Uncovered: How desperate homes, businesses bypass meters in massive electricity theft

With rising electricity tariffs, households and businesses in Nigeria are increasingly turning to illicit means to manage their soaring utility bills. GODFREY GEORGE, in this investigative piece, exposes the hidden world of power theft, exploring the methods used to bypass official systems and the broader implications for Nigeria’s energy sector

Tangled wires crisscrossed haphazardly at Mrs Ufuoma Dominic’s fabric shop in the Ketu-Ikosi area of Lagos State, creating a chaotic and messy electrical setup.

The mess of cables was too visible to be ignored and resembled a macabre dance of wires across the walls.

Two junction boxes stood out; one featured a changeover handle, while the other housed a light bulb and switch.

To the untrained eye, it might seem the switch controlled the shop’s lighting, but it did not. Instead, it served as a discreet indicator that the shop was bypassing its installed prepaid electricity meter, tapping directly from the outside wooden pole.

On that Saturday afternoon in May, Ufuoma seemed agitated, scolding her workers for failing to switch over from the metered connection to the ‘direct’ (illegal) one for three days.

“Do you people want to kill me? I spend N3,000 every day on power alone. What do I have in this shop if not the sewing machines and this small fridge?” she exclaimed, gesturing towards a deep freezer quietly humming in the corner, where she stored her mop stick.

“You people know how I suffered to get this meter so I can escape this NEPA (Disco) people from disturbing me with crazy bills. Now, imagine what you have caused me. The N15,000 that I recharged and meant to manage for one month, you people have finished it in three days because I travelled.”

As our correspondent tried to calm this owner of a well-known fabric and tailoring business in the area, she retorted, “Sir, don’t mind these girls,” rolling her eyes at her employees from a distance.

“They want to kill me. You know how these Band A tariffs are, and how we now pay so much. In my house, we spend nothing less than N5000 in just two days. We are just a compound of two flats.

“My husband is based abroad. I just have two kids. The other family is a single father with his eight-year-old. We are almost never around but, somehow, we magically exhaust N5000 in two days. I had no choice but to get some help.”

Asked who helped her with the illegal connection, she said, “My brother, it was the same NEPA people, too, who did the thing (illegal connection) for us o.

“One of my friends in the area told me of one guy, who came and did the thing for his compound people. He was the one who helped me, but he warned me that if I got caught, I was on my own.

“So, we know how we run things here. Almost all of us in this area, that is how we do it o! If not, where do we have money to buy electricity in this economy?”

According to Ufuoma, not making any sales throughout the day added to her frustration.

Visibly frustrated, she said, “Is it not when someone has eaten that they would think of buying new fabrics or making new outfits? Do you think it is easy? I pay several levies here, especially those from the local government.

“My shop rent was increased from N400,000 per annum to N550,000. That is a N150,000 increment. How am I expected to cope?” she queried as she brought out some fabrics for our correspondent to select from.

On May 24, 2022, a Nairaland User, XWizard, confessed on the microblogging platform to tampering with his meter and getting caught by officials of the Ibadan Electricity Distribution Company.

He wrote, “Yesterday (May 23), I was caught for bypassing. I wasn’t at home, so before I got back, they had cut down my wire.

“My neighbour wouldn’t let them take away the meter and wire.

“As soon as they called and told me, the first thing I did was recharge the meter online, hoping I would have a chance. But when I got home, I saw they had opened the meter.

“I’m sure our people would have taken enough pictures of the tampered meter; some of them might even mix pictures as evidence.

“They left a letter for me, and on the back of the letter, my last recharge was noted as being about eight months ago, along with a phone number.

“I don’t know what to do. I haven’t made any moves yet, but I’ve corrected the bypassed meter.”

Several persons on the thread stated that it was a ‘normal thing’ and asked him to simply call the officials to ‘negotiate’.

Another user who posted anonymously claimed that he was in a similar problem but resolved it by bribing his way out.

“Bro, there is no need to fear. Just call the number behind and speak to him outside work hours. This thing na normal thing! Everybody dey do am. But, next time, try dey buy light, even if na once in three months. These guys monitor these things,” the user posted.

Another user with the name, MadamTuno, wrote, “Yes, ordinarily you’ve committed a crime under the new NERC regulations. Instead of being arraigned in court, I suggest that you visit the Disco office in your area as soon as possible.

“Present yourself, but don’t admit any wrongdoing yet. Let them confront you with the details first. Since you already acknowledged that you made a mistake, maturely ask for the way forward.

“Begin negotiations on how to officially reimburse the Disco in installments. While I personally do not condone giving or accepting bribes, if it’s an option you consider, you might want to explore it.”

Perfecting electricity theft

To understand how electricity theft worked, our correspondent spent two months with a source in his CMD home in the Kosofe Local Government Area.

The source had hinted to this reporter during an online conversation that his compound had agreed to illegally ‘tap’ power from the pole, bypassing their meters. This was after our correspondent asked how he was coping with the increase in the electricity tariff.

On the first day of the meeting, an electrician, one Moses, who claims to work with Ikeja Electric, was contacted.

On arrival, he assessed the situation and with a stern look, immediately gave an estimate of what it would cost.

“Na 50k una go pay. That is the normal money for direct light,” he blurted.

He also noted that the compound was to buy an electricity unit worth at least N35,000 to recharge their meter before the connection would be done.

As an insider, our correspondent watched from a safe distance as the electrician performed his magic.

A ladder was dragged in through the black gate by a lad, as Moses, with precision, opened and tampered with the metre box.

He skillfully climbed up the pole, made some markings and work began.

Minute by minute, he tickled with the wires, squeezed their edges and bound them together with duct tapes, connecting them automatically.

The sight looked scary, as the wires were bare, but that did not seem to matter to any of the men who patiently watched.

After a few minutes, Moses asked that the light be turned off from the junction box.

He reconnected a new changeover switch, with up being ‘direct’ (illegal) and down being the metered connection.

It was meant to be a test-run, first for just a week, and our correspondent watched as the residents used electricity they were not paying for.

After a few days, on Sunday, May 16, 2024, power suddenly went off in the middle of the night.

After several hours of waiting, one of the neighbours (name withheld) posted on the WhatsApp group that it seemed the connection had an issue.

Moses was called but he did not seem to respond to the calls, according to the neighbours.

After two days without power, another neighbour, a mother of three boys, (name withheld), asked that a new electrician be brought in to run a check.

The new electrician, according to the source, found out that the connection was not properly done and that the compound had a debt of N30,000 on one of the meters used for the connection, which he advised that they pay.

“The electrician did not connect this thing well o. See as e do am na. Ko da na! (It is not good!) He is not supposed to open this box. It is the one on the pole that he is supposed to open and adjust from. He adjusted the wrong thing,” he said, asking to be ‘mobilised’ (paid) to carry out another connection.

“Na still N50,0000. That is the same money that you will pay. It is like that everywhere. I will collect N30,000 because of your previous experience.”

The compound of six flats paid N5,000 each and a new connection was done that night.

For three weeks straight as our correspondent was on and off the premises, the residents did not pay for power.

Also, officials of the Ikeja Electric did not suspect foul play when they came. As soon as they arrived, they were directed to the meter, which they opened and after inspecting, left the premises.

Speaking with a female neighbour, whose home doubles as an office, she said, “It is the same thing we did in my family house around the Egbeda area. Even my fiance’s people in Oworonshoki did the same thing. Nobody can pay this high tariff.”

On June 3, 2024, our correspondent tipped off a group of IE officers, who had come for their routine checks, of the illegal connection in that compound and they stormed the area in the morning.

Unfortunately, the residents had left the changeover in the ‘direct’ (illegal) connection.

As the officials checked the metre, there was no indication of power supply but there was light in the compound.

“What light are you using? What light am I seeing?” the official asked angrily, peeping through the closed gate leading to the compound, threatening to seize the meter as evidence.

Our correspondent, watching from a distance in the IE van, saw as one of the neighbours was served a letter and asked to visit the office at the Aladelola Close, Ketu, for questioning and clarification.

One of the officials, who did not want to be named because he was not authorised by his bosses to speak to the press, thanked our reporter, adding that the company was losing a lot of money to energy theft.

“We are tired of complaining. Many Lagosians don’t pay for the electricity consumed. They bypass their meters, sometimes, manipulating their bills. We will not stop until we clamp down on them all,” he said.

Six flats, no bill in nine months 

On Tuesday, July 23, 2024, while about to carry out another round of enforcement, our correspondent was called by one of the officers to join the team in the Alapere area of Lagos State.

A troubling revelation unfurled – A compound of six flats bypassed their meter and had not been paying for power for over nine months.

“From what I can see here, the last time they bought power was around September or so last year. Up until today (Tuesday), these guys have been using free light. How will the system work?” he queried.

One of the residents, who refused to disclose his name when approached for an interview said, “I don’t know what this man is talking about. We don’t use their light. We have our own generators and we use them. We just decided that we won’t recharge their meters again. Is that a crime?”

However, another resident, who said her name was Nnenna, sang another tune, contradicting her neighbour.

She said, “This thing is not supposed to get to this level. Oga journalist, na all of us dey this Nigeria. Help us beg your people. We are together. Make we settle this thing.”

The angry officers served the compound a notice and left in their van with our correspondent.

Privatisation of power sector

The privatisation of the power sector in 2013 brought about the division of Power Holding Company of Nigeria into three, namely; the Generating Companies, Transmission Company of Nigeria and the Distribution Companies.

To understand the extent of the detrimental effect of electricity theft on the power sector, the link between the three and power efficiency must be established.

The GENCOs are responsible for transforming hydro and gas power into electricity and transmitting this electricity to the TCN; the TCN uses its transmission grid to collect bulk electricity from the GENCOs and transmit it to the Discos; and the Discos buy electricity from the TCN for onward distribution to consumers for a price (tariff).

While the GENCOs and Discos are privately owned, the TCN is owned and controlled by the Federal Government.

Privatising the power sector was premised on the need for constant and adequate power, which is a prerequisite for promoting industrialisation and economic growth.

On this basis, the expectations from privatising the power sector included increased efficiency in the generation, transmission, distribution and billing system.

Ultimately, privatisation was expected to reduce the power sector infrastructure deficit and ensure efficient distribution. However, the expected benefits of privatisation have been limited.

The GENCOs average electricity generation stands at about 3,000 to 4,5000 MW compared to Nigeria’s installed generating capacity of 10,396 MW.

Limited access to foreign exchange as well as unfavourable exchange rate, are among the major threats to power generation.

According to latest World Bank figures, Nigeria’s average electricity consumption per inhabitant is only 150 kWh per capita, which is one of the lowest in the world.

High and regular system collapses, inadequate manpower to ensure proper maintenance of transmission equipment, and the continuous vandalisation of transmission equipment have contributed to the low electricity consumption per inhabitant.

Also, the DISCOs are said to be in huge debt and are poorly funded.

This, our correspondent gathered, is due to poor revenue collection framework and inefficient supply from the national grid.

Further, the Federal Government and the National Assembly have asserted that the privatisation process has not worked as expected.

The government also agreed to the need for urgent actions in the power sector, which will involve the review of the privatisation process.

The Federal Government has undoubtedly taken vital steps in resuscitating the electricity sector – from privatisation, intervention funds, meter procurement, and investment in new power plants to mention but a few.

However, experts argue that there is still much-needed improvement in the sector.

Energy theft

As electricity tariffs surge in Nigeria, businesses and households are finding increasingly desperate ways to cut costs.

Amidst the financial strain of rising utility bills, a shadowy economy has emerged, where the quest for cheaper power drives individuals and enterprises to bypass the official channels of electricity distribution.

This underground economy, fueled by widespread power theft, involves illegal connections directly from utility poles and tampering with metering systems.

From scaling electricity poles to hacking meters, the practices not only undermine the financial stability of electricity distribution companies but also compromise the reliability of the national power grid.

While there are other challenges confronting the power sector in Nigeria, electricity theft confronting the Discos poses a much greater challenge.

A safety expert and engineer based in Benin City, Edo State, Mr Miracle Morgan, defines energy theft as the criminal act of using electricity without paying for it.

According to him, it includes but is not limited to rigging an electricity line from the power source by bypassing the meter, unlawful direct connection to the distribution source, tampering with the meter for lower readings, billing irregularities by using employees of electricity companies and unpaid bills.

“The challenge of electricity theft therefore, must be put into consideration to the needed improvements in the power sector as it will boost supply in the nation,” he said.

According to research carried out by four researchers – Augustine Osigwe, Chukwuemeka Onyimadu, Chinedu Ikpeazu, and Adaobi Ofordeme – in their work titled, ‘Electricity theft in Nigeria: How effective are the existing laws?’, there is an overwhelming concern that if electricity theft is not controlled urgently, it will contribute immensely to a continued cycle of mounting debts and inefficiencies for not just the DISCOs but also the GENCOs.

They wrote, “There is an estimated average loss of about N21 billion annually in the power sector to energy theft.”

In 2013, for instance, Sustainable Energy for All ranked Nigeria as the 165th out of 195 countries in terms of electricity supply.

Discos have argued that electricity theft is one of the leading causes of the liquidity crisis in Nigeria’s electricity supply market.

It also claimed that a relatively large number of electricity consumers do not pay for electricity used, resulting in significant financial shortfalls.

Nextier Power’s discussions with DisCos reveal that about 10 to 18 per cent of the aggregate revenue losses are attributable to power theft.

Issues on Electricity Theft in Nigeria Electricity theft is a serious problem for the entire value chain of the power sector.

A safety expert and chief electrical officer in an oil and gas servicing firm in Port Harcourt, Rivers State, Terry Promise, stated that theft of electricity increases prices for customers and reduces safety.

Speaking to our correspondent, he said, “Power or electricity theft leads to misallocation of costs among suppliers, which can distort competition and hamper the efficient functioning of the market. operators.”

The researchers  –   Osigwe, Onyimadu, Ikpeazu and Ofordeme – also added that, when electricity theft occurs, the cost of purchasing electricity from the GENCOs through TCN will be higher than the revenue collected from the sales of electricity to consumers.

This is so because, according to them, electricity theft allows consumers to use electricity without paying for it. Electricity theft leaves the Discos with a huge liability.

“The Discos are unable to pay for electricity transmitted from the Gencos, which makes them reject electricity while remaining indebted to the Gencos.

“In turn, this reduces revenues to the GENCOs while increasing the cost of generating electricity. The GENCOs cannot meet their obligations to gas suppliers, rendering them highly indebted with reduced effectiveness in performing their primary function.

“Electricity theft induces a cycle of indebtedness and ineffectiveness for both the DISCOs and GENCOs.

“The occurrence of electricity theft has become dire. For instance, in 2014, the Ikeja Electricity Distribution Company (now Ikeja Electric) reported that 43,000 prepaid meters out of 134,000 installed by the company had already been tampered with by their owners in five years.

“Similarly, the Port Harcourt Electricity Distribution Company in 2017 reported a loss of about 30 per cent of expected revenue to energy theft. The distribution company noted that energy theft represented a huge revenue leakage to the company.

“Also, the Enugu Electricity Distribution Company reported a loss of about 43 per cent of its expected monthly revenue to energy theft. Further, more recently, the Eko Electricity Distribution Company reported that it was losing over N1.2 billion monthly to energy theft and commercial losses in its network.”

Band-A tariff hike

Earlier in the year, Nigeria witnessed a significant adjustment in its electricity tariff, particularly affecting customers under Band A.

The Nigerian Electricity Regulatory Commission approved an increase, setting the tariff at approximately N225 per kilowatt-hour (kWh) for Band A customers, who are typically households and businesses receiving up to 20 hours of electricity per day.

This decision was part of broader regulatory measures aimed at achieving cost-reflective tariffs in the country.

The increase in tariffs was driven by several factors, including the rising cost of natural gas, a key input in electricity generation.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority raised the base price for natural gas from $2.18 to $2.42 per metric million British thermal unit, reflecting global energy price trends.

This adjustment, alongside other operational costs, necessitated a review of electricity tariffs to ensure the sustainability of the power sector.

For consumers, particularly those in Band A, the tariff hike represents a substantial increase in electricity expenses.

This change comes at a time when Nigeria’s economy is grappling with various challenges, including high inflation rates, fluctuating exchange rates, and general economic instability.

The increased cost of electricity can exacerbate the financial strain on households and businesses, potentially leading to higher operating costs for businesses and increased living expenses for families.

The tariff increase also brings to light the issue of electricity affordability and access.

While the Band A category is often associated with more affluent consumers or businesses, the overall economic environment means that even these groups may feel the financial pinch.

And feeling the pain of this Band A categorisation is the health sector.

The newly implemented tariff hike is crippling essential services in tertiary and private healthcare facilities, leaving them struggling to survive and on the brink of imminent shutdown.

Teaching hospitals and privately-owned healthcare facilities are in a desperate battle to stay afloat in the face of escalating costs, which threatens the very core of patient care.

Recently, hospital administrators decried the huge cost of operations, lamenting that they were struggling to keep essential services running, and that patients were the ones bearing the brunt of the crisis.

Amid this, there is a broader concern that other bands, particularly those with less reliable power supply, might also face tariff hikes in the future, further burdening lower-income households and small scale businesses.

NERC’s addresses concerns

In response to concerns about fairness and service quality, NERC implemented several measures. These include stricter monitoring of service delivery commitments by electricity distribution companies.

Discos are required to maintain a minimum service level for their customers, and failure to do so can lead to penalties or the downgrade of customers to lower tariff bands, which are associated with lower service expectations.

Customers categorised as Band A, now pay over N209 per kilowatt-hour instead of N68/kWh following the removal of electricity subsidies.

Additionally, NERC also mandated the rapid deployment of metering infrastructure to prevent overbilling and ensure transparency. This initiative is crucial as metering has historically been a contentious issue in Nigeria, with many consumers billed on estimated consumption rather than actual usage.

The tariff increase also reflects a broader shift towards market-based pricing in Nigeria’s energy sector. While this approach aims to improve the financial health of the electricity market and attract investment, it poses significant risks for consumers, particularly in a country with a high poverty rate and limited social safety nets.

To mitigate the impact, the Nigerian government and NERC have been exploring various measures, such as subsidies for vulnerable consumers and incentives for energy efficiency.

However, the success of these measures depends on effective implementation and robust regulatory oversight.

An economist and tax expert, Mr Dayo Adedayo, stated that the electricity tariff increase for Band A customers in Nigeria was a significant policy shift aimed at creating a more sustainable energy sector.

However, for him, it also highlights the ongoing challenges of affordability, service delivery, and regulatory compliance in the country’s power market.

He added, “As Nigeria continues to navigate these complex issues, the balance between economic viability for service providers and affordability for consumers will be critical in ensuring a stable and equitable electricity supply.”

Energy theft too much, IKEDC laments

On Saturday, IE lamented the rise in energy theft in the past three months of the Band A tariff increase.

This is even as the DisCo threatened that offenders caught in the act of energy theft would be immediately charged, reiterating that the era of merely imposing loss of revenue penalty alone on offenders was over. The company made this announcement at its July stakeholders forum.

In a statement published on its website, IE’s Head of Corporate Communication, Kingsley Okotie, lamented the increase in energy theft, “especially over the last three months following the implementation of the reviewed tariff on Band A feeders”.

Okotie noted that the company and the entire electricity value chain cannot survive if energy theft goes unchecked.

“The theft is massive and the company cannot guarantee meeting customer expectations if this ugly trend continues.

“Ironically, some perpetrators believe that if they haven’t been caught, there are no consequences. This is false, and we must change the narrative,” he said.

Whistleblowing platform

Speaking on the strategies to curb theft, the company’s spokesman mentioned that a whistle-blowing platform had been created for customers and well-meaning Nigerians to report incidents anonymously.

He added that the platform is managed independently of the business, ensuring customers’ identities remain anonymous and highly confidential.

In 2022, the Executive Director of Research and Advocacy for the Association of Nigerian Electricity Distributors, Chief Sunday Oduntan, highlighted the severe impact of energy theft on service delivery during an interactive session with electricity consumers in Ibadan.

The Eko Electricity Distribution Company, that same year, reported a 21 per cent increase in energy theft cases, with over 21,000 incidents recorded over the past five years, resulting in revenue losses running into billions.

Wola Joseph, EKEDC’s Chief Legal Officer, noted that areas like the Agbara district face an average of 32 energy theft incidents monthly, costing nearly N4m, with total losses exceeding N35m annually.

Similarly, the Jos Electricity Distribution Company, reported significant losses due to energy theft, with CEO Bello Mohammed, indicating that only 59.67 per cent of customers with prepaid meters responded, leaving a 40.33 per cent non-response rate.

This non-compliance, coupled with illegal connections, leads to an estimated loss of N2bn monthly, with 350 cases of bypasses detected each month.

These issues have been noted to continually challenge Nigeria’s electricity sector, hindering revenue generation and service improvement.

Adedayo, further speaking on the matter, stated that Nigerians, knowingly or unknowingly, defraud the electricity supply market through various illegal practices.

He stated that non-payment of electricity bills is a major issue for Discos.

According to him, many consumers fail to pay their bills in full, creating a significant revenue shortfall for the utilities.

He said, “Another prevalent problem is the manipulation of electricity bills, which involves altering the bill amounts through corrupt practices. This typically requires the collusion of utility staff, who may be bribed by customers to adjust their bills fraudulently.

“Meter tampering is also a serious concern. Some customers manipulate their electricity meters to either inaccurately report their consumption or bypass the meter altogether. Reports from Nextier Power indicate that by mid-2019, approximately 50 per cent of meters installed between 2016 and 2018 had been tampered with.”

What the law says

The Nigerian legal system makes provision for the prohibition of electricity theft and also imposes penalties for perpetrators of the offence.

Section 94 (3) of the Electric Power Sector Reform Act (2005) provides that ‘Notwithstanding anything contained in any other law, any person who willfully destroys, injures or removes equipment or apparatus of a licensee commits an offence and is liable on conviction to imprisonment for not less than five years and not more than seven years.’

The Miscellaneous Offences Act also consists of provisions dealing with tampering with electrical equipment.

Section 1(9) of the MOA provides that “any person who unlawfully disconnects, removes, damages, tampers, meddles with or in any way whatsoever interferes with any plant, works, cables, wire or assembly of wires designed or used for transforming or converting electricity shall be guilty of an offence and liable on conviction to be sentenced to imprisonment for life”.

Section 1(10) of the MOA additionally provides that “any person who unlawfully disconnects, removes, damages, tampers, meddles with or in any way whatsoever interferes with any electric fittings, meters or other appliances used for generating, transforming, converting, conveyancing, supplying or selling electricity shall be guilty of an offence and liable on conviction to imprisonment for a term not exceeding 21 years”.

Additionally, under section 96 (2) of the EPSRA (2005) which confers power to make regulations on NERC, the regulator has made several regulations, of particular importance is the regulation to deter the theft of electricity, theft and destruction of electricity supply infrastructure, and penalties for such theft.

The NERC Theft and Other Related Regulations (2014) stipulates in Regulation 1 that “anyone who willfully and unlawfully connects to overhead, underground, or underwater lines, cables, service wires, or facilities of a licensee; or tampers with a meter, uses a tampered meter, install a current reversing transformer, use shorting wires, loop connections, or any device that interferes with accurate metering, or bypass a meter to receive electricity without proper registration” has committed an offence.

It also stated, “Anyone who damages or destroys an electric meter, equipment, wire, or conduit, causing interference with accurate metering or consumption of electricity without authorization will be guilty of an offence under Sections 383 and 400 of the Criminal Code, Section 286 (2) of the Penal Code, and Section 1 of this Regulation”.

Penalties include imprisonment as specified in Section 390 of the Criminal Code, Section 287 of the Penal Code and Section 94 of the EPSR Act.

Smart metering

To curb electricity theft in Nigeria, especially during periods of increased tariffs, Morgan stated that the Discos must deploy advanced metering infrastructure.

He said, “Invest in smart meters with real-time monitoring capabilities to detect tampering or unauthorised usage immediately.

“Use data analytics to identify unusual consumption patterns and schedule regular physical inspections of meters and connections to catch tampering early.”

Stricter enforcement

A lawyer, Mrs. Sodienye Jumbo, also suggested strict enforcement of regulations and collaboration with law enforcement.

She said, “Increase enforcement of the NERC Theft and Other Related Regulations, with regular audits and stricter penalties for offenders.

“Work closely with law enforcement agencies to ensure swift prosecution of theft-related crimes and to deter potential offenders.”

Jumbo also advised Discos to run awareness campaigns to educate consumers about the legal consequences of electricity theft and the importance of paying bills.