Questions as PHCN rakes in N4bn per month in fixed charges

When the Nigerian Electricity Regulatory Commission increased the monthly fixed charge from N75 to N500 earlier this year, the argument then was that the new tariff structure would attract investors for the companies unbundled from the Power Holding Company of Nigeria.
Electricity consumers were promised heaven on earth and were asked to bear the over 560% increase – among other tariff hikes – in the hope that Eldorado would soon come.
But a few months after the astronomical hike, consumers have started questioning what the PHCN does with the fixed charges that run into billions of naira monthly, which the organisation has been collecting since the new Multi Year Tariff Order was launched.
Fixed charges are automatically deducted from consumers with prepaid meters at the point of credit purchase, while post-paid customers have theirs factored into their monthly bills.
For the Ikeja and Eko electricity distribution companies, which have a combined list of almost a million customers, PHCN rakes in a whopping sum of N500m monthly from fixed charges alone.
The Principal Manager, Public Affairs, Eko Electricity Distribution Company, Mr. Godwin Idemudia, gave 333,091 as its customer population as at the end of September 2012.
His counterpart in Ikeja, Mr. Pekun Adeyanju, could not be reached on the phone but a source in the company told our correspondent in confidence that the customer population is in excess of 600,000.
The Ibadan Electricity Distribution Company, which covers almost the entire South-West of the country, has an estimated 1,083,779 customers.
The figure, which was given to POWER TALKBACK by the Public Affairs Manager of the company, Mr. Jide Oyenuga, was arrived at last month. Oyenuga told our correspondent on the telephone that there were still some customers yet to be captured.
However, by the time each customer pays N500 each month as fixed charge, the electricity company rakes in more than N500m.
Apart from the Eko, Ikeja and Ibadan companies mentioned above, which are raking in over N1bn per month as fixed charges, there are eight other discos operating in the country.
The other discos include Abuja, Benin, Jos, Port Harcourt and Enugu. The rest of the discos are Yola, Kano and Kaduna.
The Abuja Electricity Distribution Company has 631, 331 customers, while Yola has 286,000 customers. The figures were given by Debo Adegoke and Kuti Osiyemi of Abuja and Yola companies respectively.
Efforts to get the entire customer population of all the 11 discos from the public affairs department were not successful until this paper went to bed.
Conservatively, experts say PHCN discos rake in about N4bn monthly from fixed charges, since the three companies in Lagos and the South-West generate in excess of N1bn on a monthly basis.
But having been paying so much as fixed charges since last June, electricity customers are now questioning why the promise of steady supply made to justify the hike in the first place is not forthcoming.
Though PHCN abolished the payment of the monthly maintenance charge last June, it still collects value added tax from every customer using its services.
Although there was a slight improvement in electricity supply recently, the old era of persistent outages seems to be creeping in again–to the dismay of electricity consumers.
A customer, Mr. Yusuf Moshood, in Ojodu, Lagos, wants to know what the electricity company is doing with the N500 he pays simultaneously with his monthly electricity bill.
“Until last September, I was using post-paid meter until I had to struggle to change to prepaid. The bill for my three-bedroom flat before the hike in June was always between N2,500 and N3000,” he explained.
“But when the new tariff took effect, I started having N7000, N9000 bills. I was so angry I had to visit the PHCN office on Aina Street to complain, thinking that it was the usual crazy bill, but I met a crowd of equally angry customers like myself.
“That was where I was advised to acquire a prepaid meter.”
The building contractor said the PPM had in a way resolved the issue of incessant high bills often received from PHCN a few months back. But he complained that he had not seen what in essence the electricity company was doing with the fixed charge of N500 every month.
“They promised us better service delivery with the increase in tariff, especially with the fixed charge but we are yet to see that,” he said.
Another resident of Omole Phase 2, Lagos, Onaifoghe Ogbeide described the fixed charge as a way of robbing customers.
She said, “It is nothing but daylight robbery because I can’t see what they are using the money for. Why should I be paying a fixed charge of N500 every month in addition to my normal electricity bill?
“The way PHCN is taking the money is rather confusing. I am on PPM and everytime I go to their office to recharge, I am always left confused. Last month, I went there with about N3000 with the hope of buying enough units to serve my flat for a long time but by the time they made their computation, deducting fixed charges and all, I was left with virtually nothing. I see the electricity people robbing me; it is as simple as that.”
Poor and epileptic power supply is a major source of cost disadvantage in the nation’s real sector.
Many firms and households depend on diesel generators – a far more costly and inconvenient means – to power their operations.
Many World Bank and UNIDO studies have repeatedly indicated that Nigeria is a nation where rising and prohibitive energy costs pose a serious threat to industrialisation.
With about 10 per cent dependence on PHCN, many firms have collapsed under the unbearable burden of the rising cost of energy.
Cement manufacturers in Nigeria, for instance, pay $7 for the same unit of energy that costs just $1 in Egypt.
It is estimated that 15 per cent of manufacturing output is lost to power surges and outages.
Experts also reckon that the about 4,000MW, the peak generation by PHCN, is only sufficient to power three or four states – out of 36 and the Federal Capital Territory.
Attempts to find out what the organisation uses the returns from fixed charges for at PHCN offices in Lagos did not yield result as officials said all enquiries on this should be directed to the Nigerian Electricity Regulatory Commission.
“NERC should be able to tell you that. The commission takes charge of all those things; I don’t know what they do with all the charges,” a top official said.
A NERC spokeswoman was however not forthcoming when she was asked about what the body uses the collection for. Though she initially promised to get back to our reporter, she used different tactics to delay, failing to answer to our enquiries over a three-day period.
However, NERC had once said that the revenue from the fixed charge would be used to acquire prepaid meters for electricity consumers.