FCT of darkness: One year after private sector take-over

On November 1, in the next nine days, it will be exactly one year since the private sector bought over and effectively started operating the power generation and distribution companies.
The hope and assurance prior to the sale was that the sector would record significant improvement. There will be light. Now the story sounds worse, especially in Abuja, the Federal Capital Territory (FCT).
To find what the problem is, Abuja Metro recently engaged the managing director and chief executive of the Abuja Electricity Distribution Company (AEDC) Mr. Neil Croucher to explain to residents of the city and its environs why they have to remain perpetually in darkness one year after they took over supply of the amenities.
Why can’t Abuja Electricity Distribution Company give us light in almost one year after you took over the supply of electricity?
Of course, this is a massive transformation. And the whole world is watching because this is probably one of the most ambitious transformations going on around the world. But there are many links in the supply chain of electricity. And each of those links needs to improve to get better quality to the customers at the end of the day. It is also, a very big ship and a big ship will take a while to turn around. So managing it with public expectations is very challenging of course because it doesn’t transform overnight.
In reality, a big sector like this will take time to become a world class entity, but of course, the public quite rightly can expect to see some changes immediately. And I believe that change is already evident. So, to me and outside, there is much that has been done to improve the quality of electricity supply and quality of service. We have carried out the maintenance that was never done before not to the extent that was necessary. Taking the past 12 months for example, we cured the servitude relics of something about 4000 kilometers of lines and we have seen the benefits of doing that when we have storms, and winds blows, we have lesser altitudes. This lines stand. We also have done numerous maintenance and also reactionary maintenance. So things like these have been put in place. We have also put in place a 24-hour dial call center which is manned at all times by five operators to receive dial out call from customers. The information is logged directly into our computer system and immediately dispatched to the field so that there can be quick response. In addition we have a back-up office so that there can be a follow up and close up on all of the issues raised. And we see the increase in number of the contacts we made with these companies starting to come through it.
Ultimately, we would want it to be the dominant way in which customers feel that the contacts have been given to them for quick response. So there are many ways in which things have improved already.
Customers are groaning over estimated billing in the absence of electricity meters. When is this going to end?
Close to one area we are yet come is metering. Customers are not particularly happy with the estimated billing system and not having meters. And we feel same with their expectation. It is not acceptable for customers to have estimated bill, we believe it is the right of every customer to be accurately metered for the electricity that is given and are required to pay for. So certainly that way we have to get to as quickly as we can. More than half of our customers do not have meters and that is certainly unacceptable. But before we can carry out the massive roll out of meters, we need to ensure a platform on which all of that is based is sound and solid and it has the integrity and it has the ability against fraud and corruption because there is a very high level of that as we speak.
So again, we have been analyzing that platform, in the case of our pre-paid meters which is going to be the dominant method of metering for domestic customers. We had five different platforms which are in existence. And these platforms didn’t communicate to each other, so a customer had to be in a particular area to buy electricity and could not buy electricity anywhere else on our system. It could be from a poor management information system from our five different information systems not communicating and it will also mean there were a lot of opportunities for fraud and corruption to take place on that system.
We have already taken a decision to roll out one platform only and that project is already on the way. And that single platform should be up and running within a matter of weeks from now. Work is already on the way. And once we have the single platform, then customers would be able to purchase power anywhere on our system but they will have to do within a particular area. With one system in place now we can start heading all the various convenient methods of payment on to that system. We could not do it before because when we have all the different systems but now that we have only one we will be taking on all these kinds of e-payment, single out internet and the rest onto that system. So that is on the metering side. On the billing side, we also have six billing centers on our all unit platforms. When a customer pays money on his bill, receipt has to be manually taken and entered manually into the computer system. We need something like 85 staff for our data computer system we need to do away with the corruption in the system.
So we are looking at the upgrading to a window space system, much more one single system so that we can remove these opportunities for errors and corruption so that when a customer pays it reflects immediately in the billing system. That way, decisions could be taken within weeks on which platform then should be implemented.
These are all necessary before we can do a massive roll out of meters. And our plan on the meter problem is a hundred meters per year. So we can quickly wipe out the back log. If we can do it faster, then we can do so but then it has become logistically challenging but we can do it as fast as we can. We will quickly get to a point where every customer’s confidence is restored, so that what you pay for is metered accurately. I believe things are getting better but there are so many links in that supply chain. And starting from gas, water, the primary energy sources, and all of that, you know we are the last link in the supply chain and we are the ones that collect the money which feeds the entire supply chain. Most of the money we collect sustains the chain. We use it to pay the generators, the transmission and gas companies etc. So we need every link to improve and I believe that will happen soon.
In our case we can say we would spend something like $200 million in the next five years on capital, apart from bringing in the resources and skills. We will spend another $200 million on improving the system and the networks.
Other Discos and the Gencos have some other plans. And they all need to make money. So there is no doubting the fact that this transformation will work. We have gone well beyond the point of return, this will work, it is not going to happen overnight but it should see steady improvement. At the moment, the biggest problem that make customers not to see anything better in the services that has not been fixed yet.
What is the current quantity of power allocation from Transmission Company of Nigeria to your DISCO?
It is the problem on the side of the primary energy sources. The gas supply at the moment, the common knowledge is the last strike and indeed all strikes in the sector by the oil and gas workers definitely impact on the power supply daily. The daily power load is very low. On allocation, we only receive 11% daily which is very low. But even before the strike, there were other problem on the supply side. We also had low water levels at the hydro stations previously. But again, there are a lot of partners coming to own power stations. I read recently in the papers about a partner looking at the 226 megawatts power station. That will take time, but these things increase the good market here. There is a big market. And for customers, we need to just make sure we can beat the cost of diesel generators because that is what a lot of people use when there is low power. So there is a good market here for generators to come in. We are also encouraging more investors in generation because in our case we are not into generation business, we distribute but we are encouraging companies to come into our areas as well with smaller level generators with better generation so that they can generate locally so that we can increase that level of power for our customers as quickly as possible and avoid load shedding.
Government is still holding on to transmission of electricity. How does this affect operations of power distribution?
On the transmission side, it is fairly typical in countries where they have privatized power sector. Transmission remains in government’s hand. It is a natural monopoly. You don’t want to duplicate those wires because they are very expensive. So, it is quite typical, it is monopoly and it stays in government’s hand. I have seen here, government is contemplating some level of private sector involvement in transmission. May the situation will change. It is true because it is one of those links in the chain and a very critical part of that link. It has under investment previously, so there many facilities that will be required. For example there has not been sophisticated control center that can control such big and expensive power network. Those are essential pools for transmission on this side. There are many other areas now that need investment and increase capacity. They are bottlenecks in the systems that have been tackled. We are fortunate in Abuja we have less bottlenecks like others; so in effect, if we have some constraints on the system, we get to take some more power than our 11 ½ percent allocation because of constraints elsewhere. For our system currently, we can receive 47 items per megawatts of power and the highest we can take is between 550 megawatts. But we want to make sure that for our area of supply, we stay ahead of that game so that we are able to stay with whatever generation that will come our way. And that has been the case to date.
There are many substations government has bought like the NIPP substations, which we look forward to take over in the coming months. We have already taken over six of them that have been commissioned and are in service. There is another phase of 20 to go that would also assist us with our connection to our transmission system to ensure that we can receive any power and also ensure that the quality of the power is good. Since we commissioned the substation at Gwagwalada, there has been immediate improvement as we link up to the voltage and the quality of supply in those areas.
What is the capacity of AEDC in terms of electricity supply and operations?
We were very excited about the opportunities we saw when the government went on a road show around the world to look for investors to come in for this privatization. We were very excited and we also believe that the process that was followed was a very well brought up process, and the confidence we had at that time had been borne out. There is no doubt, it is a well-rounded process. We have seen the commitment of government, the projects used to fail us because of lack of commitment of government. You need to follow up and you show serious commitment in something like this and have confidence in that and every challenge that comes along. That challenge has been quickly addressed and I believe most of the hurdles that we should encounter are behind us. As far as our company is concerned, we did former consortium with the local entity and the company I come from has been in the power sector for 50 years, it is now a private sector that has gone through the transformation through the public sector hands to private sector hands and it is now also a listed company and been a power company that predominantly supplies general power equipment. We depend on extreme power quality and reliable power. We also put a team together which is also so vast in the power sector. So we believe we have the right skills and resources within our group to make a success of the transformation. We are long term investors because we certainly don’t believe that you can come into the power sector and make a quick buck and leave. This is a long term project and that is the commitment of our shareholders. We are here for a long hope. In fact the probability is that there would be no returns to the shareholders in the early years.
Ultimately, Nigeria needs to have a competitive tariff because it has good resources of oil and gas, and also has unexploited hydro and of course a huge potential market. So with these basic things, ultimately I think the tariff should be competitive. But on the other hand, there is huge backlog of investment; there is huge capitalization that is needed to take place in the sector. So the challenge for us is to balance up. So we have open shops so that it will help sufficient revenue that will be coming into the sector so that it can be transformed and give out good quality service. But as I said, we have a long term view, NERC is working with the sector to see how we can smoothen a tariff adjustment and make it acceptable to customers and electricity affordable too. So, hopefully we will be looking at the long term tariff that is stable and to give sanctity to the market.
Any discouraging challenges that made you feel like dumping the business since you started operation?
We would never want to back out ‎and we certainly wouldn’t do that. There are a lot of challenges but we tackle them with excitement, with vigour, although we sometimes get frustrated; but it gainful and we will not back out. Challenges coming in are basically that we didn’t have access to the business before handover. We didn’t have access. We only imagined what was in from what we saw and the environment and from the available information. But we had a good idea of something well different. I think the assets were in worse condition than we thought and in most cases we found that about 200 transformers were found in the field and were left there. So our immediate reaction was tackling those lapses. There was also complete absence of information and ICT networks. That also made the company very inefficient, so that been our focus area to put up an information system. As I talk there is information system on the metering and the billing system and these are the key information systems that need to be put in place. There are many others as well. There is also staff reorganization. The company was very delighted to be right sized because it is one whole opportunity to create an efficient electricity sector. Yes, I believe jobs will be lost in the sector but the knock out effect of an inefficient electricity sector in Nigeria, the multiplier effect will create tens of thousands of more jobs that were lost within the electricity sector in Nigeria in a short time. We must seize this opportunity to create an efficient electricity sector in Nigeria. That is the summary of the standard features today but we are still extremely confident that we will turn it around.  There so many expectations but we can’t do them overnight even when I believe that we have already achieved much and we will be achieving much more each year forward.
What are your plans for daily electricity supply to Abuja?
Certainly there are plans in place‎ for resolution of some of the gas supply constraints and in the longer term, there are plans for new generation capacity.  At the moment, there are severe shortages but those are for the various reasons that need to be resolved because in Lagos, there are many gas pipelines that are not working. But those are the short term problems that can be tackled. They are not infrastructure problems. I believe the problems we have now is to quickly resolve the low generation and by the end of this year we will be getting back to the level that went down by the beginning of this year. Also, as we get other infrastructure projects commissioned by the end of the year, and during next year, we should have an increase to the next level. From the outside, we are keenly looking out for other stakeholders and the generating companies. But for our customers, they need to get access to power so we have to put plans and we have to support them in any way we can. We are also looking at creating embedded generation in our networks. So we are talking with some independent teams to install various kinds of medium to strong generation projects within our area of supply. Things like solar power, small hydro, those kinds of projects that will also assist in improving our level of power supply to our customers will be there with time.
What is your daily electricity supply scope?
We have been given a schedule by the TCN of how much power we must take. ‎But there is increasing limited resources in the country at the moment, and each country has power allocation. Our allocation is 11 1/2 % and we are constrained to supply what we get. Other companies too have their allocation from TCN. We often take more but that figure is our basic allocation from TCN. The percentage we get vary depending on the circumstance. We can get as high as between 500 to 600 megawatts and sometimes as low as 150 megawatts.