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Corruption in the Electricity Sector: The Adhesion/Submission Contracts

05-17-2016, 06:17 PM
Sudan Democracy First Group
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Corruption in the Electricity Sector: The Adhesion/Submission Contracts

    07:17 PM May, 17 2016

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    In 1908, during the Anglo-Egyptian or the Condominium administration era, electricity production started in the district of Berri in Khartoum State, using diesel generators that produced an estimated 855 KW. In 1925, the Condominium government established the Light and Electricity Power Company (LEPC) that enhanced the capacity of these generators to increase production to reach 3,000 KW. The LEPC remained in operation until the Sudanese government purchased all the shares of the company in 1952.

    After Sudan's independence, the national government passed the Central Administration of Electricity and Water Act in 1961 to regulate the generation and distribution of electricity. In 1962, the Government of Sudan constructed its first hydropower station at the Sennar Dam with production capacity of 15 MW, and subsequently started the construction of the national electricity grid to carry generated power to different parts of the country. In 1970, another hydropower station was established by the government at Rosaries Dam with a production capacity of 30 MW, which increased to 40 MW in later years. In 1975, the National Electricity and Water Corporation (NEWC) was established to regulate electricity and water under one authority however, in 1982, the electricity and water services were split. The electricity sector was then developed further with the establishment of new electricity generation stations in Garri and Khartoum North and most recently with the completion of Merowe Dam in 2010. This has an estimated power generation of 1,250 MW, though never realized, to increase the power supply in the country 3,000 MW.

    This background on the electricity generation in Sudan shows that the government corporations have had complete control over all electricity operation in the decades since independence. For example, the NEWC, since its establishment in 1975, controlled the generation, transmission and distribution of electricity until the National Electricity Corporation (NEC) Act was decreed in 2001, which brought an end to the centralization of administration and management of the sector. In 2010, the national Council of Ministers issued a decree that dissolved NEC and broke it into five companies; Merowe Dam Electricity Company Ltd., Sudanese Hydropower Generation Company Ltd., Sudanese Thermal Power Generation Company Ltd., Sudanese Electricity Distribution Company Ltd. and the Sudanese Grid Lines Company Ltd.

    The NEC and/or the five companies that superseded it, derive their authority from several Acts and rules that regulate their operations and govern their provision of services to clients. The most important of these rules and Acts is the Electricity Act of 2001 and the NEC Commercial Regulations of 1993, that governs business transactions with clients.

    As for the electricity supply adhesion/submission contract, the subject of this article, it derives its legality from clause 12 paragraph 1 of the NEC Commercial Regulations of 1993. This clause states that any client is eligible to electricity supply when it submits a request and pays all the costs of the external connection equipment required. These costs are determined and prepared by NEC and adjusted from time to time in the absence of clients. Based on a specific sharing formula, also prepared by NEC, the client is required to pay his share of the cost of this external connection equipment. However, the ownership of this equipment sits with the NEC for the purpose of operation, maintenance and update, notwithstanding the client’s share in the cost. Furthermore, clause 6 of the same regulation explains the required steps for a client to obtain electricity as follows;

    A file is opened for any client who proves that they own or have a valid lease agreement for the property that is being connected.
    The technicians must make a field visit to determine which electrical equipment is required for the connection.
    Once the application is approved, the client proceeds to the finance department to pay the sum owed for the network and which is equivalent to the price of the equipment required to connect the electricity to his property from the closest power network.
    The client signs an agreement with the company for obtaining electricity.
    After the costs are settled and the agreement is signed, the property will be connected to the nearest distribution point.

    It worth mentioning that procedures for obtaining electricity that preceded the regulations of 1993 did not require the clients to pay the costs of external connections. In the past, the NEC used to cover these costs, but when the demand for connections to households increased, it started requesting residents in villages and neighborhoods to pay these costs from their own resources or seek donations from businesspersons, unions, associations or certain government organizations. However, NEC viewed this required financial contribution as a temporary arrangement until it was able to meet these costs from its own resources and that explains why it was not part of the regulations prior to 1993.

    Reflecting upon the electricity supply adhesion/submission contract, it is obvious that clients, including citizens, are getting an unfair deal. These terms and conditions of an adhesion/submission contract are usually dictated by the stronger party who provides the service offered, and as such the client is at a receiving end with little/no negotiating powers. The client (citizens), the weaker party to this contract, has no right to dispute or object to any term or condition. In essence this is a type of corruption whereby the Sudanese power company steals from the citizens in the following ways:

    The contract stipulates that the client contributes or covers the cost of the equipment required for external connections and this subsequently becomes the property of the Sudanese power distribution company (or previously the NEC). This means the citizens pay for equipment that they do not own such as transformers, poles, cables and any other equipment required for external networks.
    Obligating the client to pay for this equipment amounts to double taxation, since the same citizen has already paid taxes to enable the state authorities to provide him/her with public services such as education and health services, roads, water and electricity.
    Another aspect of the corruption exercised by NEC and the new companies is the collection of the cost of external connections twice or more. For example, if one client paid for the said external connections and one of his/her neighbors is also planning to connect to the electricity supply, the company would ask the neighbor to pay the cost of the same equipment used to connect the first neighbor.
    Taking advantage of the weak party to the adhesion/submission contract, which is a clear corruption on the part of the company and the government, the contract does not stipulate penalties in case the company fails to fulfill its obligations by providing continuous power supply. This became apparent after the introduction of a digital pre-pay power consumption meter system in 1977.
    In a recent development some states’ Legislative Assemblies issued local decrees that tied the ability to purchase electricity to payment of water bills. These decrees, by all measures, are considered a violation of the contract between the electricity company and the client, which did not include a reference to water bills. Moreover, the water consumption is governed by a different contract between the citizens and the water supply companies.

    It worth mentioning here that the contract for electricity connection and supply and the receipt the client receives after the payment of this cost, are devoid of any reference to the financial contribution that he/she pays to cover the cost of the external connection.

    It is high time for citizens to start addressing these corrupt practices and contest these adhesion/submission contracts and demand change in the way the electricity and water supplies are organized and administered. One option is to call for the reinstitution of the previous role of the government in the generation, transmission, administration and distribution of power and water through a centralized corporation such as the previously dissolved NEWC.

    In order to remedy the current corrupt situation, these power companies and the Ministry of Electricity and Dams should stop collecting the cost of external connections from clients and delink payment of electricity supply to water bills.

    Furthermore, legal and civil organizations should play a role in challenging these unjust and unfair contracts by bringing cases to court and mobilizing citizens to support this cause. Such initiatives could find legal support in clause 118 of the Civil Procedure Act of 1984. Regarding any agreement concluded by way of submission or adhesion and including arbitrary conditions, this clause states that the court must amend these conditions or exempt the compliant person thereof. distribution lines.

    In addition to the role of civil and legal organizations, the media has an important role to play in exposing these illicit practices in order to raise public awareness and force these companies to annul these unfair and arbitrary conditions included in electricity contracts.


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