Fixing the Power sector

by

Reuben ABATI

By Reuben Abati

Following the three-day retreat held for Ministers, Special Advisers, Permanent Secretaries and heads of Agencies and Departments by President Bola Tinubu, rather belatedly, three weeks ago with the theme: “Delivering on the Renewed Hope Agenda” some of the Ministers have been jumping up and down, as if the Retreat was the shot in the arm they needed to shift out of their slumber. We have seen quite a number of body movements lately: from the Minister of Aviation and Aerospace, Festus Keyamo, telling the heads of agencies and parastatals under his Ministry that whoever wants to sabotage him through non-performance would be fired. The Minister of Women Affairs, Uju Kennedy-Ohanenye has also made a big show of launching tricycles and sewing machines to empower women – the Pink Riders Transport Scheme. Candidly, I don’t know how many women ride tricycles across Nigeria, but it is the pattern around here that policies are often rolled out without thought or reason or prior research. The Minister of Arts, Culture and Creative Economy, Hannatu Musawa has also launched a road map for the cultural sector. But the Ministry that is the focus of this piece is Power, and its new Minister, Adebayo Adelabu, grandson of the inimitable legend, Adegoke Adelabu, a stormy petrel of Nigeria’s First Republic/Ibadan/Western region politics and brilliant author of the book, Africa in Ebullition. It must have occurred to Adebayo Adelabu that as Power Minister, he too must be seen to be doing something. So, shortly after the Presidential retreat, he called a press conference where in a copy-cat manner, he read out a riot act to the heads of agencies under his Ministry with the tone of condescension already copyrighted by Festus Keyamo: anybody that does not support me will be fired! President Tinubu may have to call the mini-Emperors, closet Headmasters, in his cabinet to order. Going about intimidating people with threats is not how to be a Minister. One Minister has even turned himself into a quasi-military administrator of the Federal Capital Territory!

However, Minister Adelabu has shown some enthusiasm for the job, and he should be advised on the basis of the things that he has said. On November 8, he told his audience, in addition to the afore-mentioned threat that (2) President Tinubu has directed that stable electricity supply must be achieved before anyone can raise the issue of cost-reflective tariff, which should have been done before now, but with the present administration having removed fuel subsidy, it would be politically inexpedient to add to the people’s burden by increasing electricity tariffs. Hence, the Federal Government is subsidizing electricity up to N70 per kilowatt hour whereas the actual cost should be about N130/N140 per kilowatt hour. Indeed in 2015, President Buhari disallowed the Multi-Year Tariff Order (MYTO). And (3), the Minister said it is shameful that Nigeria is generating just about 4,000 MW.  Previously, he had promised that under his watch, Nigeria should have 20,000 MW of electricity supply by 2026; (4) he promised to investigate the legality of the five-year license extension of the licenses given to Discos and Gencos which expired on October 31, 2023, and (5) he talked about government playing a more central role in the electricity sector. “I am determined to make impact”, he reportedly said.

I like his enthusiasm, but that is not enough. I have seen at least one detailed commentary, on aspects of the Minister’s rhetoric, notably Ijeoma Nwogwugwu’s “Penkelemesi in The Power Sector” (ThisDay, back page, Nov. 13). I want to add my voice to the conversation that my big worry is that Minister Adelabu has been sounding too strident as if he is a Regulator. No, he is not, and he has to resist the temptation to keep sounding as if he is from the Moon. The remit of the Minister is policy and helping to provide an enabling environment for the sector to thrive. Nigeria needs a reform-minded Minister in the power sector. The Minister needs to break the jinx, and so, he cannot afford to gamble. The road map for the electricity sector in Nigeria was put in place from Obasanjo to Jonathan as Presidents. The latter kick-started a comprehensive reform. But under President Buhari, the privatization and deregulation process got truncated, mismanaged, and turned upside down.  Nothing worked because there was no proper coordination in the whole of eight years. Nigeria would need a minimum of about 42,000 MW to jump-start anything but here we are, at the level of 4,000 MW, far behind most African countries and yet our electricity needs, given our population, far outstrips the African average. South Africa with a population of 57.3 million people generates about 41,194 MW and that is not even enough for it. The Minister is right when he describes the situation as shameful.  It is embarrassingly obvious however that he has not been talking to industry stakeholders. Nigeria is not short of ideas. What we lack is effective implementation. He needs to set out by finding out what the problems are. Managing the electricity sector is a specialized job, and there are people in this country who know where the corpses are buried, and who the members of the dangerous cabal in that sector are. The more he talks, the more the cabal people will plot against him. He must ask questions from the regulatory agencies also: what is their roadmap? What happened to the original road map? He should study the terrain and simplify the issues through rigorous consultations. Why for example has the Electric Power Sector Reform Act of 2005, not worked? Who are the perpetrators of impunity, lapses and sabotage within the sector? Then he must clear the table: Nigeria’s electricity sector is corrupt. All the people feeding fat at the people’s expense, be they government officials or contractors must be identified and sanctioned through a proper, preliminary audit of performance within the value-chain.

Minister Adelabu can learn from the experience of two previous Ministers. He knows Bola Ige, SAN, orator, lawyer, statesman who was Minister of Mines and Power (1999 – 2000). Upon assumption of office, Bola Ige of the Alliance for Democracy (AD), working for Obasanjo’s People’s Democratic Party (PDP) government boasted that he was going to fix Nigeria’s electricity problems in six months. He underestimated the problem. Those were the days of National Electric Power Authority (NEPA). It is commonly agreed that Bola Ige was sabotaged by the generator importers and contractors who were making humongous profits from Nigeria’s inefficiency. Chief Ige later became the Attorney General of the Federation and Minister of Justice but his tenure in the Ministry of Mines and Power was a low point in his otherwise sterling career in Nigeria’s public space. The Obasanjo administration spent over $12 trillion on the power sector in eight years. Everything went down the drain. Years later, when former Governor of Lagos, Babatunde Raji Fashola was appointed by President Muhammadu Buhari as Minister of Power, Works and Housing, and some people started suggesting that he had promised that he too would fix Nigeria’s power supply in six months; he quickly rushed to the media to say that he never said so. Buhari spent eight years but Nigeria still faces the crisis of epileptic power supply. 

In fairness to Fashola though, he prioritized consultation with stakeholders. He held regular sectoral meetings, even if those meetings eventually degenerated into conflicts between him and the distribution companies (DISCOs), but those meetings offered him a better understanding of the sector, even if the challenges in the sector were overwhelming.  Adelabu must proceed with a sense of history. There are other stakeholders in the sector that should be consulted: Dr. Ransom Owan, Dr Sam Amadi, both formerly of the Nigerian Electricity Regulatory Commission (NERC), Ambassador Godknows Igali, former Permanent Secretary of the Ministry of Power, Engr. Beks Dagogo-Jack, former Chairman of the Presidential Task Force on Power and co-Chairman of the Committee on Gas to Power (2012 - 2014), Professor Chinedu Nebo who handed over the assets of the Power Holding Company of Nigeria (PHCN), successor of NEPA, to private investors in November 2013, Rilwan Lanre Babalola who was Minister of Power 2008 to 2010, and a host of others. They are in a position to show him where the corpses are buried in a sector that is practically a graveyard of hopes and aspirations! In his time, Professor Nebo, who is a man of the cloth promised that he would drive away the evil spirits in the power sector. Those evil spirits defied Nebo. They are still there. The Minister also needs to find out what happened with the Rural Electrification Agency which became a cesspool of corruption. Every Minister comes along with the promise to improve electricity supply but the only people who benefit from all the investments are corrupt people within the value chain. It has become fashionable to blame the DISCOs, who occupy the last mile of electricity delivery, but the problem is not with the DISCOs.

Has the Minister bothered to find out what happened or is happening to the Transmission Company of Nigeria (TCN)? The Nigerian Government appointed Manitoba, a Canadian Company to manage power transmission in Nigeria – a management contract of over $200 million. Money was released to Manitoba but the company was never allowed to function. It could not execute all the projects that it was supposed to manage and deliver upon. Manitoba has since left Nigeria out of frustration. The Transmission Company is now unfortunately in the hands of government officials, the same old NEPA officials whose cognomen is “Never Expect Power Always.” There must be an audit of TCN as soon as possible, and an urgent probe of all persons who have subverted government policy. Nigeria cannot continue to move from darkness to darkness – the unfortunate reality that we are dealing with is that there are incompetent people in the value chain. And how effective is the interface between TCN and the GENCOs and DISCOs? What happened to loans disbursed in the past? The other major challenge is the supply of gas. The Governor of Niger State has been asking for a share of the Derivation Fund because his State hosts hydro dams, and he thinks his people deserve more from the national cake because of the hydro dams in Kainji, Jebba, and Shiroro in his State. Some of these Nigerian Governors and Ministers sound like they just left primary school, but that is not the focus of this piece today. The truth is that in the power sector, the main source of power is gas-fired power – that is thermal power which relies on natural gas to generate electricity – about 85% gas as opposed to 15% hydro.  Nigeria’s thermal plants include Olorunsogo, Geregu, Egbin, Omotosho, Afam, and Sapele. But gas supply is a problem, a big constraint for the GENCOS, in part because gas supply has not been decoupled from oil.

President Bola Ahmed Tinubu has been discussing the power sector with the Germans. Olaf Scholz, the German Chancellor was in Nigeria on a State visit in October.  Nigeria and Germany have had strong bilateral relations for more than 60 years. Recently, President Tinubu also travelled to Germany to attend the Compact with Africa summit on the sidelines of the G-20 meeting. He and Chancellor Scholz met again and one of the issues they discussed was Nigeria’s power sector and specifically Nigeria’s deal with Siemens, the German company with which the Buhari administration entered into an agreement – a three-phase plan to provide electricity in Nigeria. The agreement was signed under what was called the Presidential Power Initiative (PPI). By that plan it was expected that by 2023, Siemens would have provided up to 11,000 MW. We are at year-end. That has not happened. Even the idea of mini-grids has not worked. Siemens is an equipment company, not a Transmission company, not a DISCO, but everyone refers to how that company has helped the electricity generation process in Egypt. Siemens has not worked well here because it is mired in Nigeria’s complex web of zero transparency and lack of accountability. As it turned out, Nigeria started adding other things, talking about local content. Which local content? What does Nigeria produce as local content in the electricity sector? Then, COVID-19. Then the Russia-Ukraine War. And then, no magic from Siemens. The German Chancellor reportedly told President Tinubu that generating the electricity is not the problem but Nigeria has to follow through at its end. He was absolutely right.  Everything is about us. We have to follow through. Minister Fashola managed to plug some missing links in distribution because he paid attention. Adelabu must pay attention to details.

What is the way forward? The Minister must sit down with stakeholders. When they call him, he should have enough presence of mind to return their calls. He is holding a public office, not a private office. He must also work hard to dismantle the cartels in the sector.  The industry needs to be more investor-friendly, and it is the duty of the Ministry to create an enabling environment.  In addressing petty corruption in the sector, government also needs to focus on energy theft. More than 50% of the meters supplied so far to consumers are being by-passed. Nobody really wants to pay for electricity because the chaos in the sector is well known. To break the jinx, the TCN must be handed over to concessionaires. TCN and the Nigerian Gas Company are controlled by government. It is not clear how the industry can make progress if government continues to constitute itself into an obstacle. The Minister wants to review the extension of licenses. If he had done his home-work, he would have discovered that the extension is the result of a mutual agreement between government and the DISCOs – both parties having failed to fulfil their own parts of the bargain since 2013.

Going forward, the Tinubu administration must come up with a National Position on Power beyond the general statements in the 2023 election campaign manifesto. At pages 30 to 32 of the Renewed Hope Manifesto, Tinubu promised to eliminate the disconnect between generation and distribution, provide support for meter asset providers, investment for power in rural areas, power sector governance reforms, and what is generally described as “Nigeria First Power Policy.” I suggest that the President should set up a National Council on Power Reforms which will report directly to him, to begin a much-needed conversation about and around the electricity sector.