kayuseful:


I read your comments and arguments with that agbo guy
You both made salient points

You talking about "cost-reflective" tariff. That is a big word
Who determines what is costreflective and what's not, the discos?
And does it mean electricity must become a luxury before it's reflective?
Don't side with the discos because they're just being a smart business man trying to push whatever favors them. They could make profit and not declare it. Some discos are actually cashing out, but act like broke because they want more.

What about people not paying for power? We are not ready for that conversation yet. Government agencies, military barracks etc are all on this table. If discos can achieve 95% remittance rate, the current tarrif rate isn't bad

We compare with Telecom sector, but forget there's competition over there which helps to realize that true cost. Discos hav a monopoly and won't let you know the true cost. They'll leave you to keep calculating how much power costs in US, Europe, in dollars, anyway the narrative favors them

Well if the discos were cashing out they would not need extra funding from government in terms of subsidy. Plus they won't be in debt. And they would be paying their taxes. And they won't declare force majeure like the NE disco that did.


Plus what you said about the discos was said about the telecoms in the first five years of their existence. Till the benefits slowly started coming in. Telcos were once accused of profiting at our expense and setting sky high prices for poor service.

Upthread I posted a link to an independent paper by PwC. Does a better job explaining the problem.

Bankowner:
I wonder why NEPA was sold in the first place.

Because then too, they were that useless. Then, if they remained, prepaid metered thing won't be achieved and as with all government owned assets, it will be abused, misused, and stagnant.

It's not that there isn't a little progress but because it's still centralized and treated with government corrupt spirit is why we still having issues.

Bedc!!!! I knew they are number one.....that woman and corruption.

beardedboy:

Do you know since when they've been on it?
Do you know how much has been spent on it?

Some of you just talk as if government only needs to snap fingers when they want to get something done.

In the public sector, things happen very slowly due to bureaucratic bottlenecks. It's even worse in a country like Nigeria where patriotism is almost absent.

The second name for that bureaucratic bottle is called corruption. Ukraine has 6 nuclear plants that power the entire country and some part of Europe. Each plant is strategically positioned to serve a certain part and they are autonomous of each other and operations are done in a transparent manner such that systems are optimal and generation is maximal.

Not have pockets of generators scattered all over only to be sent to a central grid which then is redistributed. The cost of operating like this can never be cheap. Bureaucracy can never be simple. The value chain is a breeding ground for corruption.government wants to be in the middle of generation and distribution. Why not just generate and sell directly to discos...

Like fashola once said it's not rocket science

these people are the most USELESS. all they do is APPOINT, APPOINT, APPOINT. they never SACK, SACK, SACK

29kobo:


Well if the discos were cashing out they would not need extra funding from government in terms of subsidy. Plus they won't be in debt. And they would be paying their taxes. And they won't declare force majeure like the NE disco that did.

They're mostly cashing out for their personal pockets, but left the business in debts. That's why they refused to invest in the biz. They're running it like they could be asked to vacate anytime.
BTW not all the discos are struggling. Especially the ones in industrial areas, those ones are super rich

Plus what you said about the discos was said about the telecoms in the first five years of their existence. Till the benefits slowly started coming in. Telcos were once accused of profiting at our expense and setting sky high prices for poor service.

Like I said, telcos comparison won't work here because discos are a monopoly.
See what the prices were when it was only MTN we had. See how they crashed their prices when Glo came onboard

It is difficult to implement good policy in Nigeria except it has loopholes where politicians can cash out.
See Vat, see Npower,

.

29kobo:


And what I am pointing out is that a lot of the institutional inefficiency is caused by low prices.

Prices that are too low to make a sustainable profit.

When that happens, abuse, stealing, sabotage and inefficiency is bound to follow

At least if prices are cost reflective and government stops paying counterpart funding they would be forced to work hard like beavers for their money. And they will ensure things work well because at the end inefficiency would harm them more. Not like the current status where government was dashing them money to cover their losses.

Under what principle of management does it say that low prices cause institutional inefficiency
This is why I always contend that you don't even know what you're talking about
Is pricing one of the determinants of organizational strength or corporate strength?
If this your postulation is correct, can you explain what led to bank failures, 2008 global financial crisis, the Chrysler scandal, the ExxonMobil scandals etc.
If you say government funding is bad for business, do you also agree then, that the bailout given to Wall street in 2008 was a bad idea?
Do you agree that the bailout given to banks in Nigeria in 2009 was also a bad idea?
What about the existence of Amcon? Do you agree that it is also a bad idea?
I hope you realize that the model of running Discos in Nigeria is actually anti-capitalist because it exposes one of the weakness of the capitalist system, i.e monopoly. Each Disco have market monopoly in their areas of jurisdiction. This basically leaves the consumers at their mercy. That in itself is a recipe for institutional inefficiency according to the capitalist playbook.
Note lastly, that if profits drive institutional efficiency, the corporate governance code will not have a board made up of shareholders stay away from the general running of organizations because they are the ones with the largest stake in ensuring profitability and not the executives. But it is because the corporate code recognizes that in the pursuit of profit, shareholders can be prone to commit atrocities that harm the long-term health of the business like we saw with Etisalat, the shareholders are not involved in the management of their organizations.

Bankowner:
I wonder why NEPA was sold in the first place.

Ask Atiku and his PDP brother Jonathan. They sold it for kick-back purpose nothing more. They sold power to people without any idea what to do to help power stability in the country. It's the reason we live in darkness in a country that has been exporting oil since 70's. Every Nigeria leader past and present should be ashamed of themselves.

Back to square one.

Agboriotejoye:

Under what principle of management does it say that low prices cause institutional inefficiency
.

Under the principle that businesses have to earn a profit.

I work for a private concern. If we operated on low prices, we would be too broke to pay salaries, and maintain the kind of service that rich and poor people who patronize us are used to.

I'm going to be a bit harsh here...but you want the power sector to charge low prices because you believe it helps the poor. I don't think so, and it took me some time to get to that view. Twelve years ago, I WOULD have agreed with you, but my reading, and my eye opening experiences mean I cannot. And if that makes me ignorant and bad in your eyes, so be it.

I fully understand where you are coming from. I myself would love a situation where we sell power in this country at N10 per kwh for metered customers. But we won't have money to pay for maintenance, gas, equipment, worker welfare in the sector, security, and so forth. The view you are espousing...cheap power....does not work in real life. Either businesses earn a profit or they don't. You can sort out things like monopolies and company later on. But when I see Buhari do price controls, it annoys me a lot. Sorry, you can disagree with me, and call me ignorant, but when you sell at a loss, problems will start.

At the end, we must agree to disagree here.

And yes, I agree , bad management. But this is ultimately exacerbated by lack of a cost reflective tarrif.

We don't have light because we forced our power sector to operate at a loss because 'we had to beat oppressions.'

The society that lives on subsidies and freebies, is always responsible for a corrupt governance.”
― Dr. Ashok Anand

Clueless govt

kayuseful:

They're mostly cashing out for their personal pockets, but left the business in debts. That's why they refused to invest in the biz. They're running it like they could be asked to vacate anytime.
BTW not all the discos are struggling. Especially the ones in industrial areas, those ones are super rich

Well, according to the PwC report on the liquidity issues in our power sector, all the power companies are struggling/were struggling. I don't know where you got your info from , but at least I have a formal report, independently prepared, that tells me that they are struggling.

Like I said, telcos comparison won't work here because discos are a monopoly.
See what the prices were when it was only MTN we had. See how they crashed their prices when Glo came onboard

[/quote]

And Glo was able to come on board because the incentive of being able to set their own price, rather than have government set it for them, was there.
If it wasn't, GLo won't have been there. Adenuga did take a loan to start his business...and government setting prices as low as they were setting for mtel (one of many reasons why it initally collapsed) would have detterred him.

P.S Read the PwC report on the liquidity crisis in the power sector here.

See page 18 of the linked report.

29kobo:


A summary of what I have been saying can be found in a comment from 2018 by Kingsley Moghalu...

At the time , power cost N20-30 per kwh. Moghalu stated that it was costing us N53 per kwh to produce that single unit.

Since then, the price of power has increased, but the cost of production has increased more than the cost of power (PwC put it at N83 per kwh in 2019).

The guy you quoted, like most Nigerians, and you too, is angry because it means high prices for Nigerians. And he is right. I admit that my point essentially means Nigerians have to pay high prices for power. But then again, charging cheap prices for power in the name of helping the poor...means that you run huge losses, and as has been seen...government has to take over again.

If you do not get it...well, okay.

Even if you people charge #500/kWh the inefficiency will still be there, remember diesel, kerosene was deregulated long time ago,they said forces of demand & supply will bring it down,where are d suppliers today...no kerosene no diesel,no refineries.

29kobo:


Which is all very well, until it is time to recoup their investment.

Keep in mind that any price government sets for the discos is always below the actual cost of producing one unit of power, then all I have said begins to look understandable. It took me some time to realize this.

Please work out all cost of producing one unit of power
From 1.hydrogenerator
2.gas turbine generator.

bizzibodi:

Even if you people charge #500/kWh the inefficiency will still be there, remember diesel, kerosene was deregulated long time ago,they said forces of demand & supply will bring it down,where are d suppliers today...no kerosene no diesel,no refineries.

That's because petrol is still subsidised...therefore prices of diesel and kerosene have to be high in part to offsett the loses from selling fuel at N175 (According to the guardian, it should be N400 per liter if subsidy went.). Of course the main reason also is high oil prices.

The thing is, if subsidy on petrol went, the looting going on in the name of inflation of petrol consumption, the smuggling , and the losses..would end because people would now bring in what they can sell...but since Nigerians want cheap fuel...we tolerate all that .

bizzibodi:

Please work out all cost of producing one unit of power
From 1.hydrogenerator
2.gas turbine generator.

The PwC paper put the cost reflective tarrif at N83

In 2018, Moghalu put the cost of producing one kwh in Nigeria at N53 , at the time it was being sold at N20-30.

P.S Problem is, no one has accurate values. The paper linked here puts it between 0.053-0.108 dollars per kwh , using gas...but that was at 2017.

In my own point of views!!!! Government should prepare for change of privatization ownership to a serious Technical companies than to manage it bcs government can not handle any company like Disco with the level of corruption in politics and Nigerians at large. I was surprised for poeple blaming present administration for the improper privatizations done in the past . Foundation determines how long and quality of things will be . Disco was privatized by politicians for the politicians without Ethical consideration.

29kobo:


Under the principle that businesses have to earn a profit.

I work for a private concern. If we operated on low prices, we would be too broke to pay salaries, and maintain the kind of service that rich and poor people who patronize us are used to.

I'm going to be a bit harsh here...but you want the power sector to charge low prices because you believe it helps the poor. I don't think so, and it took me some time to get to that view. Twelve years ago, I WOULD have agreed with you, but my reading, and my eye opening experiences mean I cannot. And if that makes me ignorant and bad in your eyes, so be it.

I fully understand where you are coming from. I myself would love a situation where we sell power in this country at N10 per kwh for metered customers. But we won't have money to pay for maintenance, gas, equipment, worker welfare in the sector, security, and so forth. The view you are espousing...cheap power....does not work in real life. Either businesses earn a profit or they don't. You can sort out things like monopolies and company later on. But when I see Buhari do price controls, it annoys me a lot. Sorry, you can disagree with me, and call me ignorant, but when you sell at a loss, problems will start.

At the end, we must agree to disagree here.

And yes, I agree , bad management. But this is ultimately exacerbated by lack of a cost reflective tarrif.

We don't have light because we forced our power sector to operate at a loss because 'we had to beat oppressions.'

The society that lives on subsidies and freebies, is always responsible for a corrupt governance.”
― Dr. Ashok Anand

This is what shows you're out of your depth.
Just google what institutional efficiency or business efficiency means and see how way off the point you are.
Institutional efficiency does not have anything to do with price. If anything, it is a cost saving measure which if properly implemented can drive down prices and expand market in the long run. Efficiency has to do with maximizing your industrial inputs to produce the best optimal outputs. It involves driving down costs and not just cost in monetary terms, but cost in terms of all the inputs required to run the business.
An example is AEDC that I'm familiar with. AEDC has maintained all the offices it inherited from NEPA and not only that, opened some more. Not only that, in some remote areas, AEDC officials collect payment for bills from the villagers and pay on their behalf. Now, the question is, why open more offices as collection points when you can actually integrate your bills payment system using USSD or online platforms? The reason for that is inefficiency.
If we're to go with your stand, the cost of that inefficiency will simply be transferred to the customer to pay since the important thing is to have tariffs that can cover costs. Note that, the monopoly the Discos enjoy helps them in this regard since they don't compete with anyone and are not therefore being pushed to examine and modify their business models.
You seem to live in your own bubble and refuse to hear the other side. I already made clear that I am not against tariff increase per se, but more against arbitrary increase with no commensurate improvement in services. Another example. If your transformer has a faulty component, which has thrown your area into darkness, the Disco engineers will tell you if they are to wait for the Disco to fix it, it will take months cause it requires them to make a request to central office which takes months to process and provide the faulty parts. Therefore, the customers gather money among themselves and pay. This is another example of the inefficiency that the customer pays for because it does not stop the bills from showing up at the end of the month. So you see that due to the monopoly they enjoy, the Discos don't even need money to pay for repair, maintenance and servicing because the customers shoulder that bill themselves. The last one that occurred in my area cost us N400,000. Let me ask if the private concern you work for gets such freebies and subsidies from their customers as the Discos you're advocating for do. That's the effect of their inefficiency and the monopoly they enjoy.

Don't forget that the model you're against does not say tariffs should not increase. Rather, it says the tariff increase should be based on performance. I wonder why you're against that to be honest. Wouldn't you want Discos to improve their performance? And given the monopoly they enjoy, should this not be a welcome idea to ensure they don't just run away with profits they do not merit. By the way, which Discos has ever come out to claim they don't make profit. Give me just one with a link to back it up. Discos are at liberty to reject load they can't pay for. So only a suicidal Disco will take load it can't pay for. Any load they reject is paid for by NBET.

Lastly, note that even in US, the bastion of capitalism, monopoly is frown at, which is why they have the anti-trust commission. Read up on this. Arbitrary pricing and pushing business inefficiency on customers is also frowned at. Which is why they have FCCPC which Nigeria has also copied.

You must be dumber than I think if you didn't see the irony in my comment. It's not just about jumping to comment and insult people but using your tiny brain to first understand the import of the message you're responding to.

SeunDAssLicker:


Then you’re unintelligent for wondering since almost 20years. You can actually do a research for years with Nigeria’s electricity problem. Anyone still wondering is a dunce instead.

The PwC paper put the cost reflective tarrif at N83

In 2018, Moghalu put the cost of producing one kwh in Nigeria at N53 , at the time it was being sold at N20-30.

P.S Problem is, no one has accurate values. The paper linked here puts it between 0.053-0.108 dollars per kwh , using gas...but that was at 2017.

So you are d nobody,you seem to be into many things,see your moniker in d agric section.