Estimated bills as necessary evil, by Jerry Uwah

In the last three years, Babatunde Fashola has battled Nigeria’s eternal darkness with the doggedness that pushed back infrastructure decay in Lagos during his tenure as governor of Nigeria’s richest state. But the forces behind Nigeria’s eternal darkness are seemingly invincible. Power supply remains fitful and dubiously expensive.
The minister of power, works and housing has not relented. Last week, he ordered the Nigerian Electricity Regulatory Commission (NERC) to enforce the directive compelling the nation’s 11 electricity distribution companies (DisCos) to provide pre-paid meters to all its consumers and end the dubious estimated bills that compel consumers to pay expensively for darkness.
Consumers are excited by the minister’s directive. However, there are fears that the order might be too good to be enforced. Fashola might have issued an order that cannot be obeyed.
The order on pre-paid meters and immediate end to estimated billing reminds me of a U.S. Air Force order to Flight Lieutenant Flynn. Flynn was a young and accomplished bomber pilot in the U.S. Air Force. She was so fearless and competent that she was assigned to fly the B-52, a dreaded strategic bomber equipped to carry nuclear weapons.
Flynn’s problems with her employer started when she could not find a suitable suitor in time. She fell in love with a non-commissioned officer in her squad. The air force discovered the affair and considered it inimical to order in the service chain of command. Her commanders ordered her to jettison the affair or lose her commission.
The eminent pilot responded that the air force has given her an order she cannot obey. The man in her life was more important than the B-52 she was flying. She shunned the orders and lost her commission.
Fashola’s order on pre-paid meters to the DisCos is one such order that cannot be obeyed. While America’s celebrated B-52 pilot disobeyed her commanders for amorous reasons, the DisCos would almost certainly disobey Fashola for financial reasons.
The DisCos simply lack the financial muscle to provide the pre-paid meters that would end estimated billing.
Ironically, even the National Assembly is practically on the same page with Fashola on the vexed issue of estimated billing. The National Assembly is working on a bill that would criminalise estimated billing. The simple logic behind the proposed bill is that every power consumer in the country must have a pre-paid meter. When the National Assembly passes the bill and the president signs it into law, it would become a criminal offence for the DisCos to slap an estimated bill on a power consumer.
But the truth is that the DisCos just cannot foot the bill of metering all consumers even in the next two years. The firms that assemble pre-paid meters in Nigeria have very limited capacity.
The power industry claims that there are 28 million households with access to electricity in Nigeria. Out of the 28 million consumers, only 5.2 million have meters. More than 22 million consumers have no meters.
Fashola’s order implies that the DisCos would have to import a minimum of 21 million meters within one year since the local assembly plants lack the capacity to produce even one million meters within such a short period.
The pre-paid meters are largely imported from South Africa and they hit the shores of Nigeria at a landing cost of $22 per unit. Agency fees and other logistics push the shelve price of the meters perilously close to $30.
For the DisCos to instantly obey Fashola’s orders on estimated bills, they would have to cough out $484 million to import meters. At the official exchange rate of N305 to the dollar, that amounts to N146.62 billion. Even at the best of time, the Central Bank of Nigeria (CBN) might be reluctant to allocate almost $500 million for the metering project in one year. That means the DisCos might have to scout for forex from other sources to obey Fashola’s orders.
Industry watchers are therefore convinced that Fashola has issued an order that cannot be obeyed.
The DisCos’ indebtedness to the Nigeria Bulk Electricity Trading Company (NBET) currently stands at N859 billion. That indebtedness is at the root of the debt contagion in the power sector. No one knows how to settle the debt. Ironically, the debt is mounting every month. By January 2018, the power generation companies (GenCos) wheeled power worth N43.2 billion to the DisCos. The distribution companies sold everything to consumers and only managed to pay back N2.7 billion to the GenCos. For that month alone the DisCos chalked up close to N40 billion debts.
Since the DisCos cannot fund the metering bill, it therefore follows that estimated billing would continue as long as there is shortage of meters in the industry.
Fashola can compel the DisCos to partially obey the order on estimated bills. He should order them to work out something close to accurate estimate of the bills of each unmetered consumer and allow the bills to fluctuate within a given band each month. The crazy, dubious bills must stop. Estimated bill is a necessary evil which must be sanitised. That is the only way to pacify consumers until someone is able to work out a credible means of funding the metering project.