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 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.
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