July 25, 2024
Suit 25, Mangal Plaza, Nouakchott Street, Wuse Zone 1, Abuja- Nigeria.

Electricity Subsidy: A Renewed Channel of Fleecing the Nation?

Nigeria remains a huge village in darkness with national gird regularly in trouble, underperforming or in plain language, collapsing. The darkness continues to thicken as the country ages, yet the sector continues gulping more funds successively. Even when the sector was reportedly privatised, the federal government continued to provide subsidy to the “owners” on the complaints that they needed to put some things in place to make the facilities work efficiently. Nothing seemed to be added though as there was no improvement in the delivery. It was the case of the more you spend, the less quality you get.

Those who bought into the business must have collected more than the amount they purchased the facilities before the government called off the payment, albeit temporarily. The politicians, the businessmen and the civil servants have a way of conniving to rape the nation of its revenues. It is like the case of the AMCON which was set up to give relief to both the lenders – banks, and the borrowers – the businessmen (both are in business anyway) at the expense of the national treasury. AMCON management is now claiming that the institution is going bankrupt as if that was not the way it was intended to end up! They were announcing the bankruptcy to prepare our minds or to check our reactions if they finally fold up. SERAP should take up their case.

Honest businesses celebrate 20 years, silver jubilee and more despite stormy periods because the foundation is solid in truth but those founded on a fraudulent base disappear or dissolve into thin air as the owners are never stable, they are on the run for another mischievous action on the people and the economy. They are many in Nigeria. Check them out!

Those who bought into our electricity business did not do so in good faith just as those who sold the facilities to them. There were reports that the politicians sold them to their friends. Of course, no one expected them to sell to their enemies but also, not friends in crime against their fatherland. When the Minister of Electricity or is it Power Minister complained that the ministry was owing GenCos N1.3 trillion and another $1.3 billion to gas firms and would not be able to meet up with new N2.9 trillion for servicing the GenCos this year, I was surprised and worried. The same electricity businesses are collecting money from customers for services not rendered. They have not added to the equipment they inherited from PHCN before the sales nor have they added new ideas.

The modus operandi before sales remains the same. People still receive ‘crazy bills,’ communities still buy transformers to replace damaged ones, and individuals still buy poles to extend electricity to their new houses and buy meters from electricity providers to calculate payments to them! The old system remains. So, where is the subsidy coming from? Since the present minister took over, we have witnessed more darkness in my area than before. Some other friends confirm the same. And a number of underhand increases in rates. The service providers seem to have a decision on how much revenue must come in monthly and work towards that, irrespective of the supply of electricity.

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The increasing inefficiency is what happens when you take a man who knows how to count money to be counting electricity poles. Se bi it is management!  The time we had Barth Nnaji, the power engineer, as a Minister for Power, there was progress in the electricity delivery. But the power mafia in government, in the corridor of power, and in the ministries started a campaign of calumny until the minister resigned. They were afraid of Nigeria getting electricity and they lost the power to make money through the supply of generators, supply of diesel for the generators, power of supplying all sorts of lamps, inverters, solar panels, batteries, et cetera. Goodluck Jonathan, the President on the throne then, succumbed to the pressure. He could not support the minister to remain to achieve the power revolution. That was the first time we would have the right person in the right place for power. Today, we are below where Nnaji lifted us.

Where is this subsidy coming from? Is it from buying gas or diesel to power the power turbines or from overtime services of labour or for the continuous darkness we have been witnessing? Someone must explain to the citizens and businesses, who have been living with the inefficiencies and ineffectiveness in the power sector. The fuel subsidy mafia has moved from that sector to the electricity subsidy. There is a need to probe what this subsidy is meant for.

Probably because it is being argued that many advanced countries provide electricity subsidy, our power managers felt subsidy must be provided anyway, anyhow. We need to study why, how and to whom the subsidy in the power sector is allotted. There are variants across countries. In the United Kingdom for example, consumers get some subsidy in the amount they pay as against what they should pay on the basis of the quantity of electricity they generate through the use of solar installations in their homes, while businesses which also generate electricity in one form or another are given some discount in the amount they should pay. No one is paid X pound sterling for using electricity but is given a discount on the amount expected to be paid for contributing to electricity generation. Never mind the IMF’s position on subsidy. Subsidy is a norm in the country of their residence. What is important is that subsidy must be paid justifiably.

It is imperative that our public utility companies or service providers think more of services than profit-making. Inefficient electricity supply contributes to the high cost of production in the country as businesses must generate their power at high costs. As the price of diesel, generator oil and spare parts rise, the cost of production increases.

There are various models of privatisation and we have used one successfully. The telephone services have been successfully privatised. One should be surprised if the service providers are also claiming subsidies. When the business started with MTN, the public was buying phones and SIM cards at exorbitant prices but as soon as the number increased, particularly with the entry of Glo, the prices for SIM cards and services tumbled down while the ‘chinco’ or Chinese phones brought down the prices tremendously. Many of the service providers first depended on NITEL infrastructure but gradually set up theirs thereafter. Today, the once almighty NITEL has crumbled, and many young Nigerians may not know they ever existed.

It is high time we used the same model or another variant for the privatisation of the electricity sector. Let local and international power companies compete in the open market to supply the country electricity. In the telecom industry, many service providers have come and gone and some remain dominant. The dominant ones are careful not to over-misbehave because there is control and opportunity for new ones to come in. The same should apply to electricity.

The approved and competing electricity companies can rent the infrastructure of the PHCN at the initial stage until they construct theirs. They will build their own grid. If the law says there should be only one grid, that law can be modified to accommodate many. Many emerging economies with functional electricity supply do not rely on one grid. Such companies cannot claim subsidy and they will be under the guidance of a regulator like the present one to contain their excesses. Nigerians can be given the opportunity to buy shares and contribute to funding the companies like the case with MTN.

Recent changes in legislation have deregulated the power sector towards allowing states opportunities to generate power for their citizens and some have taken advantage of these. The effectiveness is probably constrained by the issue of the grid system. The federal government must raise bills for legislation to remove all impediments to making electricity supply improve with the resultant effects of unleashing economic growth with employment generation, revenue growth and rejuvenating the informal sector for improved contributions to the national economy. I say no to subsidy for electricity generation by GenCos. Those who arranged subsidy for them are rather helping themselves to our treasury. The government should stop it, the legislature should probe it.

This article was first published on Punch

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