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Electricity tariff in Nigeria is quite low – Leynes

By BusinessNews Staff on March 9, 2015

The pioneer Managing Director of Ibadan Electricity Distribution Company (IBEDC), Mr. Fortunato Leynes, exited the company after 18 months. In this interview with Kunle Aderinokun, he speaks on the challenges in the power sector and his experience on the job as well as the reason for bowing out. Excerpts:

You have been in the saddle for one and a half years; would you say that electricity distribution improved under your watch at IBEDC?
Well, you see that there has been substantial improvement in our service. However, we do not have enough supply from the Transmission Company of Nigeria (TCN). That is why so many of our customers are experiencing low service. And that also has a great impact on our revenue because how could we convince customers to pay for their electricity bills when at the time our marketers and other employees were collecting their bills, there is no electricity? However, I need to add that there are expansions we need to do which we had to step down because of financial considerations. But these are things the company will do as it is able to access more funds.

Would you say that you have been able to achieve what you intended to achieve when you set out?
We have been able to record some remarkable achievements. First, we have been able to put a proper structure in place. So, the company is going to keep waxing strong. We were also able to institute a perfect process. We also made the company quite responsive to its publics. These are the key factors to the success of an organisation. So, I have no doubt whatsoever that whoever takes over can continue from where I am leaving off.

Why are you leaving after just 18 months in office?
Well, it is not the easiest decisions for me to make. But after considering all the issues, I decided to quit so that I can go back to my family.

But you knew that you would be staying away from your family when you decided to take up the appointment?
Yes. But at every point there is need for one to prioritise. When I was taking up the appointment, I was willing to make the sacrifice to help put the new company on a sound footing. Now, my family needs me back home in The Philippines and I think I owe my family a point of duty to return home at this point. Again, let me say that I did not find the decision an easy one but I found it necessary. Some things are more important than occupying an executive position.

Are you being pushed out because you were unable to hit the revenue target you were given?
No. In fact, we generated more than N3 billion in monthly collections. That is huge. So, I am not being pushed out. The decision to leave at this point is entirely mine.

But taking into consideration that other distribution companies have also been terminating their agreement with their technical partners, don’t you think it looks as if your leaving IBEDC at this point cannot be voluntary?
No. Our engagement with Manila Electric Company is still on. The technical partnership is still intact. I cannot speak for other distribution companies but I know that with IBEDC, the agreement with the technical partner is still very much intact.
My leaving has nothing to do with any disagreement with Manila Electric.
You came with some other people from Manila Electric Company. Are you leaving with them as well?
No. They will be left behind here. It is just me. They are here because of the technical service agreement, and as I said, the agreement is still intact. That is why they will stay here; to provide necessary support and services needed by IBEDC.

What challenges do you think your successor will face?
The same challenges we faced when we came in. One of the challenges is the lack of supply channels from the national grid. It would have been a source of joy for us to be able to guarantee 24-hour electricity supply to our customers but we cannot give what we don’t have. Also, although there has been an increase in tariff, it is still insufficient; it is still inadequate, it is not sufficient for us to pay our bills, thus putting a very big challenge on us.

How far have you gone with the embedded power generation that you wanted to do at a point?
Right now, we are in discussion with three companies that are involved in supplying power from captive generation. They have excess power which they want to sell to us.
But we are not limiting it to just those three. Last year we invited expressions of interest from generation companies to put up embedded generation within our own network. There were 65 companies that sent in their expressions of interest and our Technical Evaluation Committee has completed its technical evaluation of these expressions and this has been forwarded to me.

Where do you see power generation in Nigeria in the next three years?
Power generation coming from the national grid is still not sufficient to supply the actual power requirements of all the customers here in Nigeria. And normally, power generation supply contracts, which would have helped, will take time. So, for the country to enjoy uninterrupted power supply will take between five and seven years. But one thing that is sure is that along the line there will be marked improvements. But to get to that point of uninterrupted power supply will take a minimum of five years.

What are the constraints facing power generation; funds or technical abilities?
For us, it is rehabilitation. That is the problem of the national grid. Then, there is also the challenge of vandalising gas pipelines; that is a very big challenge.
The second challenge is that it takes time to build the power plants. The shortest time it takes to build power plants is between 36 to 48 months. And that is from the point of financial process, if the banks are ready to finance the project.
But with my experience in The Philippines, it takes no fewer than one and a half years from the time the negotiation starts to the time of the completion of the financial deal. For us to get there, it will take up to four years. It actually takes time because power plants are not items you buy off the shelf.
How do you see the regulators of the sector in Nigeria? Are they friendly?
The regulators are friendly except that they are also stern in terms of compliance. So, they really would want that all the players in the industry – the generating companies and the distribution companies – really comply with all the requirements that are given by the Nigerian government.

You said there is a lot of waste in the transmission of energy in the country. How do you think that can be tackled?
There is really the need to build additional transmission lines. The ones in use now are old and cause a lot of wastage.

Are you sure there were no issues between you and the board of directors?
No. No. No. I tried my best to make them happy. I had a very good relationship with the board of directors.

Were they happy with you?
I think they were.

Would you say you were able to make your staff happy?
I believe I did. I would say I made my staff happy and they enjoyed working with me.

What about some people whose appointments have not been confirmed over a year after being engaged?
The recommendation is already with the board and I am sure it will be approved. Let me say that staff confirmation can be delayed for a number of factors. After clearing all the issues, we made a recommendation to the board for us to confirm the appointment of our staff. I am sure that very soon all the staff that have not had their appointments confirmed will be confirmed.

Were you able to make your customers happy?
From information and feedback that I got from the different customers’ fora we held, I believe we made more of our customers happy when compared with what was obtainable in the past.

Many of them have issues with meters acquisition. What are you doing about that?
That is why we keep announcing that the customers having difficulty on accessing meters should get in touch with our customer service department. We told them that they can apply for meters because we are currently rolling out meters for installation.

Do you think Nigeria pays for electricity more than other countries?
No. The price of electricity here in Nigeria is quite low. Our non-commercial customers pay less than N20 per kilowatt. For instance, if it were in The Philippines, our customers will be paying something around N50 per kilowatt, but here, customers just pay less than N20 on the average. Electricity is cheaper in Nigeria.

Now, as you leave office the MD of IBEDC, what are you going to miss?
I will miss everybody, the employees, because one thing I like about Nigerians is that they are very hospitable and when you see everybody in the morning, they are very much concerned about how you spent the night. This is not very common in The Philippines and this is something I will really miss.

[ThisDay]

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