THE Minister of Power, Works and Housing, Babatunde Fashola (SAN), has told Nigerians not to blame the Federal Government but hold power generating and distributing companies responsible for the woes of the power sector. As Chairman, Senate Committee on Power who has gone round the power installations, do you agree with him?
We basically did an oversight of the Discos and I recall that I encapsulated the problem of the power section when I said that all have sinned and that everybody has a share of the blame. So it amounts to abdication of responsibility for the Minister to say that nobody should blame the Federal Government but rather blame the operators especially the Discos for whatever shortfall that we see in the electricity sector. It amounts to running away from his responsibility. Everybody has a share of the blame at the moment because of the flawed process that led to so many problems within the power sector.
To untangle the whole difficulties within the electricity sector means that everybody should work towards delivering service to the people and not to seek for who to blame. And I think it is also the politicisation of the sector that has led to this. The Minister should take huge part of the blame because he was the person who was quoted prior to his being made Minister or prior to this government coming into office that a serious government will resolve these issues within six months. Now three years down the line, four years down the line and election is looming, and the score card of the government with regards to everything, including power, is very abysmal. The Minister now turns around and said I never said such a thing. Why didn’t he say he didn’t say such a thing all these while? It just shows actually that our public officials, when they make comments regarding to where they want to go should really be very careful in their choice of words. It was very easy at that time they were looking for power to blame the PDP government for everything. Now he is inside, and he is turning around and instead of him accepting blame, he now turns around and say blame the operators. It is neither here nor there.
He talks about the Nigerian Electricity Regulatory Commission (NERC) being the supervisors but then NERC also takes instructions from him. He has never let NERC to put a tariff that will be reflective of the cost of power. He has also not resolved the lingering issue of who has to take responsibility for the differential between the cost of power and the tariff that they have given to the Discos to use at the moment. Those are the issues that we think that government should resolve through its own policy mechanism and I had occasion to say this at one time. If you insist that the Discos will have to carry that burden then you have to give them the appropriate tariff. You cannot now hold the tariff and at the same time turn around and say that they should be able to operate under this debilitating circumstance.
In addition, because the value chain of power from generation all the way down through transmission to distribution if any part is lacking that affects the other parts. So, at the moment, everybody, I will say, has a share of the blame and people shouldn’t run away from their responsibilities.
When you say everybody, are you saying Nigerians, the consumers, should also share in the blame?
Well, I will say this: the general populace has also in one sense been short-changed by the government. First, the government gave them the impression that power is free and so they were brought up on a diet of free power. Now they have to pay for power. Power is not like telephoning in which case if you don’t buy credit you’re unable to make a call. Power is far more than that. It is, I will say, inelastic good that is very difficult for people to stay away from. In economics, it is called inelastic good. You just have to use it and once you get used to it and you have things that depend on it you must be able to get your worth.
One of the most critical problems we got when we were going from one Disco to another is the question of metering. Most of the people we did town hall meetings with condemned in very strong terms the issue of estimated billing. We also knew that that would be one of the key problems of the sector. Of course what it does is to give the Discos a window through which they can continually cheat the populace. And that is a sore point between the Discos and the populace. One would have also expected that a much more vigorous effort would have been made in making sure that billings, estimated billings, are done in such a way that it will only affect you according to your consumption. Because the problem with estimated billing is that you’re billed for what you do not consume. And that is, there is no other way to call it, than cheating. So if you give an entity a means of being able to collect money without service, it will do it. That is human behaviour. These are all the things that we think ought to be corrected. The issue is that investments are being made but those investments are not yielding what we think should be the optimal. But of course, Nigerians were not told the truth by the Discos about the investments that were made in the sector. What we are seeing is the fact that investments in the sector are supposed to be long term investments in which case you’re going to borrow money at single digit for 20, 25, years to 30 years. But we had a situation in which people borrowed short term money at double digits and they have to pay back what they borrowed. That’s why I was talking about a flawed process. At a point due diligence was supposed to have been used to get the facts of the cost of their borrowing that was not done.
The process of privatisation was supervised by the World Bank and our public officials in BPE, etc, so where did the problem come from?
The problem is not in the privatisation. The concept is correct, the way it was done is correct but I just said due diligence was not done. But usually when processes of this nature are done, the due diligence I mean is the cost of money. You could see now that cost of money is too high, so one doesn’t know where to put the blame now.
The statement by Fashola that Gencos and Discos should be blamed, could it be out of frustration and hopelessness in the power sector?
We I think it’s just frustration. When you run into a situation where you’re unable to move forward what you get is that you’re frustrated and you can now go ahead and make such a statement. I feel really that the frustration is coming out of the fact that they made heavy weather out of the inability of the previous government to provide steady and reliable power to the citizens. They used it to get into office and the citizens expected that they will match their rhetoric with action so that by now, few years down the line, power would have been everywhere and everybody would have been getting power.
Now they are back at the same place they were and they can no longer tell the populace how bad the previous government was with regard to power because their own record also shows that they’re not able to do much about it. So it is that helplessness that has led to the frustration and hopelessness. We can locate it in one way. Do not politicise everything. They used it in their political campaign now it has broken down and we’re in another campaign era people are now asking, give us your score card. With hindsight, they would not have politicised the power sector.
From your findings, did the Discos and Gencos bring in money that is commensurate to grow the sector?
Was due diligence done, yes. Was it done well, we don’t think so. Otherwise we will not have this push by the Discos to pay back at the rate that is not very good for the health of the Discos. There is no Discos that its due diligence balance sheet that is not negative. And so they can’t borrow. When anybody wants to invest, the person has to invest based on what is in your balance sheet, your potentials and your income.
But we hear that the Federal Government is working with some established companies especially the petroleum companies to now because they also own the gas that is used to power the generating companies to get into the sector and buy equity and use it to be able to expand operations. If that is done I think that will improve the sector. But the point is that investment decisions with regard to power will always for anybody in the sector, they must look at it to be sure that if you put money there, your money is not tied in or that it is not a losing proposition. I would think that what we need to do as a nation would be to continue to make the sector to be attractive enough to injection of capital because where they are today, it is hard to inject further capital into the sector and expand services.
The committee has gone round most of the power installations in the country. You were in Kaduna and shortly after your trip to Kaduna there was controversy that the Ministry of Power was trying to commission the diesel plant to power the Kaduna plant and you stopped the plan. What is the true position now?
The government plan originally was not to run the Kaduna plant the way the Ministry wants to run it. The report of the committee from the visit to the Kaduna plant is ready and waiting to be laid and discussed on the floor of the Senate. Originally the plant was not designed to use diesel as power source. It was designed to use gas. Ultimately, the Ministry in its own wisdom attempted to reconfigure the turbines to now use diesel because they are dual powered turbine. But then we also found out that with the cost of diesel and the quantity of diesel that will be used to fire the eight plants that were designed for the place, we are talking about the quantity of diesel that are not available in this country.
And for it to be used in that place, it has to be trucked to the place from the South since the Kaduna refinery is not operational. So introducing such complications into the place is what our committee didn’t understand. And when asked to justify it, we couldn’t find the justification for such enormous investment. It is more or less not going to work. And part of this is what happens in Nigeria in policy making that some decisions are taken that have no basis at all in logic. Like I said the report is ready and will be laid but is mind bugling.
What could have informed the call by some stakeholders for a second look at the privatisation process?
Well, any time there is a process and you don’t think that you are getting the value for which the process was put in place there always a call. But our position as a Committee is that it is too late in the day to say scrap privatisation. You will cause far more harm to the system than you’re going to resolve. And so that best thing to do is to continue and make sure that you do the right thing.
The DISCOs will tell you because they have a time line to A ,B ,C ,D and when you look at whether they have actualized the time line, you find out that they are falling far short of it. And I just give you a simple example when you tell them you have not installed this amount of meters they will tell you at the time we signed this contract, dollar was 165 or 180 but today dollar is 360 or even more.
They will tell therefore that that has already negated the provisions on which they signed the agreement. And so if they were but a meter for N100 that today the same meter is costing N300 so how do you expect them to buy. Meanwhile they are supposed to have had a tariff adjustment to take cognizance of the foreign currency cost but no adjustment has been done. And so they are still being kept at a tariff that is predicated on the old tariff of 160 or 190 dollar.
We work very well with all the different agencies of government. But our job is not for carry us along or for us to carry them along. Our job is to oversight the sector and say according to the law that you’re following it or according to the budget we have given you, that is if we are dealing with the Ministry, we want to know whether you have expended A,B,C or D. It is not a question that they are carrying us along or being part of us. We are to make sure that the right things are done.
When will Nigeria get the power sector right? Can we ever fix the sector? What is the hope that it is doable?
Well, I am not in the business of hope with regards to making commitments for things that are in the hands of different sections of the country. But I think that I should say if we use that word we ensure that everybody concerned and especially the driver of the economic affair of the nation which is the government should do everything possible to move us beyond where we are with regards to power today. There is a direct co-relation between poverty and power that has been established.
The countries with very low power potential are also the poorest countries in the world. And so because there is direct co-relation between power and poverty, if you also want to move country out of the poverty trap that we have found ourselves that means that power must be commensurate in moving up. So that should be the aim of every government. The more power you put out the more it influences your movement out of poverty. So if you see that there such a direct link, I think that the axiomatic thing to do is ramp up power supply to the citizens as quickly as you can.
When your committee visited some South-East and South-South, you initiated a model aimed at resolving the source of conflict between Discos and consumers in relation to estimated billing. It looks as a proposal that will put paid to the conflict, how does it work really?
Yes, let us say this that one of the most important source of friction between the consumers and the Discos is the fact that consumers feel that they are made to pay for what did not consume. That is why you see that there is no conflict between those in the telephoning business and their consumers because if you speak too long on the phone your credit runs out. You know that you’re the person that made those calls. If you’re in the internet every day, your data runs out, you’re the person that has also degraded your data what can now be of dispute is how fast and how slow. But the difference in power is consumers feeling that you cannot give me for two weeks I do not get power from you, then I get power three days for the rest of the month and then at the end of the month you charge me for a full month supply. That is extortion. That is what is causing most of the conflicts. And so we were at a point at which we saw a model that we think can be used so that neither side feels cheated. And that model is to meter the transformers. If you pre-pay metered transformers that means that the resident in the area themselves will buy the tokens and load into the meter for their transformers. Their transformers will be on and if it runs out, they don’t have power. So they now know that what they pay is actually what they consume.
We felt, because in most of our communities we have electricity committees, we have people going around to collect electricity dues, but what is going on presently is because they are not metered, whatever comes to them is what they are told to pay. From my office I have had so much complaint. One community will come and say they have been given millions to pay and when you go back, the process of resolution, through NERC of these issues is also cumbersome for them. So we thought that this will be a half way to making sure that everybody is metered. The regulation is that everybody must be metered but if in the interim everybody is not metered but every transformer is metered that in the interim resolves some of the blames and sources of conflict. That is why we recommended it to most of the DISCOs. I do not think that DISCOs would reject a situation where people pay for only what they use. Rather than people fighting in your office every day, give them a half way option and then gradually meter everybody since the DISCOs complain that the funds to meter everybody is so difficult, the money runs in billions of Naira. Meanwhile I’m not so sure that they have proper numeration of their customers because it is still an ongoing process. If you enumerate all your customers you know where they are where they are, you know what their consumption is then you should have no problem in terms of delivery.
NERC is proposing legislation to curb energy theft. To what extent will that help?
I think that the law on energy theft is what we are working on now in the committee and in next few days should be ready. We’re working together with the regulator, NERC because what it entails is an amendment of the principal Act with regards to making specific provisions for theft of electricity or theft and vandalism of electricity equipment and installations. We think that once this come into force and signed by the President, that will help the sector. Because right now if you catch somebody stealing power, the police will be the ones to prosecute them. The police now have to go and pick and choose the prosecutor who will in turn look at what law to use because there are different pieces of legislation scattered all over that relate to it. So doing this under the Electricity Act would bring clarity to the situation. So that no matter where you are in this country and no matter what happens whenever you have contravened the provisions of the Act then it will be clear and obvious. It will also help jurisprudence so that judges will also understand how they should penalize those that are brought in front of them.
How long can Nigerians wait for steady power in this country?
I would say that you cannot put a time line on something like power because it has to do with the commitment of the government and stakeholders, the GENCOs, DISCOs and all that. It also has to do with the commitment of the citizens to be able to also pay for the cost of power. Therefore, it is the combination of all three that will help us and lead us where we want to go. My feeling is that you cannot just come out and say today or tomorrow. I think that is also the reason why when started this interview we talked about the frustrations of those who made specific time commitment which they can no longer fulfil.
It was claimed in some quarters that the decision of the President to veto the Electoral Act Amendment Bill was targeted at the PDP to frustrate the party’s electoral chances. Do you think so?
I think that the rejection of the Bill is aimed at conferring an illegal advantage to the present government using the coercive instruments of the state to perpetuate themselves in power. Because the amendments that were in that Bill were ordinarily supposed to help in eliminating man made adjustments on election results. If you have direct transmission of results then that eliminates anybody going to rewrite results somewhere. If you make sure that accreditation is tied to the ballot papers, it also means that there can’t be over voting. So there are all manners of way that this would have helped to bring a much more transparent process. So it’s ironical to say the least that a party of change is now the party of retrogression. The party has looked for all manners of reasons including ridiculous ones to avoid doing the needful.
How does the PDP intend to tackle the perceived challenge?
Barring anything, what the ruling party has not taken into consideration is that the ruling party itself is also affected by this process. The assumption by the ruling party that they control the instrument of power that they will muzzle everybody and do what they want may not work. If in my constituency my people vote and stay there and the votes are counted and every one of my people knows what the result is and takes it to the next level and by the time it comes to the final level we already have all our result sheets, and authenticated results, anybody going up there to change figures is only doing that at his own risk. I believe whether they sign the Electoral Act or not this government is going to lose the election and there will be a blow out in the first election to get rid of that because Nigerians are tired and prepared to protect their votes.
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