Energy Woes -By Yinka Oduneye

Filed under: Economic Issues |

The impact of a stable power supply in the modern and developed economies of the world is phenomenal… It impacts services, manufacturing, agriculture, entertainment etc. sectors of the economy meaningfully. It does two things directly creates jobs and the people live a good life. Even in developing economies, where there is stable electricity these impacts are felt. Unfortunately for my country, we do not have a tolerable supply of electricity not to talk of stable, so we are denied these benefits. The benefits can only be imagined… increased revenue to the government, improved quality of life, high life expectancy… We age quickly and die wretched because we are victims of visionless leadership and followership suffering from thrift gene hypothesis.

Despite spending a lot of resources (financial, human, material, time etc) on this endeavor in the past 19 years we do not have anything to show for it. There have been a lot of movements that did not result in any motion. The merchants at various levels have been the beneficiaries. The masses hope, pray, fast and occasionally resort to agitation but to no avail. Proponents of privatization convinced the government to go that route ‘kaka ko san lara iya aje, nse lonburusi’ unfortunately no appreciable improvement if not worse.

Many questions. Are we doomed? Who can change the misfortune? How best can we run generation, transmission, and distribution? When can we deploy our best minds for the benefit of the majority? And so many more….



I think we are not doomed, we only need a leader who is altruistic in his approach to giving Nigerians stable electricity. About 5 years ago, the distribution end of the chain was partially privatized by the government. Various promises were made to the mass hopes were raised but to no avail. There can only be one reason for this failure the selection process was compromised and if compromised the results too will be compromised. Other climes did this productively. The ‘successful’ owners have inundated us with from reasonable to unreasonable reasons for the failures. From all that has been put forward by all concerned and a little, I have gleaned from NERC site I think Nigerians have been shortchanged. Not too distant ago, one of the discos was offering the company up for sale at a discount. It sounds comical and lacks sincerity. I am sure he was only joking because I assume he knows the right way to go about selling the shares of the company to interested entrepreneurs should he be serious.

Let’s take a deeper look at some of the issues thrown up by the sale and lack of performance on the part of the owners. Let them search their conscience and come out truthful to themselves. They know how they emerged as preferred bidders and the challenge to that due diligence was sacrificed. That has come out clearly in their submission of not knowing the actual metering gap. While it is valid that there is a divergence between the book gap and the actual gap it does not hold water. It is in this same country that a company bought an oil and gas company but due to the above reason due diligence was sacrificed and a humongous debt was discovered. Nobody lost sleep over the gaffe, so I do not see any reason what so ever that the discos should think this is a national problem. They have gotten away with it this far because the regulatory body is ineffectual or complicit. NERC is not BPE, so I do not see why they should be complicit except if they say the body language from the president is not favorable to be effectual. We also hear about the tariff. I will be looking at the tariff issue from the angle of their business proposal to the banks to access the loans and tariff across various countries with similar and better economic outlooks to Nigeria. There has been a tariff adjustment after the sale also the naira has been devalued. However, this cry for tariff adjustment has been on since day one and I want the government and BPE to come out sincerely to tell us if the sale was conditioned on tariff increases at the slightest request. I searched the net to see how we compared with other countries and I am comfortable to say that comparatively, we are not doing badly as per the cost of electricity. (kw/h). Another study that looked at purchasing power across countries ranked us as been expensive next to Germany and Spain. When we look at actuals we tiered among countries with similar demographics. Electricity is cheaper in all countries that produce oil and gas than in Nigeria except in Venezuela that I was not able to confirm. Even if the tariff is doubled we will not experience significant improvement. This is because tariff is not the critical problem, but we have triangle pegs in square holes and if we do not fill the surrounding gaps nothing tangible will happen. Do not forget that most of the countries have a stable power supply and the consumers do not have to spend additional money to mitigate the gap of power outages as prevalent in Nigeria. So eventually the Nigerian spends more money on power. The Discos went into this business with a defective business plan. The first sign of this defect is the resistance by consumers to accept estimated power bill and the insistence by Discos as the only viable option for now. It makes good mathematical sense and looks good during number crunching. 1million multiply by x equals 1 millionx. However, being recurrent and without basis, the person that wears the shoe will resist. REGRETTABLY, MANY ACCOUNTS HAVE BEEN PRELOADED WITH THESE ASSUMED FIGURES THAT EVENTUALLY WHEN A PREPAID METER IS INSTALLED THE CONSUMER STILL PAYS. Daily the poor man cries about this criminal estimated billing the people who foisted it on us are not bothered because they have been taken care of for it to get better it is getting worse. I make bold to request that the President, Vice President, NERC chairman with all in charge of NERC, BPE, National Assembly members, Ministers should with immediate effect request the DISCOS to relocate all the prepaid meters in their houses and relatives to the average Nigerian’s house who is suffering this criminal injustice whether this problem will not be resolved within days or months. The justification is the NERC template that made some provisions for discounting and distributing energy to unmetered consumers. I will be delighted if NERC can publish monthly verification exercise on the methodology done randomly across Nigeria. The methodology is inapt. The assumption that 2 people on the same transformer and live in 2 bedrooms flat will consume the same amount of power is wrong. The variables are too many to make that assumption work. The area where I needed help most is in understanding the issue of energy theft. The discos have metered all transformers, and this gives them a measure of energy sent to any area. At the end of the month, all energy consumed by metered premises is deducted from the total and whatever is left is shared to the unfortunate unmetered premises. Punishing the unmetered premises for no fault of theirs. So where is the energy theft? Even with bypassed meters, the energy is still shared to unmetered premises. Do not forget that the NERC template made various provision for energy losses. NERC inadvertently made provisions for technical and commercial losses but due to estimated billing, everything is passed to the consumer. I said defective business template because the critical source of their revenue is consumer billing and if this is faulty the whole of the template collapses.

During the last 4 years, they have spent more energy protecting and preserving estimated billing than closing the metering gap, working with regulatory bodies and national assembly to make laws for the speedy prosecution of energy theft. Estimated billing is low hanging fruit devoid of expenditure but sadly it is not a win-win arrangement because their staff is the beneficiary. Go towards their offices during the distribution of bills and disconnection especially towards the evening, the rendezvous around those offices are part recipients and a confirmation of the underhand dealings happening.

Going forward, the president must bring power to join his 5-point agenda two of which are security especially militancy in the North East and fight against corruption. I must commend him for taking on two very difficult challenges and the two do not have good markers for determining success. We missed the opportunity when the North East problem started to confront it frontally and stamp it out, but the militants have established themselves. It is a very big industry worldwide. We can only define a minimum level of acceptance and continuous engagement. Has militancy gone in the South-South? No.

America, UK, France etc have not been able to stamp out militancy. Al Shabaab has continually terrorized Kenya, but the country has always put forward a united front against the militants. We have lazy and mischievous elements saying we have never been this divided. Give me an example of a thriving society today where this ease of cheap mass communication called the internet has not helped thrown up various divisive issues. The wise, elders and intelligent people in these societies are rising to the challenges and using this same medium to unite the people by highlighting their strengths as a people. We can go on destabilizing our society and even recruit external help for whatever perceived gains the same society will always remain ours. Coming back to my power issue, having adopted power by the president we may want to have a full-fledged minister for the ministry. Power is critical to our economic growth and it deserves full attention. Many large-scale manufacturing concerns cannot be sited in this country because of energy unemployment is high because the SMEs cannot thrive on power from the generators. We should as a matter of urgency rejig NERC. This brings me to the various comments on the travails of MTN and the regulatory authority. I must commend Punch for a fantastic editorial on the issue well written and balanced and I condemn some other cheap commentators playing up the issue of FDI as if any organization can get away with a similar thing in South Africa. Without wasting too much time on it, the regulatory body has alleged, let the concerned disproof the allegation and the courts can also adjudicate. It is by allowing our institutions to work that we can strengthen them and create enduring platforms for a thriving society. There are issues with the transmission and generation segments of the power chain if we get the distribution end right revenue will be generated this will make finance available to enhance the two other legs of the power sector. We can adjust tariff as appropriate to be in tandem with economic realities but not with estimated billing that is ambiguous.

On a concluding note, I just want to comment on the misleading word RESTRUCTURE thrown up by the elites and politicians to unnecessarily excite the uninformed and promote divisive tendencies. I have listened to various submissions on the subject and my take away is that there is no alignment in what the word means. Its definition is defined by the speaker and the audience. Two National committees were set up at different times by different governments with each claiming to have produced the best deductions. However, the agitation for restructuring has not waned. I can only conclude that those committees were set up to divert and reward participants. If not, why did we not achieve results with their reports? Why were the reports not compelling enough to them who set up to progress them? If truly there are strong and cogent issues to be reviewed the National assembly is there to initiate and debate the issues on constitutional matters. The members are elected representatives of the people who should know the aspiration of their constituents if truly they are the peoples’ representatives and should be able to articulate the issues and present them for debates. We have had 19 years of democracy, if we discount the first year and decide to take the issues one per year by now we should almost be done with them. I strongly believe there are 2 or 3 issues that need to be reviewed in the constitution. The National assembly is eminently empowered to resolve these issues if they can prioritize and not be distracted by who leads the chambers, which committee(s) they belong, wages and oversight functions.

We are in interesting times, what we hear now is the president has not done this, has not done that and they say he has integrity, where is the integrity? I make bold to say that a survey of the mass will confirm that our president has integrity. Whether his integrity is alleviating their economic hardship or not is a different ball game. My conclusion can be confirmed by a survey that has its demographics appropriately defined. This same fact cannot be said about most people putting themselves up for the highest office in the land. We cannot ascribe any attribute to them except maybe allegations of corruption. Aspiring to the highest office has become so lowly rated that most of the intending aspirants that have access to mass media do not have any aspirations to present to Nigerians except to go about condemning the seating president or reacting to news issues. Nothing to look forward to in their agenda. Nigerians will need to shine their eyes. The current democratic environment is not conducive to a candidate with the right traits, exposure, competence and strength of purpose to lead Nigeria. This is because the followership who want the dividend of democracy cannot delay their gratification, so they go for immediate enjoyment and cry immediately they swallow the gratification.

They self-deny the fact that awoof dey run belle. You cannot eat your cake and have it.

Do have a good day.

Yinka Oduneye