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There Is No New Tariff- Engr Gidari-Wudil  

Engr. Tasiu Saad Gidari-Wudil is the Assistant General Manager with the Nigerian Electricity Regulatory Commission, NERC, a Senior Member, Institute of Electrical and Electronic Engineers, (IEEE), New York, USA and a member BOT of the Nigerian Institute of Electrical and Electronic Engineers, (NIEEE). He is the Vice President of the Nigerian Society of Engineers, NSE. T.S.G Wudil, a passionate regulator in the power sector spoke with our correspondent in an exclusive interview, giving insight into the challenges in the sector and the solutions to implement.

In your opinion sir, what do you think are the major challenges of the power sector?

The challenges in the power sector are many; technical, commercial, and policy issues. Policies involve regulations and government attitudes, so taking the technical challenges, we find that most of the equipment is obsolete and there is a gap in professional expertise, graduates, and practising engineers. For the commercial issues, the utilities are complaining that the tariffs they are charging are not cost-effective and they are not able to collect their money, the distribution companies are finding it hard to collect their money from the consumers, likewise the generation company are not also able to get their money from the distribution companies, and gas suppliers are finding it hard to collect their money too, these are the commercial issues. In terms of government policies, when the utilities were sold out they were given service level agreements that they and the government were to meet, but the government did not fulfil its part of the agreement so these utility companies bank on this lapse to also not meet their part – it has now become a chicken and egg situation. Nobody is exonerated from these challenges – consumers steal electricity and some do not pay, some government agencies are also owing to distribution companies so much money, then there are government policies that may not be good for the sector – these are all issues.

What has the current NERC administration done to address some of these issues or what solutions have they proffered?

 NERC is doing its part as a regulator and there are so many laudable initiatives brought by different sits in the commission. On metering issues, there have been several efforts to ensure that distribution companies use the metering system so that consumers are paying for what they consume. There were different levels of metering done such as the Credited Advanced Payment Metering Implementation (CAPMI) scheme which did not work, now we have the Meter Asset Provider (MAP) regulations which are promising to work, it has not started so we are watching it, and monitoring the implementation, which we hope is going to be better. Mostly the issue with the consumer is not metering him properly and so he is not willing to pay, but we have seen situations where people are metered properly but still refuse to pay – it is a tricky situation. We hope this new MAP initiative would solve the problem.

Regulations and policies are essential to any establishment or sector. What quality assurance or compliance efforts or regulations has NERC made to ensure they can assess the quality of services being provided to electricity consumers?

 In regulation, enforcement is at different levels and in different forms. There is something called ‘self-regulation’ that is, self-enforcement – the regulator would give the latitude within which persons are to comply and if there is no compliance, the persons involved are the ones who are going to lose and no one else. This is referred to as performance regulations, where you are put in a tight corner to operate and if one is efficient to deliver as expected, they benefit, but some regulations are enforced and monitored – both systems we have in Nigeria. There are situations where some regulations do not allow you to beat the system and for good reasons, but if you are efficient in complying you will be okay, if you are not, it will be your problem. However, when it comes to the quality of service, the commission must come in and that is why we created the ‘customer complaint forum’. The procedure for this forum is very clear on the NERC website – as a consumer if you have any complaint about a distribution company, the first thing to do is to report in writing to the distribution company about the problem you have with them – it can be billing, low supply, accident, conductor and whatsoever, because they are the ones who own the network and therefore can understand your complaint. If within a certain period in which you have made a complaint and you are not satisfied, either with the solution, they proffered or your complaints were not treated at all in the stipulated time of 15 working days, you can escalate it to the customer complaint forum. Virtually in every state, there is a customer complaint forum – we started in Lagos with EKO customer complaint forum. The past president of The Nigerian Society of Engineers (NSE); Engr. Dr Olusegun Ajayi was the first chairman, and in every forum, Nigerian Institute of Electrical and Electronics Engineers (NIEEE) has a representative that is there as experts to advise that forum and this forum is not comprised of members or staffs of NERC, neither is it made up of staffs of the distribution companies – the forum is made up of opinion leaders in that community that are chosen; they include lawyers, engineers, religious bodies, so they all sit down and look at the complaint side by side the response of the distribution companies, from there they assess, and make a decision. There will be a ruling where they hear from both parties as obtains in a small court, using the NERC regulations and law. If the individual or distribution company is still not satisfied with the outcome, they have the opportunity to take it further by bringing it to the commission. At the commission we try to do an informal resolution but if it is not possible it goes to what is called a ‘hearing’ – a legal system made of a panel of three commissioners, minimum, who listen to the appeals, before taking a decision. If there is still dissatisfaction in any quarters, they then proceed to the appeal court – that is why when people go straight to court on issues concerning electricity, they are seen as not knowing the procedure, so the court will ask them to go back and follow the steps provided by NERC.

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Can you give us some insights about the newly approved electricity tariffs?

 There is no new tariff – the tariff has been there, it is only being activated and used now because the multi-year tariff order is released at a time and spans five years per period – the order has been there, it is just the implementation. Every half-year, the order is reviewed with certain escalators which include; exchange rates, rate of inflation, and about three or four other factors. These factors are imputed into a model to develop a more suitable tariff for that period. Consumers have to understand that these escalator indices change and it is not the electricity industry that changes it – it is the economy.  We use two sources which are the Central Bank and the National Bureau of Statistics, to get that information in the model and anybody can do this as the model is on the NERC website, so anyone can impute the figures and see how it comes out. So, there is no new tariff, it has been there, now it has been released and it is for five years, but there is a caveat there, at the end of every half-year, the escalators would have to be checked and imputed into the model and see if the tariffs need to be reviewed.

Based on the insight about tariffs, what would you say is the benefit of its half-yearly reviews to the consumer, in your opinion?

Any regulator is not one-sided; regulators are expected to be umpires, not a judge – he is a mini-dictator; because he can issue, enforce laws, and hear appeals, so he is more like a small government, however, the laws establishing a regulator has made it compulsory for him to engage stakeholders, if he does not engage stakeholders, then his laws cannot hold water. In that process of engaging stakeholders, that is where his wings are clipped as he cannot decide on his own to impose a new tariff – no. Whatever decisions need to be made are discussed with these key players before concluding and this is the case with reviews of tariffs – regulators must be seen to do this engagement and this is what the commission is doing. In minor reviews, however, you may engage only some stakeholders because a total involvement of all the stakeholders has been captured in the main review, so you only apply these minor changes and go.

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Despite the epileptic supply of electricity to Nigerians – in some cases consumers do not even receive this service why do we still have to pay a lot?

I would give an analogy to answer this question. Supposing during the festive season you want to travel, and you go to a park to board a vehicle but there are insufficient buses, then you find that the drivers have hiked the prices; do you still ask the drivers for an explanation for the inflated rates even with your inability to board a vehicle? It is not like this in electricity – in electricity the little amount of power that is being generated is assessed based on the cost to generate a unit, the cost to transport and distribute that unit, because the way tariff is made, a single office pin in the office of any distribution or generation or transmission company is being paid for by the consumer – that is exactly how tariff is done. That is why it is regulated and that is the reason why none of this power distribution, generation or transmission companies can come and say they want to buy helicopters because they would be asked about what they want to use it for – TCN, for instance, might say they want to use it to patrol; and they are allowed to patrol, so they would be granted permission to buy one and the general premise is that this has value for the consumer. For instance, if there is a failure on a power line, they can use the helicopter to quickly patrol and solve the problem, so by doing that in record time the consumer gets value. Now, if they say they are going to buy a jet; the question would be ‘jet to do what’? and they might reply that it is for their boss, we tell them no, because it is not adding value to the consumer, that is why we the NERC are regulators and we ensure that any money they want to spend they have to come to the commission and state that ‘this is the amount of energy I am transporting, this is the amount of money I would spend in running this processes, so this is how much I need for the cost of transportation, in addition, they say now you know the running cost, I also need to make a profit’. After the commission has confirmed all that the power companies are doing, there would be a review before we give a percentage of that as profit.

 Finally, what is the place of standardization in NERC and the power sector as a whole?

It is the most important thing that any engineering outfit would need as it is the key to technology transfer, to ensure things are done correctly, and to be able to sell. It has economic values, so for you to be in business you must obey standards and you must take part in standardization. That is why today ‘IEEE International New York’ calls the shots. We in Nigeria should be able to come up with standards – South Africa came up with standards on pre-payment and all over the world, that standard is being used and for you to get a license on pre-payment bill payment, you must go to South-Africa.

 

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