Uzoma Erondu: The fraud (or schadenfreude) called Estimated Billing (Y! Naira&Kobo)

John, a friend of mine moved into an apartment in a sub-urban area of Lagos in the early months of 2013, and it turned out to be one without an electricity meter. However, he had no qualms with the legacy electricity bills as the Landlord was on top of his game in ensuring that monthly bills were settled promptly by the tenants.

His electricity bills started off being about N4000/month; his apartment was a 2-bedroom flat so he had no issues settling the bills. But month-in, month-out, the bills kept rising without a commensurate increase in his household appliances nor in the electricity supply. He then decides to write a letter to the local electricity utility complaining about the increase, and this is the response he got, “On account [123-456-7890], the load inventory taken is commensurate with the bill given to you.

We will however, like to advise you to apply for a pre-paid meter (PPM) by subscribing to our CAPMI scheme”. So, knowing that no investigation was done on his apartment by the DISCO to ascertain his load inventory, he protested this response by writing another letter, but nothing was ever heard from the Electricity Distribution Company (DISCO).

By the way, Credited Advance Payment for Metering Implementation Scheme (CAPMI) is an initiative introduced by the NERC – the regulatory agency, to bridge the metering gap wherein customers without meters can advance a payment to effect the purchase of meters.

So John’s situation went on for the next 2 years or thereabout and of course, the estimated bill kept rising without any increase in either his power supply or demand. And in blatant defiance of NERC, the DISCO never sent an estimated bill in accordance with the agreed methodology laid down by NERC.

It so seemed that the DISCOs (through the Business Unit Managers) after determining the units purchased by pre-paid meter consumers, simply deducted it from a set monthly revenue target, then apportioned the balance arbitrarily across board in a bid to meet already set performance KPIs, led mainly by revenue.

John then writes another letter to NERC and he got a feedback after two days “We however wish to inform you that we are not PHCN, but NERC, the Regulatory body of PHCN. Please be informed that you are to lodge your complaint at the first instance to: [the DISCO concerned].

It is when you are not satisfied with the outcome of the handling of such complaint by the Customer Complaints Unit (CCU) of PHCN or encounter delay in the handling of the complaint, only then can such complaint be referred to our office, or through the email address, with evidence that the complaint had earlier been lodged with PHCN. Thank you.” To be fair to the regulatory agency, at least they tried by responding within 48hours to an email. When you interact with lots of Nigerian public service institutions, you will acknowledge this is a rarity.

Fast-forward to February 2016, when the NERC issued a directive to unmetered customers not to pay disputed bills, John in his naivety thought that would solve his problem, but alas, he was wrong. The bills kept coming, and as the Landlord insisted that all tenants pay their bills (disputed or not), poor John had to pay and of course, the DISCO seeing that the same customer who complained kept settling his bills, did what a typical ‘Nigeria-n’ utility will do, “increase the bill”.

Nigeria can be a very interesting country in all ramifications. We tend to see a problem, know it cannot be fixed in a certain way, yet keep banging our heads on the wall in the hope that some miracle will happen. Take the case of the ‘pegging’ of the Naira, for a whole year, a country of over 170 million people kept on with a merry-go-round about how we needed to defend the Naira.

Not until we got to the rock-bottom-recession did we realize that we knew what the solution was. Sad to think that we tried every other thing but the ‘right’ solution, and after much damage to the economy, finally decided to do the right thing or as some will say, one of the right things.

In light of the above, the DISCOS have repeatedly said that they cannot fund the capital expenditure required to close the metering gap, yet we keep expecting some sort of miracle to happen. As recent as November 2015, the CEO of one of the most financially stable DISCOS repeated this assertion http://www.nigeriaelectricityhub.com/?p=3295, yet we trudge on, down the wrong road. How long before we come to realize and admit that the DISCOS cannot afford to close the metering gap given the huge capex requirement?

I quite agree that while bidding for the distribution companies, the preferred bidders had metering plans which were scrutinized and stood as one of the matrix in deciding their capacity. But the reality is that none of them can sufficiently meet the capex required to provide meters for their teeming ‘unmetered customers’.

And going back to the whole pre-qualification criteria, the DISCOs are not the only guilty party, the Government also made some promises which it failed and has continuously failed to keep. Nigeria is said to have an estimate of about approximately 50% of electricity consumers without functional meters. This definitely results in huge commercial losses for the DISCOS.

Some of these low-hanging fruits may fix this conundrum:

  1. Encourage a simultaneous roll-out programme of both the CAPMI and a de-regulated meter-purchase mechanism which gives potential consumers the ability to buy these approved pre-paid meters themselves. Meters are not as complicated as made to seem and certainly not as intelligent as some smart phones around the corner. So what on earth is there to a meter-purchase? As currently witnessed in the entertainment/pay-tv space where customers pay for decoders and licensed agents then fix and install, this modality could be adopted in the prepaid metering mechanism. The DISCOS should engage credible firms (and the NEMSA) with the requisite installation technical know-how and skills to partner with. A situation where DISCOS are solely allowed to handle the procurement, vetting, down to installation only breeds some sort of monopoly with its attendant inefficiencies.

DISCOS are by nature, geographical monopolies, so the chances of customers switching is almost non-existent. Mechanisms that further enhances their monopolistic tendencies can never result in a fair market where the customer is treated like the KING he is.

  1. Amend the Metering Code and/or the relevant regulation(s) to enable the above. If constitutions can be amended, then this should not be a herculean task to handle. Simple, and short.

 

  1. Revamp the CAPMI. The CAPMI has not bridged the metering gap, and unsurprisingly, it will not. A situation wherein a 3-phase meter costs about N68000($340) to purchase begs the question, in a country with over 87.2% living on less than $2/per day and with its minimum wage set at N17,500($88) how?. Invariably what this means is that a civil servant on the minimum-pay grade will have to set aside about 4 months of his salaries just to purchase a pre-paid meter. This is definitely destined-not-to-work. We need to create a flexible payment plan such that willing customers can pay in installments of 4 or 5 times, rather than the single/lump-sum payment of N68000. If gadgets and phones can be purchased via installments or credit finance in Nigeria, with the right financing structure, this can also work with prepaid meters; all it takes is the will and the determination. This should be a low-hanging fruit for the DISCOS.

Back to my friend, John. After being tired of the several and outrageous estimated bills, he decided to take advantage of the CAPMI scheme; and so he paid N68000 for a prepaid meter in March 2015.

Four months after payment he was yet to receive his meter, he eventually writes to his DISCO, noting that in compliance with NERC’s directive to customers who opt to procure meter under the CAPMI scheme must be metered within 60 days, failure in which the electricity customer will neither be billed nor Disconnected by the electricity distribution company”. On getting to the DISCO, he was told to calm down, after all, there were customers who had paid 6 months prior to himself and were yet to be metered. Not satisfied, he wrote to NERC, and true to its nature, it responded with the template answer “Please be informed that you are to lodge your complaint at the first instance to……”

Seven (7) months after making his CAPMI payment, the meter finally gets installed. He was at least fortunate, as many have gone as long as 12 months and beyond, between payment and eventual installation.

But that is not the end of the DISCO’s display of crass inefficiency; two, three and even four (4) months after installation of the PPM, estimated bills kept coming. Mr. John-the customer, then had to write to the DISCO, notifying it that his apartment had been metered and should not be issued with estimated bills forthwith.

This clearly is not just a case of mistake, error or fraud; this also has to qualify to be called Schadenfreude.


Uzoma Erondu is a finance professional with a bias for energy and infrastructure. He writes from Lagos.

Op–ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija

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