Discussants: Idowu Oyebanjo (Moderator), Deberechi David, Tunde Salihu, Emeka Ezeh, Akinwumi Bada, Sampa Katepa, Duru Austyn, Eddy Ebruke, Silvanus Ajuyah, Ademola Agoro, Lukuman Olayiwola, Ismaila Rafiu, Isaac Adekanye, Segun Adaju and Rabiu Haruna
Discussion: Billing, Energy theft and Off-grid solutions are issues currently gaining attention of Nigerians as the need to achieve energy sufficiency remains in the forefront.
Idowu Oyebanjo starts the discussion in an unusual manner.
Oyebanjo: What percentage of Nigerians are:
- Unwilling to pay?
- Unable to pay?
For energy used
Deberechi:
I have conducted Demand Side Management, DSM studies for two over loaded transformer in Aba and Akure. Just by changing the bulbs in the area to CLF bulbs the transformer entire load would become 40% of rated capacity. With LED bulbs I’m sure if I’m to redo the study it will drop further to 30%.
The first study was promoted because it’s area where I grew up and conducted the studies as my school mini project then; out of zeal to improve power in the area but Enugu Electricity Distribution Company, EEDC, Aba Business Unit trashed it. They refused to pay attention.
The second study was in Akure out of zeal to prove that the management is not doing enough to bring needed short term solution to power supply availability to the people and it was trashed too. One of the DISCOs service chief was of the opinion that if you show people how to conserve energy and pay for what they consume exactly the DISCOs will be recording lower unit at the end of the month.
I don’t have the statistics for unwilling to pay and unable to pay customers. But from my experience as a customer service agent and field service staff who has interacted with many customers I am very sure that customers in both categories can easily be converted to willing and able paying customers.
Oyebanjo:
Will energy efficiency lead to lower income for utilities?
Deberechi:
Initially … It may. But once the power remains constant, consumption starts growing and this time it grows for economic development. Not just social.
Bada:
Definitely yes! But then consequently the utilities will get more efficient too in discharging their responsibilities. Win win
You cannot get anything objective as estimate here because of supply paucity. Such study can yield reasonable results in an energy sufficient environment
Sampa:
Not necessarily since payment patterns exhibit a level of inelasticity. Many residential consumers appear to have a fixed monthly budget for electricity and tend to pay similar amounts even when the bill varies. Energy efficiency would initially tend to improve DisCo’s collection efficiency, but in the long term, situation will probably revert to normal, except for the hypothetical impact that efficiency leads to improved service which in turn results in improved willingness to pay.
Oyebanjo:
Utilities know that there is a lower return on investment in energy efficiency compared to capital projects
Deberechi:
Instead of claiming that they don’t have funds or point at people’s inability to pay as a reason for not investing; I wonder why the DISCOs should not properly implement Demand Side Management, DSM concepts if they actually want to improve supply. And people’s ability to pay will start matching the bills. For a 5w LED bulb used for 12hours daily in a month the energy consumption will be less than 2kwh. The low income can always pay N100 for each bulb. Many even live in one or two rooms with their house holds. So DISCOs need to ensure they start DSM
Bada:
@( Katepa) The antidote here will be do not bill, go ahead and meter. I know there are challenges, but we need to create the trust within our consumers that we really want to meter them.
Deberechi:
@(Sampa Katepa) In long term, it’s only those that have capacity to pay that will grow their loads. For examples, if a family starts a saloon, they will start consuming more with their dryers, clipper, etc but their customer will pay them thus increasing their payment ability and the fact that they will not like disconnection it will increase their willingness to pay just to protect the revenue.
Tunde:
This is not always true.
I have a mini-grid where I provide 24 hours power supply and people are not paying their fair share. A particular compound has damaged 3 power meters because of attempts to steal electricity.
Deberechi:
Fair share to what amount?
Duru:
@(Tunde Salihu) My boss, I recall this challenge you threw at us in another forum.
The challenge with Rural Electrification. Revenue Assurance and Collection will remain a problem wherever energy consumers see the power infrastructure as their own share of national cake.
The use of Technology (IoT) was one solution but… I do hope NERC will support the deployment of Narrow Band IoT across the Energy Consumer Market.
Olotu:
@(Tunde Salihu) Ha ha ha. Welcome to the club. One good starting point before anything else is cultural, ethical rebirth of citizenship in our lives. Personal , corporate and national, that way must people begin to think nation first , not self or religion or tribe or region but nation . People . Nationality
Deberechi:
@(Tunde Salihu) any mini-grid providers offer less and charge more compared to the grid. This often follows from your business model, investment choices and need to recoup investment within specified period. I don’t know about your own, but we need to be sure that you captured your consumers consumption capacity and payment ability in your design, deployment and operation. If you wouldn’t mind, we can discuss further on your business.
Tunde:
@(Dabrechi) My brother, if you are not involved in mini-grid business, please leave theory alone. Thanks. I called off a new installation late November, because I could not get 20 houses from 103 to just sign up without initial payment as a proof that they were serious.
We had visit the community for discussions more than 4 times prior to our plan for installation.
So sir, this is practical, not theory class!
Tunde:
@(Olotu) Thanks sir! One of my consumers in one village pointedly told me that he was not paying for electricity in Lagos, so why should he spend more than N500 in the village for electricity.
Just last week we installed solar for a senior Medical Doctor and to our shock, we discovered that the man bypassed his 1. Hot plate, 3 ACs and other heavy loads………
(I beg, we dey see plenty things in this industry!)
Nigerians don’t want to pay for electricity, if they can!
He paid his electrician to do the bypass. We discovered when he did not want us to power the inverter from the meter.
Olotu:
I was waiting for you to say this. A few years back we launched the first batch of digital meters (the first generation type) . The choice of customers in Abuja Area were the legislators , Asokoro and Maitama residents. Funny to say and not without nostalgia, that many of the meters were bypassed. There was a study on it by my people with very interesting recommendations. I share in one of the recommendation of a former minister of power – Anyone wanting to lead this Nation should first have their brains checked. By extension we all need to be so challenged because those guys come from amongst us. Well done bro. Practical to the hilt
Deberechi:
@(Tunde) I have been in involved in mini-grid business, not as a CEO but just as ordinary project Engineer. My employments have all revolved around energy business. So I am going to be speaking from position of experience. It would be left for you to make sense out of it or not.
That your business feasibility study showed that out of 103 houses less than 20 houses signed up for initial payment is normal. It only suggests to you that you should pay more attention to business scaling which involves determining minimum viable threshold that you require to start and how you will increase as more and more people become interested in the business.
In this case a system as small as 10KVA or 5KVA can start off the business provided such systems can be easily paralleled to scale up to the required amount as the load grows.
In the Nigerian society, at least in the SW, SS and SE which I am very conversant with, more and more customers will keep signing up as they get testimonies from the few customers that you have been serving well with your small systems and as they come you present your service agreement that they must sign off before being connected.
One big mistake that many of the mini-grid operators have been making which I can’t tell if you are among is to install big system capacity with hope that the consumers will sign up immediately. Unfortunately, just as ordinary commodity people don’t
Unfortunately, just as ordinary commodity people price lower when they see that a commodity is in abundance and that the seller has no option. Thus another critical reason to pay attention to scaling. If you are able to control your supply very well, you will definitely influence demand to the extent you want as people cannot always help the societal competition of …. “My neigbour has supply, why can’t I also have? Is he richer than me? These questions must always pop up. In scaling you must consider the technical, customer behaviour, demand, etc.
From my personal observation as electricity worker in various capacity and as a customer of some DISCOs, I must confess that many micro-grid operators do not do proper customer behavioural analysis before embarking on the business just like the DISCOs that seems too careless about customer experience and how it in turn impacts on their behaviours and consequently on their willingness to pay, protect power equipment, show integrity in consumption and payment, etc.
Starting from your prospective customer that cannot pay more than N500.00 because he has been using NEPA free in Lagos. I bet you to investigate. You will find out that either he was a NEPA staff or has been very close to NEPA staff. He has orientation that electricity ought to be free. At this point it should suggest to you that the community needs thorough orientation before they will open up. Yes, I don’t know what exactly were your community entry strategies and how far you orientated on energy and costs. But I am sure that those customers can pay when they see that your services are not in any way extorting them. Rather your services are just best at such price. I should also bet you to investigate, you will find out that the man who cannot pay more than N500 for electricity goes around discouraging others. He is a stakeholder to manager in the project. If you capture him, he will go and capture all others for you.
Business integrity on the side of customers is influenced by integrity of supplier, the customer experience given to the customer, etc. First we have had meter installers that convince the customer to allow them bypass the meter or some loads for a token so that their PPM credit will last or their monthly consumption will remain low in terms of credit meters. We also have customers who influenced in the meter installers or other electrician to bypass the meter for them. In either case, customer want’s to pay a bill that he or she can afford. That is where making sure that customers are fully aware of DSM concepts and tools becomes very vital. Whether the supplier is for mini-grid or DISCO
Beside making conscious effort to see that the bill is not too high, energy theft prevention ought to be inculcated in your design. Benin Electricity Distribution Company, BEDC kept on installing their prepared meter at locations accessible to customers before I sent in my observations that the meter they were currently installing can be mounted on pole at zero extra cost in order to reduce meter bypass. Their first pole mounted meter was tried out in Akure after a long run. In order to solve energy theft technically, one can also use insulated cable (maybe single core PVC insulated for LV reticulation at marginal cost. Meter monitoring is essential. It’s not enough to just mount prepaid meters thinking it will solve energy theft and revenue loss issues. As a matter of fact, my personal preference is credit meter that requires electricity workers to go round collecting meter readings and observing integrity of the connections. An operator just need dedicated staff and easy to read meters. Maybe with wifi or Bluetooth connection, any meter that he crosses will register and transfer its data to the meter reader with the staff. The technologies are quite simple.
From experience, there are loyal customers whose DISCOs poor customer service compelled to be lackadaisical on the business integrity when it comes to energy theft or subjects that they consider in the better interest of the DISCOs. They see such as payback time. For instance, many installed PPM might not be functioning well. Business integrity requires that the customers draw the attention of the DISCO’s energy sales representative serving them. But those who have experience nonchalant attitude of DISCO’s customer care representative other staff will never do that. It’s a payback time. After all if they complain, the DISCO will come and remove the meter, place them on direct billing and start giving them estimated bill with no hope of meter replacement. Maybe with advent of MAP they will have to pay heavily again for meters.
Customers simply transfer their experience and behaviour to mini-grid operators. Yes you may think that the service area that you have chosen is a virgin one. They have not gotten electricity before, but that is not the case when it comes to the customer behaviour. Most Nigerians living in the rural communities or underserved areas who makes the electricity subscription and payment decision have at some point been to areas that have electricity or interacted with people who have lived in areas with electricity. They are not totally ignorant of what is obtainable in the served areas, they have opinions. This is why periodic critical customer experience and behaviour analysis is very important and perhaps establishing customer education (orientation) unit.
My dear Chief Tunde …. there are many factors that comes into play when it comes to critical business factors in the energy industry. I cannot say the exact solutions that will suit your business … perhaps till you are able to present your own exact business case. But all I can say is that DSM is very vital in getting Nigeria power sector in order. Yes it will reduce consumption and bring down the utility company revenue at the initial month, it will also allow for true load growth in a sustainable way. It will also curb energy loses as more customers will learn how to consume just what the amount of energy that they need and what they can pay for. DISCOs need to do better and mini-grid operators don’t need to copy DISCOs in any way. They should just mind the peculiarities of the communities that they are to serve. Thank you
Tunde:
@ (Deberechi) I am not interested in going on an ego trip with you, but for the sake of others who are reading, I’ll offer more insights into mini-grid development and the general insincerity of Nigerian electricity consumers everywhere.
Before we embarked on a particular particular project, I had in my team at least 4 former bankers, 2 of which were of directors. We also had 2 other business development guys with combined experience of about 14 years in other areas.
We visited the community more than 10 times. We had series of meetings with their representatives from the village and diaspora. They gave us a list of ALL residents and we discussed with 2 of their people who were to setup food & water business in the village.
We incorporated an irrigation system for them based on their requests to commence dry season farming. We arranged loan facilities for them that will ensure that from planting to harvesting they won’t invest 1 kobo of their own. We also arranged for off-takers that will pay for everything they produce at market prices. This would be used to offset the soft loan and they’ll receive the balance.
We promised to help convert a mill to Electrical system because he was spending about N3k per day on buying diesel and we estimated that charging him N10 to N15K was a lot reasonable and he would undergo less stress.
At the completion of the project the man living in Lagos who was to start the water factory died, in 3 months. The other man who was to start food business had some political problems and fell into bad times. We actually found out that he was also extorting ALL our contractors.
The farming could not take off for a number of reasons, but the most ridiculous was because of their goats…..
Despite series of assurances and our well documented assessment, less than 40% signed on. The Miller would not allow the conversion even though we were making the investment.
There is a compound where we lost over 3 meters because of bypass. We actually used the pole mounted meter twice. I had to entirely disconnect this customer.
Among the operators of electricity business in Nigeria, this is the common trend whether in mini-grid or national grid. The insincerity is across board; from your staff down to consumers. Corruption is affecting all facets of our life deeply.
My man, just discuss with operators, especially in rural communities and hear many tales of disappointments. Nigeria is a special case!
Ezeh:
At the end, a people without character will go no where. Knowledge is important but without character knowledge is a dangerous weapon against sustainable development.
Lukuman:
It’s frustrating and sad to read about your experience. But giving up should not be an option as we still have a responsibility to develop this country. I would like to suggest that you include risk assessments into your project development model. The business aspect of the risk assessment will help identify most of the business risks upfront, evolve mitigation actions and bring down the identified risks to manageable levels that allows the project to succeed.
Ebruke:
Without a thorough risk assessment I doubt the investor will go very far and experience all sorts like we have been reading. The experiences so far give the impression the Nigerian instance is a failed one, let’s not overlook the fact that power is a critical element of economic growth. That being said the next should be how do we go away from issues plaguing the sector, this brings in your risk assessment process and a culture change implementation plan. We overlook the change management side of improving the sector. Until there is a culture change I doubt these experiences will go away.
Change the culture or attitude of the people and when the culture is imbibed and accepted then the new mentality can be said to the new way, just like achieving a new steady state after a disturbance. When your system attains a new steady state you would have hit reliability again and all that is left is sustainability of the new culture. It’s a lot of work but the price we have to pay for the rot developed over so many years
Ismaila:
How do you suggest this “change the culture/attitude” should proceed sir?. Project change management process is what you want to use on the habits of people whose inner soul is practically unreachable….hmmnn!.
Ajuyah:
Good question! Unfortunately after carrying out Risk Assessments even with the aid of softwares the stark reality is that the investor does NOT have the latitude to carry out the mitigation strategies (as per Nigeria peculiar problems that seem to defy International Best Practices)
It becomes a Go/No-Go Decision……. As not taking risk it itself is risky.
We have a big problem at hand and the discussions above is just an eye opener
In my own opinion, the mitigation strategies are to be implemented by the families, religious bodies, schools and the government taking the initiative.
What is National Orientation Agency (NOA) doing as highlighted above?
*Character is NOT optional*
Ezeh:
Very good advice. Based on the risk assessment, you may not even proceed with the investment. More so, when the power to enforce contracts and penalize unwholesome acts are not within your control
Agoro:
Sorry for your experience but there is way out. Based on my experience has a mini grid developer in Nigeria you have to plan to off take minimum of 50% of your generation capacity when developing your business plan. Land is the greatest asset in the village make sure you negotiate land in exchange for power supply before starting development no matter how profitable the business plan suggested.
Adekanye:
The ongoing discussion is really an expose of how sad our case has become as a people.
While Daberechi has enlightened us on practical steps, Tunde has shown us the pains taken by his team and the unpleasant experiences. These are not ego trips but knowledge sharing at its best. Thanks for the enlightenment.
I recently carried out a study in this area of consumers attitude to electricity supply companies. It is pathetic that the average person is not ready to pay commensurate price for services received.
I believe that there is urgent need for re-orientation of our people. The NOA has utterly failed and need to be rejuvenated. People must understand that there is a price for everything (including ignorance). Nothing goes for free in life.
Our basic education also need a rejig so that obligations and responsibilities will be understood by citizens. With that, people will not expect government to provide all things free for them.
The service providers are not finding things easy. While we may blame the DISCOS for not performing as expected, we should also visit the attitude of majority of consumers (not the few enlightened ones who are ready to pay).
The rot cuts across all sectors and the psych of our people need to be improved. This will encourage investors to render the required services optimally.
Adaju:
The discussion on mini grid is enlightening. I have being involved in the space too on M&E and assessment of mini grids. It is a mixed bag currently and still needs some support to grow and scale. As it is now, it will be a bit difficult to set up and run a mini grid in Nigeria on sustainable basis both pricing and off take without grants and funding supports. To achieve commercial viability of mini grids without grants or what is called Result-Based Financing grants, final price to end users will be too high which may also affect affordability. There are some studies already done that may bring insight into the sector in Nigeria. At the Renewable Energy Association of Nigeria, there is a Mini Grid Working Group with partners such as the African Mini Grid Association that is working hard to scale the market in Nigeria
Some project developers have also adopted a strategy of having anchor clients such as telecoms, rural facilities etc that takes up about 40% of the energy generated depending on location while focusing on productive uses of energy to boost revenue and enhance capacity to pay.
We have also seen situations where real energy demand differs from what the initial assessment and feasibility studies shows. Although tariffs of some mini grids are already cheaper then generators but most users want to compare with grid tariff which is currently not cost reflective in my opinion.
I must commend the efforts of the REA, development partners such as NESP, GIZ and investors in the market. I believe the sector is being opened already and with adequate awareness and further deregulation of electricity pricing, mini grid has a massive opportunity in Nigeria with potential 8,000 to 10,000 sites waiting for project developers
Ezeh:
The attitude of non payment for services is as a result of long held attitude and thinking that public utilities are to be given out free just like free education, free health services, free this free that.free fuel even free electricity. Any thing free is not appropriated by the receiver. So it is going to take a long time before we come to terms that there is no free food even in Freetown. People must be made to take responsibility for their lives. People must learn to cut their coats according to the size of cloth they have. You can’t go for instance to have 9 children and weep up sentiments that they have not eaten and expect me to provide free education ,free health services etc
Haruna:
@(Ezeh) The concept of democratic Work to earn a living, Pay taxes to have meaningful development and have a say in Government
Freedom of speech only based on conditions for sustainable development
Tunde:
There are many CEO of major corporations here in many spheres of project implementation and management.
I am sure their greatest headache in Nigeria is the people and the ugly corruptive system we have. You will do all the studies they do in sane climes, build up all the models and do objective analyses before moving ahead, but certain funny factors will start derailing the project. I don’t see our NESI can be profitable with the mindset of Nigerians. My daughter is in the industry and was slapped for catching a consumer who bypassed meter.
Let me give another anecdote. We were surveying for a new location and we saw this place with about 100 household and over 5 neighbouring villages. We started discussion with them and were excited about their responses.
We did a follow up and as part of our due diligence, we met the Kabiyesi of the town responsible for the village. The Kabiyesi linked us up with the ward’s youth leader who happens to be a Professor of Chemical engineering. During our follow up visit we had a meeting with the Prof & Kabiyesi’s COS.
During the meeting, they told us they wish this was a federal government project. They told us to be careful so that we would not loose our capital. They said there was a time that there was security challenge in the whole of that area and they levied every household N100 to pay vigilantes after series of meetings. After 3 months most of them stopped paying.
(Wahala they for our country!)
We need attitudinal reorientation in this country!
Duru:
In a society where those in authority allocate food, water and house to themselves and their family members, without providing same for ordinary citizens, then you leave the citizenry with only one choice, to cheat the system by any means possible.
The energy theft and unwillingness to pay for service is induced by our rulers and public servants. Nigerians have only learnt to survive amongst the fittest, especially with the fact that nearly 120 million of us struggling to eat daily.
Start the correction by removing all the unusual perks of office and illegitimate bogus allowances that politicians and some public servants enjoy.
When ordinary Nigerians see a level playing field, we will naturally adjust because nobody would like to be seen as an outlier.
Ebruke:
If we all agree we need power then we have to find a lasting solution. There always is a solution. Same people that find it hard to be civil in public but when they get abroad they comply! It’s there but we haven’t tried hard enough to make it stick.
Oyebanjo:
The only way to have electricity in Nigeria is to allow it to be done the way it is done in countries that have uninterrupted power supply
On this note the curtain was drawn on the subject matter from the foremost platform; Project and Procurement.
