20 Years of the Power Question

The Horizon BY Kayode Komolafe           kayode.komolafe@thisdaylive.com

0805 500 1974

Apart from the promises made during the 2015 election, President Muhammadu Buhari possibly imagined at the take-off of his administration that the question of electricity supply to power the economy would be quickly resolved.

An indication of that hope was implicit in the loaded portfolio assigned former Lagos State governor, Babatunde Raji Fashola. Fashola was made Minister of Power, Works and Housing. The President actually acted on the report of the transition committee headed by the highly revered technocrat, Alhaji Ahmed Joda, that prepared the ground for the government.

When eyebrows were raised about the Fashola’s mouthful portfolio in some sceptical quarters, the official response seemed to be that not much government work was expected, for instance, in the power sector, which was largely privatised.

In other words, the work load of the minister was assumed not be as heavy as it appeared to critical observers because of the reforms already taking place in the power sector. So there was a level of trust by the government in the private sector to deliver on generation and distribution of power. These assumptions have now turned out to be false.

Meanwhile the expectations of regular power supply were rising legitimately among members of the public.

The initial optimism of the Buhari administration in fixing the electricity problem was not unprecedented.

In the early days of the administration of President Olusegun Obasanjo there was even a greater upbeat mood. Before he was made the attorney-general, Chief Bola Ige was the minister of power. Brimming with optimism, Ige actually came up with a six-month agenda with time-lines to turn things around in the sector. Obasanjo was to remark later that in the first six months of his brief tenure in the power ministry Ige could hardly “distinguish his left from his right” in the operational labyrinth of the power sector.

Obasanjo readily admitted that the complexity of the problem of the sector. In 2001, the Obasanjo administration crafted the National Electric Power Policy (NEPP). In the process of implementing or attempting to implement the policy, the Electric Power Sector Reform Act (EPSRA) was enacted in 2005 to give legal backing to the major changes required to make things work in the sector.

The administration of President Goodluck Jonathan moved the reform further in 2013 with the privatisation of the generation and distribution of power up to 60%. As successor companies, 11 Distribution Companies (DISCOs) and six Generation Companies (GENCOs) emerged in the sector. The exercise was , of course, based on the Road Map for Power Sector Reform launched by Jonathan in 2010.

Since then, however, instead of steady power supply for industrial and domestic consumption the public has been treated to a surfeit of lectures on the technicalities of the engineering, operation and business modules of power generation and distribution. Different stories are being told periodically about why steady power is not available in Nigeria. Experts of various hues continue to offer rationalisations laden with technical jargons on why 20 years after a policy was enunciated to change things for the better in the power sector, people remain in darkness because there is no yet light.

In fact, laymen who pay attention to these technical excuses have more or less become “experts” in matters of power supply.

It was Dr. Chidi Amuta who once made an observation that not many people, perhaps, pay adequate attention. The inimitable public intellectual said that something must be wrong with a system in which the public is often lectured on technicalities of infrastructure instead the actual provision of services or goods. According to Amuta, members of the public want motorable roads and solid bridges; the official response instead is to delve into the civil engineering of road construction in order to explain why roads cannot be constructed. When you need water, you should simply turn on the tap instead of becoming a student of waterworks engineering and operations. But in Nigeria members of the public receive a greater volume of lectures than gallon waters from the organisations saddled with the responsibility of water supply.

A similar thing has been on display in the power sector for the better part of the last 20 years. Yet when members of the elite “escape” to developed countries on holidays and visits they enjoy infrastructural facilities- train services, steady power supply, good roads etc- without anybody giving them technical lessons on why those facilities might not work for the benefit of consumers.

Huge challenges have been identified by the stakeholders in the sector. The case of the private investors in the sector has been clearly made. Despite the billions of naira that government has poured into the sector as a stakeholder, the private sector players still cry out that funding is a major issue. This problem is exacerbated by the poor system of revenue collection. Other well-known issues of the sector include insufficient power supply from the national grid, theft of electricity by some consumers and the lack of facilities for operations. For the DISCOs, the most prominent of the problem that consumers complain about is the metering gap.

While he was minister of power, Fashola was critical of the corporate governance process of some of the private players in the sector. He once accused them of sabotaging the economy by distorting government’s policy for the sector. Practices of which the public sector is often accused have also been found to be rife among the private sector players. These include lack of due process, inefficiency and poor accounting process.

Although some of the DISCOs, in particular, have made counter allegations of undue interference against the government, a lot of things remain inexcusable on the part of the private sector players. Elementarily, a company that is involved in power distribution should have the capacity to provide meters for consumers. This is to smoothen the process of revenue collection. It is unpardonable that eight years after privatisation, some DISCOs still estimate bills for consumers to pay. This is no business. It is pure exploitation. A company that cannot provide meters has no business holding the licence for power distribution. The matter is as simple as that if it is stripped of all technicalities. The absurdity of estimated bills becomes conspicuous if you juxtapose what some DISCOs do with what obtains in the downstream sector of the petroleum industry, another sector in the energy industry. Imagine a fuel station without a fuel dispenser! How would it look like for the cost of fuel pumped into a consumer’s car to be estimated because of the lack of fuel dispenser. Worse still, how would it sound if a retailer gives hiking of fuel price as a condition for providing fuel dispensers at filling stations in the first place? It is scandalous that the businessmen in the power sector have mystified metering of power supply. And they get away with blue murder because of the abysmal failure of regulation. They operate as if there are no rules in place. Consumers are just helpless in the circumstance.

The DISCOs could make their case for increase in tariff without making it a condition for the basic provision of meters.

The frustration of the consumers with scarcity of metres is usually untold. The other day a Nigerian in the diaspora, who is developing a property in his town in Oyo state, asked a friend living in Lagos to use his “connection” to secure a meter for the new house. The Lagos friend explained that power distribution is business and you shouldn’t require any “connection” with a company to have a meter. According to him, the relationship between a DISCO and the consumer is that of a customer and a distributor, unlike in the days of the defunct National Electric Power Authority (NEPA). In any case, the DISCO serving Ikeja consumers where the Lagos friend lives is different from the one operating in Oyo state. The man in the diaspora merely laughed off the explanation claiming that although he was away he knew “what goes on the ground” in matters of power supply in Nigeria.

As a first step, the DISCOs should make meters available to all consumers. It is obvious that that would bolster the process of revenue collection a great deal.

Some countries have taken developmental leap in all sectors of their economy and society within 20 years. The stories of China, UAE and Singapore changed within 20 years. Here in Nigeria we are talking of the reform in only the power sector without appreciable progress in 20 years. Yet from the World bank expert to the woman frying akara by the road side, it is generally known that Nigeria’s economic development is hinged on the power question. It doesn’t require expertise to know that you cannot sustainably power the largest economy in Africa on diesel with all the environmental consequences. Provisions are still made in budgets of government departments for generating sets and diesels 20 years after a power policy was put in place as a turning point. Tomes of technical papers have been presented on the question. Days have been spent holding conferences on the problem.

In the debate on the political economy that went on for many years, the case for the privatisation of the power sector among others was made on clear grounds: the private sector would muster a greater capacity to run things better by bringing in the needed capital, technology, skilled manpower and the culture of business based on efficiency.

There is no evidence yet of such a capacity in the power sector.

So, as long as the problem of poor power supply persists, the debate must continue so as to find a solution.

This should bring into the fore the economic thoughts driving policy. These ideas must be identifiable. Some economists posit that in some areas of the economy such as railways, electricity, health insurance and pensions, privatisation may not be a silver bullet. Perhaps, this is the reality Nigeria is facing with the problem in the power sector.

If 20 years ago the Obasanjo administration saw the power question as a low-hanging fruit, it should be clear to the Buhari administration now with 18 months more in power that it is a more difficult task. It is, of course, an ideological sacrilege in the policy arena to call for the reversal of the process. Indeed labour once called for the withdrawal of the licences of the DISCOs. Government officials and their experts would just chuckle at that suggestion anyway.

Policymakers should have a rethink on the apparent policy cul-de-sac so that Buhari can provide the ultimate answer to the power question categorically posed by Obasanjo 20 years ago.

PolicyNotes Pantami and NIMC

At the keenly contested 3.5 GHz Spectrum Auction on Monday, Communication Minister Isa Pantami said in passing that 30 million more people registered for national identity this year without any money released to the National Identity Management Commission (NIMC).

The money approved for the commission is yet to be released in December, according to the minister.

To be sure, the minister spoke on a positive note of compliments to NIMC for recording some achievements despite the odds of poor funding.

However, it is important to stress the negative import of the official observation.

It should be a matter of regret that a commission performing such a crucial task is not well funded.

The importance of the National Identification Number (NIN) in the socio-economic and even political realms are obvious to the policymakers and the public alike.

The NIN is of great importance for security, banking, financial transactions and implementation of social programmes among other uses.

It is, therefore, curious that such a scheme is not accorded the due budgetary priority.

The government is urging the people to congregate at registration centres, in a season of public health emergency, for NIN when NIMC is not adequately equipped to perform the job. Perhaps if the agency is well funded the process of registration would be efficient and members of the public would find the exercise less stressful.

So rather than celebrate NIMC as an agency working without funds, the government should rather pay attention to the policy disarticulation involved in withholding the agency’s funds.