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Playing Politics with Power Sector

SimonKolawolelive By Simon-Kolawole, Electronic mail: simon.kolawole@thisdaylive.com, sms: 0805 500 1961

SIMONKOLAWOLELIVE! BY SIMON KOLAWOLE

In 2006, President Olusegun Obasanjo got here up with Imaginative and prescient 20:2020 — an audacious dream to make Nigeria one of many 20 largest economies on the earth by 2020. There have been a lot projections that had been supposed to mix to make Nigeria attain the objective, however the one which all the time catches my fancy was that we’d be producing 10,000 megawatts of electrical energy by 2007 and 35,000mw by 2020. When President Umaru Musa Yar’Adua launched the blueprint in 2009, the bold projections had been re-sized and toned down: put in capability was to develop from 6,000mw in 2009 to 20,000mw by 2015. President Muhammadu Buhari has now promised us 25,000mw by 2025.

In the present day’s realities are heartbreaking. It’s good that the ability producing firms (GenCos) now have the capability to provide roughly 13,000mw, however they will solely churn out about 7,500mw as issues stand and the Transmission Firm of Nigeria (TCN) can take solely about 4,000mw of the ability produced to ship to the distribution firms (DisCos). The DisCos, in flip, are hardly capable of give industries, places of work and households the whole 4,000mw due to all types of points — technical, industrial, and what-not. All stated and accomplished, then, Nigeria is nowhere close to being one of many world’s prime 20 economies. Not shocked: no mega financial system runs on mills. Truth.

However why are we nonetheless right here? We will checklist one million causes. After we had been awarding contracts for the constructing of energy vegetation in 2005, we didn’t consider how gasoline would get to them. We solely remembered we would have liked to construct gasoline pipelines after the generators had arrived. Even when the generators arrived, governors compelled work to cease, arguing that the funding of energy initiatives from the surplus crude account was unlawful. The multi-year tariff order (MYTO), designed to step by step section out electrical energy subsidy and make the trade commercially viable, was not applied for political causes. The TCN doesn’t have the capability to “wheel” the ability generated by GenCos. And so forth.

The buck passing within the energy sector, apart the fraud, is just too political. The nationwide financial council (NEC) lately introduced that it was going to embark on a forensic audit of the DisCos. On the floor, that’s superb. Audit by the sector regulator, the Nigerian Electrical energy Regulatory Company (NERC), is authentic and authorized, absolutely supplied for within the Electrical Energy Sector Reform Act of 2005. If the DisCos are responsible of malpractices, why ought to we not be completely satisfied about that? However the undertone, as I perceive it, is that the federal government needs to reverse the privatisation of DisCos or dilute the possession and take management of the entities. It may be good or unhealthy; we are able to argue over the deserves.

Nonetheless, there’s something that doesn’t sit proper when the whole Nigeria electrical energy provide trade is in a multitude and the one individuals you wish to “audit” are the DisCos. The coverage making is defective and rickety; the regulator is politically manipulated and much from impartial; some energy buy agreements (PPAs) with the GenCos had been designed to bankrupt Nigeria; the transmission firm is perpetually stagnant and hurting each GenCos and DisCos and the whole nation; and the Nigerian Bulk Electrical energy Buying and selling Firm (NBET) — the corporate that buys energy from GenCos and sells to DisCos — has turn into a examine in intrigues. To cap all of it, Mr Sale Mamman is the minister of energy.

There are a lot inquiries to ask. Why did we enter into PPAs with GenCos, a few of which obligate us to pay hundreds of thousands of {dollars} month-to-month to 1 firm, once we knew very nicely that the TCN didn’t, doesn’t, and won’t, have the capability to take energy from these firms within the lifetime of the contracts? Even when we produce 100,000mw immediately, TCN can solely take 4,000mw, in any other case their system will collapse and the whole nation shall be in darkness. Who authorised this type of contracts? How did we field ourselves into this horrible nook that can see us lose cash each month whereas Nigerians proceed to groan and moan in darkness? Who pays for this?

As I write this, the PPA the federal authorities signed with Azura Energy Plant in Edo state is on the verge of getting Nigeria right into a critical monetary mess. The Jonathan administration was reluctant to grant Azura the sovereign assure to safe a $237 million mortgage for the 450mw plant. In line with studies, Mr Mohammed Bello Adoke, then the attorney-general of the federation, opposed the assure primarily based on a call by the federal government council (FEC) that Nigeria should be indemnified in such agreements. All of the phrases had been skewed in opposition to the nation. We had been to pay Azura about $30 million month-to-month for energy generated beneath the “take-or-pay” situation.

Technically, there was nothing incorrect with this. Azura wanted tremendous assurance of recouping its funding, and the federal government gave it. You can not accuse Azura of any incorrect doing. Nonetheless, when the Buhari administration determined to put aside the indemnity clause and go headlong into singing the World Financial institution partial danger assure (PRG) for the mortgage in 2015, those that pushed the deal knew very nicely that TCN wouldn’t be capable of take all the ability to be produced by Azura. On prime of that, we agreed to pay Azura $1.2 billion as compensation if we resolve to terminate the contract. Who authorised this type of settlement, for goodness sake? Now we’re in hassle.

One other sticky deal, from the bunch of suicidal agreements, is the gasoline provide settlement (GSA) between the Niger Delta Energy Holding Firm (NDPHC) Ltd and Accugas Ltd. Below the deal, we should pay Accugas over $10 million month-to-month for provide gasoline to the Calabar Electrical energy Technology Firm (CEGC) Ltd, owned by NDPHC. It’s a take-or-pay settlement — so we should pay whether or not or not Calabar takes the gasoline. Sadly, Calabar can’t take all of the gasoline as a result of when it produces energy, TCN doesn’t have the capability to take it on the grid! Those that signed the settlement knew this lack of capability earlier than committing Nigeria to it. Who did this to our nation?

In 2015, earlier than the Accugas settlement was concluded with the involvement of the World Financial institution, points had been raised by Dr Marilyn Amobi, the outgoing MD of NBET, and the NDPHC itself. In line with media studies, monumental stress was exerted on Amobi to log out on the deal however she maintained her floor, stating, in a memo, that the NBET was frightened concerning the “sustainability of the transaction” and declaring “the close to insolvency state of affairs of the electrical energy market [and] the absent rapid market liquidity resolution”. She stated the transaction was solely sustainable if the DisCos had been absolutely settling their invoices. We went forward with the deal and right here we’re.

From 2015 until date, we’ve paid about N255 billion to 5 GenCos beneath the PPAs for energy not delivered — principally as a result of TCN doesn’t have the capability to take it. Azura alone has acquired over N42 billion out of this within the final two years. Let me repeat: due to the form of agreements we signed, we’ve paid over N255 billion for energy that Nigerians DID NOT get. To make it less complicated, you may have eaten solely six plates of rice however you may have been made to pay for 10! And you recognize what? We don’t even have the cash. We’re borrowing to service these invoices. It’s a bottomless pit! The Buhari administration has paid over N1.three trillion since 2015 to maintain the provision trade going.

Let me be clear: I’m not saying the GenCos did something incorrect. It’s their luck that authorities entered into agreements that had been going to bankrupt Nigeria. I don’t imagine it was solely after the agreements had been signed that we realised the TCN was incapable of taking the ability we agreed to pay for. I additionally wish to be clear on this: I’m not saying there must be no audit of DisCos. I’m for something that can clear up the system and take Nigerians out of this darkness. However what I can’t perceive is how making the DisCos the scapegoat will handle the decay within the energy provide trade. It will probably solely masks the choking odour of the buccaneering occurring at our expense.

If we’re honest about addressing the ability challenge and stopping our treasury from persevering with to service the pot bellies of the buccaneers, allow us to conduct a wholesale forensic and technical audit of the whole trade. We have to determine no matter is chargeable for this surprising state of the sector, re-negotiate the suicidal offers we signed (the coronavirus pandemic will, hopefully, present a pressure majeure), align the mandatory components, and take the essential steps to assist Buhari’s renewed energy initiative obtain the outlined objectives and targets. Renationalising the DisCos via the backdoor doesn’t appear to be the magic components to me. Allow us to not frog-jump from frying pan to fireplace.

I’d be sincere and confess that I’m having fun with secure energy provide the place I dwell. Our property has an settlement with Ikeja Electrical which goes very nicely regardless of a couple of hitches — precipitated principally by you-know-who: the TCN. We aren’t beneath MYTO, so we pay double the regulated tariff, and we’re assured at the very least 20 hours of energy provide every day. Faults are attended to as a matter of precedence. I solely purchase diesel as soon as in a protracted whereas. The noise air pollution is near zero many of the month. However my pleasure is just not full: this must be the story everywhere in the nation, not in my little residential space. Till this turns into the rule slightly than the exception, Nigerians will maintain groping at midnight. Actually.

AND FOUR OTHER THINGS…
APC ROULETTE
President Buhari successfully took cost of the flailing All Progressives Congress (APC) on Thursday, chairing a gathering of the nationwide government committee (NEC) to dissolve the nationwide working committee (NWC) led by Comrade Adams Oshiomhole. The ruling celebration was happening the drain on a free fall and the president appeared not involved concerning the fortune of the platform that introduced him to energy. He lastly acted. It could seem the dissolution of NWC would harm one faction and favour one other, however I might slightly see this as a possibility for the celebration to reconcile and rebuild. How the celebration handles the subsequent few months and contending forces will decide its future. Tough.

ATTORNEY-GENERAL OF APC
Am I the one one questioning why Mallam Abubakar Malami, the attorney-general of the federation, could be the one to swear within the APC caretaker chairman? Is he the attorney-general of APC or the attorney-general of Nigeria? Who swears within the nationwide officers of different political events? Article 29 of the APC structure expressly states that each officer elected or appointed as an officer of the celebration shall subscribe to the oath of workplace as supplied in Schedule II to this structure “earlier than an acceptable Principal Officer of the Celebration as could also be authorised by the Nationwide Working Committee”. Malami has been ridiculing the workplace of the attorney-general since 2015. Preposterous.

AJIMOBI FABLE
Are you a type of who say Senator Abiola Ajimobi died way back however the information was solely damaged after the APC management tussle was resolved on Thursday? If Ajimobi had died earlier than the APC NEC assembly, what function would it not have served to delay the announcement? Did Ajimobi have any energy to cease President Buhari from convening the NEC assembly? Did he have any energy to cease the dissolution of the NWC? What precisely was his being alive or lifeless going to the APC? Nicely, since we love conspiracy theories, let me add my very own: Ajimobi is definitely not lifeless. He’s someplace in Jamaica beneath a brand new identification. It’s a log of wooden that shall be buried in Ibadan immediately. Glad?

SO TYPICAL
The demolition of a constructing within the compound of the Nigerian excessive fee in Accra, Ghana, despatched shock waves via the diplomatic neighborhood, however each international locations have managed the aftermath with maturity. Ghana has promised to rebuild the construction in addition to punish the culprits. This is superb and inspiring. However there’s something we’d have missed: the Nigeria excessive fee, in keeping with the Ghanaian authorities, didn’t reply to a request to provide its paperwork for the land since July 2019! That was how the land was re-allocated to a 3rd celebration. The demolition was reckless, agreed, however when shall we start to do issues the precise means too? Embarrassing.

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