Performance Appraisal of the Privatised Nigerian Electricity Distribution Sector: A Case Study

Abstract

Several reforms (towards privatization) have been carried out in the Nigeria's power sector in recent years, with the main goal of improving its efficiency and reliability. The reforms were believed to be the only hope of relief from the pains of unreliable and insufficient electric power supply that is so prevalent in the country. However, the perennial grid collapses, decreasing generation capacity, ineffective metering system and unreliable electric power supply, even after the implementation of the privatization policy raised some doubts about the effectiveness of the reforms. This study assessed the impacts of the privatization policy of the country’s electricity distribution sector on the electricity consumers using Benin Electricity Distribution Company (BEDC) as a case study. It examined post privatization performance of BEDC using quality of service delivery, metering/billing and financial competency as critical success indicators. A descriptive survey research approach was adopted, with questionnaires administered to about 710 representative sample of residential and commercial customers of BEDC. The self-designed questionnaire titled “Questionnaire on Performance Appraisal of the Privatized Nigerian Electricity Distribution Sector (QPAPNDS)” was used to elicit information from the sample. Three experts from Ekiti State University, Ado-Ekiti, Nigeria, validated the instrument. The data collected was analyzed using descriptive statistics (mean scores,  and standard deviation,σ) on a 4-point Likert scale, while the primary hypothesis was tested at a significance threshold of alpha=0.05 using a One-Way Analysis of Variance (ANOVA). The findings showed that Distribution Companies (DisCos) have brought no significant improvement on the quality of electricity supply in terms of service delivery, metering/billing and financial competency. In other words, there is no major improvement between what obtains before the reforms and after the reforms, except the successful unbundling of the old Power Holding Company of Nigeria (PHCN) into generation, transmission and distribution companies. The results showed a widespread failure to achieve the main objectives of the reforms (a low reform effectiveness). Hence, the reforms suffered a wide disconnect between institutional policy and field feedback implementation, leading the sector into a negative feedback loop of consumer distrust and under-funding. The study recommended removal of consumer-funded infrastructure investments, total eradication of estimated billings, mandatory provision of prepaid meters for all consumers, introduction of enhanced staff welfare packages (to reduce corruption), full implementation of a cost-reflective tariff system and an holistic review of the policy, for better performance. The study will be useful for DisCos and other power sector stakeholders, in enhancing the performance of the sector.