Electricity supply: Akah’s gaffe

THE  Minister of Power, Works and Housing, Mr Babatunde Fashola, and the acting Chairman/Chief Executive Officer of the Nigerian Electricity Regulatory Commission (NERC), Dr Tony Akah, seem to differ on the issue of power interruptions and outages in the country. While the minister attributed the collapse being witnessed in the sector to liquidity problems and vandalism of key facilities, among others, during a press briefing sequel to the recent Federal Executive Council meeting, the NERC, through Dr Akah, declared that without an increase in the electricity tariff payable by consumers or an intervention by the Federal Government in the form of subsidy to the power firms, Nigerians would not be able to get steady power supply.

Dr Akah’s position readily tallies with the attitude of most regulators in Nigeria. Usually set up in the interest of the consumers, these regulators would rather seek the comfort of the players in the industry which they claim to regulate, often to the dismay of the consumers. It therefore hardly came as a surprise that Dr Akah could only see increase in the tariff payable by consumers as the solution to the problem of insufficient power supply. Citing Ghana as a convenient example, Dr Akah stated that the power regulator in the country had to increase tariff before the situation improved. Mercifully, though, he entered a caveat, namely the acquisition of a new technology by Ghana. In effect, the power sector and its supply chain in Ghana did not improve because of increase in tariff. It was in fact the other way round: the power output  and supply improved as a result of the acquisition of new and more efficient technology. It was after this that the tariff increased in Ghana. Will the proposed increase in tariff address the problem of vandalism which Fashola cited as one of the major factors responsible for poor power supply in Nigeria?

The increase in tariff may also not account for the immense loss of megawatts of power during transmission for which the consumers are billed invariably, a practice that is encouraged by the monopoly of power generation in that sector and which gives the impression that it is the fault of the consumers that power is lost during transmission. The views expressed by the NERC Chief Executive reflect the attitude of a captured regulator and this is unfortunate. Rather than insisting on fair play in the sector, the NERC only found a convenient way of shifting the heavy burden of operation in the power sector onto the beleaguered shoulders of consumers. Dr Akah even suggested the alternative of a regime of subsidy similar to the abused one in the fuel sector. This is, to say the least, completely absurd.

To be sure, power supply is by no means cheap anywhere in the world. But the problem of power outages has to be fundamentally dealt with by first getting the country’s control handle firmly on the supply side of the power equilibrium. It is quite daunting attempting to explain why the Nigerian regulators cannot get their acts together until they have compelled the consumers who they are expected to protect to go through all sorts of harrowing experiences. They are quick to take sides with investors who were very familiar with the situation in the sector before embarking on their investments and who are very swift when it comes to recouping the returns on their investments expeditiously. This is despite the fact that many of them are too technically deficient to perform creditably well in the sector and they are not willing to take the required risks before reaping the expected profits. In this connection, it is heartening that the Senate Committee on Privatisation rejected the NERC’s position during a visit to the commission’s headquarters on an oversight duty. The committee called for the issuance of licenses to more power investors in order to break the monopoly of the current operators. It also insisted, rightly in our own view, that the Federal Government should not provide any subsidy to the sector.

We are persuaded that NERC owes it a duty to the country to ensure a level playing field before it can make certain crucial decisions in the interest of the Nigerian citizen, corporate or individual. Both the investors and the consumers must be fairly treated. Nigerians are ready to pay for a fair assessment of the price of electricity only if it is available first. The investors that will not up their ante in the supply side of the market by acquiring the required technology can always be eased out of the system.