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Power sector records N7.2bn losses in six months

By BusinessNews Staff on February 6, 2015

Nigeria’s power sector with an Aggregate Technical, Commercial and Collection losses put at over eight per cent, could have lost over N7.2bn from August 2014 to January this year, given a monthly ATC and C loss of N1.2bn.

Our correspondent gathered from power sector stakeholders at the ongoing Regional Workshop on Metering, Billing and Loss Reduction for Distribution Utilities organised by the National Power Training Institute of Nigeria that current ATC and C losses stood at over eight per cent.

It was also learnt that between August and September 2014, the country recorded over N1.2bn losses.

According to the stakeholders, the greatest challenges the present power utilities face are huge ATC and C losses.

It will be recalled that in 2012 when the United States Trade and Development Agency in collaboration with NAPTIN carried out studies on technical and commercial losses in the three most viable electricity distribution companies in Nigeria – Eko Electricity Distribution Company , Ikeja Electricity Distribution Company and Abuja Electricity Distribution Company, an average figure of 45 per cent was arrived at for the losses.

A majority of the losses, it was recorded then, were under commercial losses, put at 28 per cent.

According to NAPTN, it was because of the importance of this figure that the Bureau of Public Enterprises decided on who wins the bidding process for the generation and distribution companies based on the ability of the successful bidder to reduce the losses to the barest minimum.

The Federal Government also said it was moving to revalidate over 750,000 contracts entered into by the defunct Power Holding Company of Nigeria for the supply of electricity meters to Nigerians before the privatisation of the generation and distribution segments of the power sector.

This move became necessary following many litigation cases between the Federal Government and meter dealers that have trailed the country’s electricity metering programme and scheme over a year after the power distribution companies were bought over by private players.

The Permanent Secretary, Ministry of Power, Dr. Godknows Igali, who represented the Minister of Power at the NAPTIN workshop, said aside the 750,000 meter supply contracts, which had been looked into by government already, there were other contracts that were being reassessed to ascertain their validity.

Before the privatisation of the power distribution arm, he confirmed that over three million meters were tied to existing meter supply contracts, a good number of which had been stocked within the country in anticipation of a favourable market condition that would warrant their release.

He said, “Before privatisation, we have over 750,000 contracts for meter supply. These are the contracts we have looked into.

“Since privatisation, there have been many cases of litigation between government and dealers. The President had to come in, saying the cases should be taken out of court.

On the value of the contracts, the power sector permanent secretary said, “We are still working with the ministry and the regulator on the details.”

Agali said the Transition Electricity Market slated for January 1 this year had already started, adding that some contracts have been entered into by stakeholders to maximise the potential of the market.

He said the Nigerian Electricity Regulation Commission was already operating a transition market, which allows government to watch the market from afar and do not interfere at any opportunity.

Earlier, the Director-General, NAPTIN, Mr. Reuben Okeke, described the workshop as a Power Africa Initiative of President Barrack Obama of the United States of America, saying the quest to find a solution to Africa’s search for reliable and effective power distribution has gone beyond not only geographical barriers, but also linguistic.

He says the greatest challenge that the present utilities face is huge aggregate technical, commercial and collection losses, adding that, “You cannot reduce any losses and increase revenue unless the distribution network is improved upon in all its ramifications.

“In the product electricity, if you do not have a neat network, efficient equipment like distribution transformers, loyal marketers in particular, credible meters and effective billing system, good customer service ATC and C losses will be a mirage.”

Okeke said if distribution companies succeed in reducing the losses by 10 per cent, they would have full return on all their investments, even with the present level of generation and wheeling capacity of the Transmission Company of Nigeria.

“Achieving this will need further investment which may be as much as 50 per cent of their initial investment,” he added.

The TCN had, however, claimed an ATC and C loss of less than 8.05 per cent in recent times.

The NAPTIN boss said though some utility companies had made appreciable investments towards reducing the losses, a majority of them were yet to do so especially in the provision of energy meters.

[Punch]

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