Introduction

The electricity industry in Nigeria since the privatization era has become awash with many promising opportunities. The industry which was broken into three layers of Generation, Transmission and Distribution with private firms/individuals holding the majority shares in the Generation and Distribution layers of the industry while the government, understandably, maintains its control on the Transmission layer of the industry. The privatization of the industry saw the emergence of 11 distribution firms now reduced to 10 upon the return to the Federal Government of the Yola Electricity Distribution Company by the investors.

Unfortunately, one of the biggest challenges the electricity distribution industry has had to deal with through its existence is the loss of energy through conscious act of energy theft which in no mean way add to the unimaginable height of the Aggregate Technical, Commercial and Collection (ATC&C) losses. The theft of electric energy can be in different forms including but not limited to meter tampering/ bye-pass and illegal or unauthorized use of electricity, non-payment of tariff/bills, vandalism and Transformer Oil theft. Electricity theft, except for cases of vandalism which may lead to technical losses, is basically aligned as commercial loss.

Electric energy theft as every other criminal activity, is not limited to Nigeria. In fact, it was reported that South Africa loses on the average of R20 billion, the equivalent of a whopping $1.5 billion per annum to electricity theft.[1]  In India, the central government, aside having pledged an investment of billions of dollars for creating a smart grid infrastructure had in November, 2014, announced the release of USD$4 billion in funding for smart metering programs all geared towards discouraging electricity theft.[2] This is aside having a comprehensive and updated India Electricity Theft Act, 2003 with some interesting amendments thereto in 2007 which has robust provisions on electricity theft.

This write up will be focusing on available legal framework on the offence of electricity theft by meter bye-pass/tampering and illegal use of electricity which basically results to commercial loss to the Distribution Companies (Discos).

Electric Energy Theft Defined

Electric energy theft is concisely the fraudulent or dishonest use of electric energy through illegal connection/reconnection, tapping of distribution cables, tampering or damages to a meter with the aim to either reduce or completely fail to record accurately the amount of electric energy supplied and consumed. It also includes refusal to pay for energy bill supplied and consumed.

Electric energy theft has also been defined as the use of electrical power without a contract with a supplier with total or partial bypassing metering system or interfering this system in the way to adulterate its measurements. Contract is understood here as a valid obligation to deliver power and to pay for it.[3]

In Nigeria, the laws that deal with electricity theft are less than elaborate. Although the offence of electric energy theft is provided for in both the Miscellaneous Offences Act and the Criminal Code Act, there is need for an extensive and all-encompassing law on electricity theft. More importantly, is the need to deviate from laying too much emphasis on imprisonment of persons found guilty to a more business and investment friendly punishment such as fines. That is, punishment that guarantees restitution to the victim/investor. The cases, just like every other case before a Nigerian court, runs into years as a result of the under staffed and over worked judicial system. In most cases, the electricity distribution company is less interested in the conviction of the suspects as they are in recouping the monetary value of the electric energy that might have been stolen by the culprit. This is understandably so, as in most contracts of purchase and supply of electric energy between a Disco and a generating firm, the take or pay clause is usually a steady feature. The Disco cannot argue that it will not pay for the quantum of energy stolen or which got lost because it could not account for same. This development if left unchecked will constantly keep the commercial losses on the high side or transfer the burden to the unmetered customers of the Discos who are billed based on estimation. This is more so as the Discos will strive to recover money for energy supplied in order to achieve a certain “acceptable” level of billing efficiency.

Legal Framework on Electricity Theft in Nigeria

Section 1 (9) of the Miscellaneous Offences Act, Cap. M17, Laws of the Federation of Nigeria (LFN) 2004 on tampering with electric works and plants provides thus:

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.

Furthermore, Section 1 (10) of the same Miscellaneous Offences Act on tampering with electric fittings, etc., provides thus:

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.

It is pertinent to note that the offences as contained in the Miscellaneous Offences Act are to be tried by the Federal High Court alone.[4] The Act further provides that where a person charged with any of the offences contained in Section 1 of the Act is convicted with the offence of attempt to commit same, he suffers the same punishment as if the offence was actually committed.[5] The Act also goes ahead to punish whoever is convicted for the offence of having conspired to commit electric energy theft with the same punishment as prescribed for the offence under this Act.[6]

More so, the Criminal Code Act also provides for the offence of electric theft with a more loose definition and a lesser punishment upon conviction for 3 years[7] and the offence as created under the Act can be tried by a Magistrate Court covering the jurisdiction where the said offence is committed. However, an offender under this Section cannot be arrested without warrant.[8]

Section 94 (3) of the Electric Power Sector Reform Act (EPSRA), 2005 provides thus:

Notwithstanding anything contained in any other law, any person who wilfully destroys, injures or removes equipment or apparatus of a licensee commits an offence and is liable on conviction to imprisonment for a period of not less than five years and not more than seven years.

Remarkably, this is the only provision of the Electric Power Sector Reform Act, 2005 that has to deal with electricity theft. The Act also failed to put into consideration the energy and the equivalent sum in naira that may have been lost as a result of the actions of the electricity theft or any means to recover same.

It has been argued in many quarters that the laws at the national level on electricity theft and related offences neither support nor encourage investments in the sector. Of course, it could be argued that electricity theft is a crime and should be treated as such. The laws as they are currently constituted leaves nothing to be salvaged by the investor who has no option other than to pay for the energy already delivered to him but stolen by an offender who upon conviction may be sent to prison for life, a period of 21 years or 3 years respectively as the case maybe. The offender is not mandated by law to restitute for the already stolen electricity energy which then adds to the Discos’ huge loss ratios attributed to technical and commercial losses.

The investor(s) who is in business to make money rather ends up wasting time and resources in pursuing and prosecuting electricity thieves for years because of our slow judicial system, without any chances of him recouping his lost funds as a result of the theft. In worst cases, the prosecution may not be able to secure conviction due to lapses in investigation by the relevant law enforcement agencies and lack of adequate capacity in properly prosecuting persons accused of electricity theft. The operations of the energy sector and precisely, the electricity industry require a reasonable level of understanding of what obtains in the sector.

Position in India

The law as it is in India with regards to electricity theft has more and better robust provisions. It has undergone some amendments since inception, the most relevant to this discourse being in 2007.[9] The Indian Act provides for punishment upon conviction of an electricity theft offender, for imprisonment which may extend to 3 years or a fine or both.[10]

It further provides that where upon calculation of the value of the electric energy stolen, where it does not exceed 10 Kilowatts, the fine to be imposed on a first offender shall not be less than three times the financial gain and in the event of second or subsequent conviction, the fine shall not be less than six times the financial gain on the account of such electricity theft. Where the value of stolen electric power does exceed 10 Kilowatts, the fine imposed on a first offender shall not be less than three times the financial gain and on the event of second or subsequent conviction, a sentence of not less than six months which may extend to five years and with fine not less than six times the financial gain on account of such theft of electricity.[11]

Under the Electricity Act in India, where a person is convicted as a second or subsequent offender for having stolen electricity in the value of excess of 10 Kilowatts, such a person, in addition to the punishment above shall be debarred from getting any supply of electricity for a period which shall not be less than three months but may be extended to two years and shall be debarred from getting supply of electricity for that period from any other source or generating station.[12]

The officer of the distribution company on discovery of the said theft is entitled to immediately disconnect the customer’s supply, calculate the penalty[13] and report such electricity theft to a police station within 24 hours of such discovery and disconnection. The said officer may decide not to pursue further the electricity theft case and is obligated to reconnect the customer where the suspected electric energy thief pays up the assessed amount.[14]

It may appear from the foregoing that the Act in India, apart from providing for a robust guideline on dealing with electric energy theft, also provides for a more liberal and business friendly approach towards dealing with the offence of electricity theft. Going through the Electricity Act in India, it may appear that first offenders are only meant to pay fines/penalty which in any case is punitive enough to ensure it is calculated at three times the value of the energy lost as a result of the act of the said suspected electricity thief.

Of great interest is the fact that the Electricity Act, 2003 as amended in 2007 in India also provides for the establishment and constitution of a special court for the speedy trial of offences referred to in Sections 135 to 139 and 150. The Special Court is to be constituted by the State Government by notification in an Official Gazette.[15] The Special Court shall consist of a single Judge who shall be appointed by the State Government with the concurrence of the High Court[16] and for a person to be qualified for appointment as a Judge of the Special Court, he must have been, immediately before such appointment, an Additional District and Sessions Judge.[17] Where the Special Court is vacant or not constituted by the State Government, the urgent business of the Special Court will be disposed of in accordance with the directions of the District and Sessions Judge having territorial jurisdiction over where the Special Court would have been constituted.[18]

From the above provisions of the Electricity Act of India, the Indian Electricity Act has quite comprehensive, elaborate and effective provisions on electricity theft. The benefits of a special tailored Electricity Act creating the offences and the provision of a Special Court therein brings about not just a speedy dispensation of justice in an electricity theft trial, but also the boosting of the investors’ confidence that electricity theft offenders are deterred. Another gain is the fact that the Disco gets to recover some funds lost to electricity theft through the fines as calculated and charged on the offender in accordance with the provisions of the Act.

Efforts towards a better Legal Framework

It is worthy of mention that the Nigeria Electricity Regulatory Commission (“NERC” or “the Commission”), pursuant to its powers under Section 96(1) of the EPSRA, 2005 sometime in 2013 made an effort towards correcting the legislative error in the EPSRA  by formulating what it called the Electricity Theft and Other Related Offences Regulation. The Regulation which has similar provisions with the Electricity Act of India in addition to having a good and robust definition as to what constitutes the crime of electricity theft also has a provision which encourages whistle blowing and rewards any person who reports such an offence to either the Commission or any law enforcement authority with N10,000[19]. It also empowers an authorised officer of the Licensee who identifies such acts of theft to disconnect the premises immediately. The Regulation also provides that any person who commits the offence of electricity theft as defined in the Regulation shall be guilty of the offences under Sections 383 and 400 of the Criminal Code, Sections 286(2) of the Penal Code and Section1 of the Regulation. The offences as contained are also punishable with terms of imprisonment as contained under Sections 390 of the Criminal Code, Section 287 of the Penal Code and Section 94 of the EPSRA. The Regulation also made the offence of electricity theft a strict liability offence. Regrettably, this Regulation is to come into effect on the date of its publication in the Official Gazette.

A Bill for an Act seeking to prohibit and prevent Electricity Theft, Power Infrastructure Vandalisation and Power Company Protection 2017 bearing a more encompassing provisions on electricity theft was submitted by NERC to the then Power Committee led by Senator Enyinnaya Abaribe for consideration in plenary and passage into law have made little or no progress at the Senate (Red Chambers). This may not be unconnected with the recent change in the leadership of the Senate. The Bill seeks amongst other things to protect investments in the sector and curb humungous losses recorded as a result of electricity theft. It is an improvement on the provisions of the NERC’s 2014 Regulation. It is left to imagination when and whether the Bill in issue will see the light of the day.

In Nigeria, the regulatory framework on electric energy theft needs to be improved on to reflect the stack realities on ground. The non-elaborate provision for the offence and punishment of Electricity theft and penalties under the EPSRA, 2005 may be seen as one oversight too many. The reliance on the provisions of Section 1(9) and (10) of the Miscellaneous Offences Act LFN 2004, Section 400 of the Criminal Code Act and Section 94(3) EPSRA, 2005 are inadequate and less elaborate in its definitions and punishment of the offence.  Furthermore, the law as it is in Nigeria has less or no business appeal/encouragement either for the existing investors or would-be investors in the sector. The terms of imprisonment as provided under the Miscellaneous Offences Act without any option of fine and a form of restitution to the Discos who are directly affected by such theft is to say the least, grossly unambitious.

The 4^th Alteration of the Constitution of the Federal Republic of Nigeria, 1999 introduced by Bill No. 3, 2017 moved some items which were hitherto in the Exclusive Legislative list to the Concurrent list. The said alteration empowered the State Houses of Assemblies to make laws, with clear delineations, with regards to the electricity industry.[20]

Encouragingly, some States in Nigeria have taken the initiative to put in place laws geared towards the protection of the electricity investments and installations within their States. Such States like Lagos, Ekiti (with the Ekiti State Electricity Regulation Law, 2015) and Edo State. It must be noted that the Edo State Governor is yet to accent to the well-crafted law as passed by the Edo State House of Assembly which made provisions amongst other necessary things, for the creation of a Special Court for the trial of suspected electricity thieves.

With Discos recording huge ATC&C losses up to 58% which percentage keeps increasing on monthly basis, the Government needs no prophet to call their attention to an imminent collapse of the sector if nothing is done to reduce the portion of this percentage losses recorded as a result of electricity theft. Benin Electricity Distribution Company Plc., for instance posted a loss of 58% for the month of February, 2019.[21]

Recommendations

1. The Minister of Power and the NERC should leverage on their powers to vigorously see to the enactment of a comprehensive, elaborate and a well-tailored “Electricity Theft Act” by the current Senate. The stakeholders should also ensure that effective implementation and enforcement mechanisms are detailed out in the proposed Act by creating a joint monitoring team that will comprise of authorised staff of the Discos and the Commission. The duty of this team to be legally recognized in the proposed Act will be monitoring, identifying, collection/building up evidence and reporting for prosecution of any incidence of electricity theft in the area of coverage by Discos. The funding of this monitoring team should be shared between the Discos and the government. The Commission and the Minister may also, as a quick fix situation, propose and strongly recommend the amendment of the EPSRA, 2005 particularly Section 94 to reflect an elaborate provision for electricity theft offences of all sorts, restitution driven provisions, special courts for the speedy trial of suspected offenders and punishment enough to deter intending offenders.
2. The Commission should include and perfect the “whistle blowing” provision as contained in its Electricity theft and Other Related Offences Regulation, 2014 to ensure that whistle blower’s name/identity is not exposed to the offender, any person who may have benefited from the theft or the general public. The reporting of such offences to be covered in the Act should be risk and stress-free to the extent of providing a toll-free lines through which such offences will be reported. The proposed Act should also ensure that the incentive to encourage whistle-blowing is made enticing enough and timeously made available to the “whistle-blower” so as to encourage the reporting of electricity theft to the designated and appropriate authority.
3. The Commission should also ensure that meters to be installed hence forth are smart meters. This can be made to commence with the Commission’s Meter Assets Provider, Regulation 112 currently in place. This will discourage electricity theft of the kind that has to do with meter bye-pass/ tampering. This could be achieved by making it a part of the conditions qualifying any Meter Asset Provider for selection into the program that they must supply and install such smart prepaid meters.
4. The Commission should ensure that a provision is included, either in the proposed amendment of the EPSRA or the proposed Electricity Theft Act, for the creation of a special court for the trial of electricity theft offenders. The judicial officers to head these courts must be trained on what comprises electricity theft and all other related offences and how same affects the industry. This will guarantee speedy trials for suspects and will reduce the extent of time and resources dissipated both on the part of the Discos and the Government especially before the Federal High Court when the prosecution charges under the Miscellaneous Offences Act.
5. The Commission shall further ensure that in addition for the terms of imprisonment, the proposed Act has a provision which will ensure that electricity theft offenders are made to pay double or more of the calculated amount of energy reasonably estimated to have been lost by the Discos as a result of the said theft. The proposed Act should also include the modalities for arriving at any of such calculation for electric energy that have been stolen.
6. Other States should be encouraged to follow the footsteps of States like Lagos and Ekiti in enacting laws to safeguard against electricity theft. This will go a long way in assuring investors of the safety or otherwise of their investments in their States. Again, States should be encouraged to invest in the industry to help provide electricity for their people. This may be achieved by partnering with interested generating firms to establish off grid generating plants in the industrial areas within their states which in turn will increase revenue and investments to the states.

Conclusion

It is no longer in doubt that the survival of the distribution sector of the electricity industry is largely dependent on the actions or inaction of all the stakeholders. The era of using the sector as a pawn in the political chess board is now past. The Government must show itself as being above board and jettison the usual blame game by making sure that the legal framework needed for the desired success in the industry is not only put in place but seen to be aggressively enforced. No industry can survive the level of losses being brandied about by these investors largely as a result of vandalism and theft.

It must be noted that if the industry collapses, the shuttle bags of blame must be seen hanging both on the back of the investors and the Government.

The Government and its relevant agencies must ensure that a robust legal framework is designed and enacted to help combat the devouring menace of electricity theft. Modalities should also be put in place to ensure the laws so enacted are enforced. This will see the Government to have proverbially thrown out the bone for the dog and letting the fight be between the dog and the spirits. The EPSRA is due for a holistic amendment to reflect the realities on ground. Situations where cases of electricity theft linger in the courts for years with the end not in sight is draining both for the Disco who is the complainant, the Prosecutor and the accused person(s).

References:

[1] www.smartenergy.com, Published June 27, 2017, accessed June 12^th, 2019 @11.48 am.

[2] Varsha Singh, “Power theft continues to hit Indian economy India needs sweeping reforms to curb the loss” July 4^th, 2018 accessed 13^th June, 2019, https://mediaindia.eu/business-politics/power-theft-continues-to-hit-indian-economy/

[3] Roman Targosz on July 13, 2009 09:05, Last updated on: October 28, 2016 07:06; http://www.leonardo-energy.org/resources/460 accessed 13th June, 2019 @ 11.30 pm.

[4] s. 1(1) Miscellaneous Offence Act, Cap. M77, LFN, 2004.

[5] s. 1(19), paras. a, b (supra).

[6] s. 3(6) (supra).

[7] s. 400 Criminal Code Act.

[8] s. 400 (supra).

[9] The Electricity (Amendment) Act of India, 2007.

[10] s. 135 of The Electricity (Amendment) Act, 2007.

[11] s. 135 (supra).

[12] s. 135 (supra).

[13] M.P. Electricity Board, Jabalpur & Ors v. Harsh Wood Products & Anr. 1996 SCC (4) 522, JT 1996 (5) 434

[14] s. 135 (Supra)

[15] s. 153(1) Electricity Act, 2003

[16] s. 153 (2) (supra).

[17] s. 153 (3) (supra).

[18] s. 153 (4)(b) (supra).

[19] Section 14 of NERC’s Electricity Theft and Other Related Offences Regulation, 2014.

[20] See 2^nd Schedule, Part II, Item 14 (a, b, c) of the 1999 Constitution of the Federal Republic of Nigeria (4^th Alteration).

[21] www.nerc.org.