Enhancing power distribution in NigeriaSeptember 21, 2021
Folake Soetan, CEO of Ikeja Electric (IE), talks to The Energy Year about how the company is enhancing its distribution performance and services to customers and the importance of the National Mass Metering Programme. IE operates Nigeria’s largest power distribution network.
What position does IE hold in the distribution arena and what initiatives has it introduced to enhance its performance?
Privatisation of the sector materialised in November 2013, leading to the creation of 11 electricity distribution companies known as DisCos. The privatisation scheme aimed to improve efficiency and also ensure that power is widely available across the country. Ikeja Electric was the biggest DisCo even before privatisation, and what number one means for us is not only the population we cover but being the best in systems and the best in people in terms of skills, knowledge and out-of-the-box thinking.
The distribution space has encountered several obstacles over recent years. At IE, we have managed the difficulties by being more innovative and creative and leveraging our expertise to achieve improvements, and this simply speaks to the type of talents we have in the system. Accordingly, we have tried to secure the required investment from a financial and infrastructural perspective. Now, we are aiming to harness three key elements: manpower, turnkey investment and technology.
The challenges besetting the distribution sector are diverse. Lack of liquidity among the DisCos is a common theme and this can be traced to the absence of commercial pricing of electricity. The need for a more cost-reflective tariff is elemental, as this allows us to attract funding and make the necessary investments to upgrade the distribution network. Regardless of this, we have made targeted investments to enhance our performance.
To this end, one of the very first initiatives was to attract the best people with the right skills for critical roles and to do so we had to ensure the right working environment so we began a massive rehabilitation of our offices. We created a Young Engineer Program that brought forth young talent. Another one we have set forth is an initiative called the power allocation model. This model is aimed at maximising the energy allocated to Ikeja Electric from the system; it aids the rollout of a targeted investment scheme. Consequently, we began to focus on areas where we could minimise losses.
Moreover, we also try to be more efficient in our payment channels by offering alternative payment schemes to make it easier for the customer. We introduced online billing and payment systems such as e-billing, which also made the whole process more accountable and transparent.
All these initiatives are part of our “customer first, technology now” approach, under which we’ve also introduced a direct WhatsApp helpline which the customer can use to engage us. Not only that, our customer-centric approach has led us to develop applications on social media to improve customer experience – for example, we have an app, iSafe, which is dedicated to the prompt reporting of safety hazards in our network for speedy resolution. We are also big on data and there are technologies we use to ensure that we are more commercially driven, efficient, safe and compliant with data protection standards.
Another initiative which we introduced at the beginning is customer enumeration and asset mapping. As a company, it is key for us to understand who our customers or assets are and how they are classified, so we carried out a comprehensive enumeration exercise called the CETAAM [Customer Enumeration, Technical Audit and Asset Mapping] project. It is a GIS initiative that combines customer data and mapping out technical assets and their locations within the network to help determine network needs and close revenue leaks. This enumeration technique gives us the state of the asset and helps us with planning our distribution network effectively.
What coverage does the company’s distribution network have in Lagos?
Ikeja Electric is the largest DisCo in Nigeria, with a targeted market distribution share of 15.2% of generation. We have surpassed this target recently but with complications from the pandemic, we are maintaining it at 15.2%.
When it comes to Lagos, there are two DisCos: Eko Distribution Company and Ikeja Electric. We cover over 65% of the industrial and commercial customers, as well as 12 of the 20 Local Government Areas in Lagos. Many of the industrial companies on the mainland, for example, are under our coverage area. Moreover, we have six business units, namely Abule Egba, Ikeja, Akowonjo, Ikorodu, Shomolu and Oshodi, and have 17 transmission substations.
Tell us about your Bilateral Power Scheme and the success it has had.
The Bilateral Power Scheme guarantees an enhanced level of power supply and associated services to customers, including a minimum of 20 hours of daily electricity supply based on a mutually agreed tariff, under a “willing buyer, willing seller” agreement.
The Bilateral Power Scheme was first launched in August 2019 in the Magodo Phase 2 area of Lagos and has subsequently been adopted in some other residential areas we cover. The initiative has surpassed all expectations, delivering quality services to our customers as part of a greater goal of “bringing energy to life.”
How important is the National Mass Metering Programme and how is it being rolled out?
Metering is a responsibility of the DisCos and they implement their metering strategy based on their capacities. For us at IE, our metering strategy starts from the upstream. We get power from the Transmission Company of Nigeria (TCN) feeders, so we need to be sure that all the trading points are measured with smart meters to account for the energy we receive. Today, we have pretty much all our power coming from metered feeders and the distribution transformers. This was our priority before rolling out our customer metering system.
In the last 12 months, DisCos have found it difficult to get meters. This is mainly due to forex, with import levies increasing from 10% to 45%, and the capping of meter prices by the federal government. This has had a direct impact on the cost of imported meters, so providers have not been bringing in as many meters as before. This, in turn, has caused metering schemes to stall. So as a way of response, the federal government introduced the National Mass Metering Programme (NMMP) on October 30, 2020.
The NMMP is an effort to bridge the country’s metering gap and cushion the impact of the service-reflective tariff on electricity consumers. The programme, therefore, aims to increase the rate of metering in the country. It is also expected to reduce collection losses as well as increase financial flows for DisCos. Furthermore, it seeks to eliminate arbitrary estimated billing, improve network monitoring capability and provide data for market administration.
The Nigerian Electricity Regulatory Commission (NERC) has further issued an order capping the amount that unmetered non-maximum demand customers should pay. This means we cannot charge this class of customers more than a certain amount. So when devising our metering strategy, we must meter all those customers that are covered by NERC’s capping order first.
Secondly, the metering strategy is targeted, in order of priority, in accordance with the five different bands – the first band has a minimum of 20 hours per day, the second 16 hours per day, etc. So our priority is to optimise the different bands, from the highest-hour bands to the lowest-hour bands to minimise our losses. As a final target, we will close out metering in the areas where customers can least afford to pay.
What are your short-term and long-term strategies?
Ikeja Electric is a regulated business so our targets are very clear. Our goal from an ATC&C perspective is to reach 15.2%. We are proud to say that we ended the 2020 year with 29.8% but the pandemic really impacted us – there were at least three months where we couldn’t even collect revenue. So, our goal still remains 15.2%. Another target is to continue to be a customer-centric and customer-focused organisation, as this is our mantra. This means that we want to improve our customer service delivery. On an organisational level, our goal is to optimise revenue across the board and for this, policy management is crucial.
Moreover, we intend to concentrate on workforce productivity and effectiveness. We are constantly trying to ensure that we have clear and smart key performance indicators (KPIs) that we can track.
Again, culture, here, is elemental. We want to drive a culture of performance, respect, collaboration and innovation. A lot of our initiatives are tied to encouraging creativity and innovation; this is being driven by both legacy staff and young talent. Our young talents are the future and we want to keep attracting and retaining them.
As for our long-term goals, IT transformation is critical. Our focus is to leverage technology to achieve our business goals, while improving efficiency, enhancing customer experience and optimising revenue. Technology is the key to all this.