Nigeria plans to review power firms' performance next year

Nigeria's Bureau of Public Enterprises (BPE) has announced plans to conduct a performance review of the privatised electricity distribution companies on December 31, 2019. George Utomi, Director at Eko Distribution Company, shared insights on the upcoming review, highlighting key issues and challenges facing the sector. The review will be based on the performance agreements signed between investors and the BPE, outlining specific targets and goals to be achieved during the privatisation process. One of the major contentious issues expected to arise during the review is the metering target set for the distribution companies. The initial target of 1.7 million consumers over a five-year period has not been fully met, leading to calls for an extension and a reevaluation of baseline studies. This has resulted in revised targets for Aggregate Technical, Commercial, and Collection losses, with companies like Eko Distribution seeing improvements in loss reduction targets. The discrepancy in metering requirements, with a current estimate of close to 8 million meters needed, poses a significant challenge for the sector. Despite the financial constraints and regulatory limitations on capital expenditure, initiatives like the Meter Asset Providers program have been introduced to support rapid deployment of meters and improve performance metrics. Collection performance has also seen an increase across the industry, with companies working towards enhancing revenue streams. Looking ahead to the December 2019 deadline, the worst-case scenario for companies failing to meet performance targets could result in the BPE exercising the option to buy back assets for a nominal fee of one dollar. However, Utomi emphasized that the review process will consider broader industry challenges, such as the lack of cost-reflective tariffs and outstanding government obligations. Initiatives like the Rural Electrification Agency's solar projects have also impacted distribution companies' operations and revenue streams. Despite these challenges, Utomi expressed confidence in a collaborative approach towards resolving issues and improving the performance of the power sector. The upcoming review will be a critical assessment of the privatisation process and the effectiveness of measures implemented to enhance the sector's operations and service delivery. Stakeholders will be closely monitoring the outcomes of the review to assess the future trajectory of Nigeria's power industry.