Distribution Network Operators and Public Skepticism

Distribution Network Operators and Public SkepticismPublic skepticism towards the state of power provision in Nigeria had almost become legendary over the years, that the words ‘dissatisfaction’ and ‘inefficiency’ assumed status of names unmistakably allied with this country’s large vertically integrated power utilities (as epitomized by the Power Holding Company of Nigeria or PHCN and its predecessors).This remained the bane of this public owned power provider until November 1, 2013, when a very significant privitisation process made way for the physical take-over of now defunct PHCN by privately-run successor companies. With this development, hopes of Nigerians were raised about improved performance in electric power provision, based on renowned public perception about impressive performance of typical private sector ventures.

To some Nigerians, it has been long enough since these successor companies took over, and public expectations are about being waned into disappointment. This is being fanned by obvious dearth of information, mainly on the part of electric power distribution companies which comprise the most visible part of the electricity supply chain, and closest to the consumers for likely public bashing.

With electric power delivery marketing coming to play in this regard, this piece (the second title in the series on electric power distribution marketing) is intended to fill some gaps in the area of well required consumer education, as a way of spurring public indulgence towards happenings, to rekindle people’s expectations on what this new order offers.

It is no secret that electricity is one of the greatest enablers of economic growth and development of any nation. This is the reason for raised hopes of Nigerians about electric power supply, with the take-over of power generation and distribution assets by privately-run ventures. Going by antecedence, there was confidence reposed in the ability of these new private sector owners to come up with much improved performance.

Nigerians indeed expected the new owners to kick off by, at least, sustaining the earlier capacity (during most of the last quarter of 2013) of 3,800 to 4,200 megawatts (MW), which really raised peoples’ hopes about improved electricity supply. I wonder if these expectations are still hanging ‘up there’ or dashed, due to the prevailing plunge in electric power supply. It should be borne in mind that these successor companies to the defunct PHCN merely took physical possession of the facilities last November.

Mindful of likely reversal of public’s high hopes, clearly looming in the past few weeks, this presentation aims to proffer reasons for the present experience, to help douse public skepticism, provide hints on ways out as succor to ‘edgy nerves’. With the electric power distribution companies (which I often prefer to tag Distribution Network Operators or DNOs) being the most visible to the consumers in the electricity supply chain, unfavourable public comments and blames are often heaped on them – Even where faults (of unimpressive power supply) are not theirs.

People must realize that “the game has changed”. Nigerians should understand that the present situation on electricity provision and delivery is no longer what it used to be with the PHCN and its predecessors. The DNOs must emphasize to this country’s numerous electricity consumers that deregulation (which the recently concluded privatisation brought about) entails a process of unbundling or breaking apart Nigeria’s monopolistic vertical integrated electricity utility into three respective components, namely generation, transmission, and distribution. The process has made for mass realization among Nigerians that, henceforth, the finger of blame on power failures or outages need not be pointed at the distribution companies. These now purchase bulk electricity from the electricity market, which they sell at retail rates to end users. Furthermore, outages have costs which are of no benefits to these DNOs.

A fourth component, Retail, will surely become a reality with further unbundling of these present DNOs within a competitive market, in a few years time – A title later in this series, “Nigeria and retail power provision” vividly captures what to expect. Nigerians only require to tarry a while, as their expectations on power supply will be met in due course.

With the ‘problem galore’, and mounting consumer disenchantment since the takeover by these private sector operators, Nigerians should refrain from blaming the DNOs (as they comprise the electricity supply component most exposed to the public). The consumers must understand that improved power supply had not come like ‘putting on the switch’ (instantly), in consonance with their expectations as fallout of privatisation, due to several teething problems which came the ways of these successors companies, some of which can be itemized as follows:

Rot in these systems, which due diligence of the privatisation process (to help identify areas of gap, and areas to invest in) did not really unravel. This is compounded by not much of concerted efforts, on the part of DNOs, towards stimulating public understanding of the situation.

An incredible metering gap, not addressed in any way before the takeover by successor companies. It is on record that Nigeria has a huge, not easy to fill, metering gap of 2.7million, to be bridged for DNOs’ benefits.

Shortfall in gas supply resulting in the epileptic power supply regime in most parts of the country (culminating in power generation dropping by 1,600MW to below 2,500MW, according to the Nigerian National Petroleum Corporation or NNPC). This situation even now threatens the $1.8billion investments expected from these new DNOs, in line with terms of the privatisation programme. (То бе цонтинуед)

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