See shocking reasons Why power sector crisis won’t end soon
Joe Ajaero, the president of the Nigeria Labour Congress, NLC, can be an interviewer’s delight. That
is if you do not allow him to hijack the session. Versed in virtually all aspects of labour, Ajaero can talk for as long as you allow him. Blessed with institutional memory, the unionist laid bare the problems confronting Nigeria’s power sector, tracing it back to the days of the NDA, ECN, NEPA and PHCN, before the shambolic privatisation process which has brought the sector to this sorry pass. He was our guest at Vanguard last week, a visit which he described as home coming, having worked there as a journalist. In this session, he speaks about the welfare of journalists and why the professional leadership bodies should do more to help retiring colleagues. He also counseled the government on how to tame the scourge of corruption. Excerpts
Surviving in Nigeria throws up a lot of challenges?
Everyone understands that it is difficult to survive in Nigeria. And that brings me to the issue of minimum wage demand we are making. You know, if you check the cost of living index in this country, you can’t get less than that N615,000 we are asking for.
That N615,000 we ask for is not for somebody to live in a flat, it is for maybe a room and parlour. You can’t even buy a phone or recharge cards to communicate. It is not for somebody who will buy a recharge card. If you check all that we analyze there, there is no room for entertainment.
And you dare not have relations, or more than four children and one wife. If you do, you will not survive in this situation. You can’t pay tithe or offering in church, and it’s not for people that have cars because you can’t service your car. We looked at it, N500 per meal per person in a family of six. In a day, it’s about N1,500. For six people in a month, we are talking of N270,000 for feeding alone. We looked at housing and accommodation and fixed about N40,000 for a room and parlour, in a conservative sense. We looked at education for our four children.
We put N50,000. Definitely, it’s not a private school anyway. We looked at gas and kerosene, all those issues. If you take one cylinder to refill it, it is about N14,000 or N15,000. Now, if you have to refill it two times in a month, it is over N30,000. For electricity, before the current tariff increases, we put N20,000 . Of course, you know better now, you know how it goes. And by the time you bring all these things together, that was how we got N615,000.
Is that N615 realistic, without prejudice to all the breakdown you’ve provided?
Before the removal of petrol subsidy, NLC would not have asked for more than N150,000 for salary review.
But immediately that area was touched, from transportation, housing to foodstuff, everything changed. And these are the things we need. You can’t even save one naira. This one is not for you to have any savings. And if anybody is now saying, “Oh, you are wrong in this item because we itemized it”, it is subject to negotiation. We have already told them that all things being equal, if you bring inflation down, work on the value of the currency and then all things being equal and at a controllable level, then we can think of something lower.
But if they remain like this and there is no effort, no conscious effort to even keep inflation down, then it will be difficult for anybody to tell you that you can survive on less than this. However, even the global index from the UN says that no human being can survive on less than $2 per day. Now, if you take it from that premise, $2 per day for an individual, for a family of six, is $12 a day.
In a month, you are going to have $360. You can use your calculator and check. Check all these things that NLC is saying. This is what somebody needs to survive. It’s not a luxury. It’s not for somebody that has a car, because if you fill your tank, over 50,000 will go for that and it is still conservative. So you can’t afford to own a car. And then the transportation, we looked at maybe N3,000 or N3, 500, because the workers live in fringe areas. By the time you go to work and come back, in a month, you are spending almost N90,000. You are not even supposed to have a social life and, no security is included in these costs, assuming the place you are living they are paying for security. You can’t pay for it. We looked at all these and arrived at N615,000. But it is open for negotiation.
This famous N615,00, will it be for eternity because the way NLC is pursuing it…
(Cuts in) We will agree to put a reopener clause that will not be up to five years because if they even pay you N615,000 and you wait for the next five years, you will suffer. The way things are happening, unless inflation is addressed.
We know that some employers in the private sector and some editors are worried about how they are going to pay this N615,000. But if we work together, you know, we can bring inflation down. Our foreign exchange, we control it. When this government came, we gave them a proposal on Compressed Natural Gas, CNG, where we have a conversion kit and convert our vehicles. Any vehicle that you are filling with about N30,000 now, it won’t take you up to N10,000 to fill it if it is CNG. And the CNG is eco-friendly. The deposit in this country can last for the next 500 years. Those are alternatives we provided. If they do that and you touch the issue of transportation, you’ll see that food stuff and everything will go down. Of course, for goodness sake, N30,000 is a lot of money in any currency. You can’t pay a salary of 30,000 dollars. You can’t pay a salary of 20,000 dollars. But because inflation and other factors have made a mess of our currency, that is why the figure has now become an issue. We are open for interrogation, either on minimum wage or other issues that are bothering us.
Corruption is another issue that is as serious as inflation?
The issue of waiting for corruption to happen and we start to fight it can not serve any good. If there is no inbuilt mechanism to stop corruption from happening, the Nigerian economy will continue to bleed. If you watch now, the people that are being mentioned, let’s say, a former minister. What he did in the past. Is there no inbuilt mechanism to stop him before he moves that money? Some security men saw this happen, or they will see it happening, and they will not do their report to stop it. They will wait until it happens. The best thing is for us to be proactive.
If it is a contract they are awarding, a contract for N20,000,000, and you are putting N200,000,000, and the contract passes through, and the person commits the offence. Maybe if he is still alive, you can prosecute him. Now, there is no system that can stop the person from awarding a contract of N20,000,000 that has been inflated to N200,000,000. Until we become proactive to stop it from happening, this thing will continue to be there.
But some of your members work in these ministries…
I was somewhere not long ago where someone raised the issue that our members are there in the ministries when this corruption takes place. And our people can’t say, no, stop it. I responded that successive governments up until today have weaponized poverty. If you ask a worker to carry this carton and put it in the boot, he may not know what is there. Unless it is going to pass through his table to approve, then that is where you hold the worker responsible.
But that driver or the cleaner, they will tell me to drop this. And when he finishes, you give him N10,000. You give a worker that is earning N30,000, N10,000 once, he will salute you and ask you whether there is another carton to be dropped. We should learn to be proactive. Now, even the anti-graft agencies, their jobs should not be when it has happened. They should let them help us before it happens. Even if we were to station them in all the offices, every contract document that passes through, they will vet it so that we can stop it there. If we do that, Nigeria will be better for it. But if we wait for people to finish and some will run, it won’t help.
The ones being mentioned now are the ones that were so pronounced. Now, you see a governor of a state. You are talking of over N80 billion. And it is only this month or last month that they paid their salaries completely. And these are the people that are telling you that they can’t pay a salary, that their states are not viable. And you look at the level of loot, N100 billion, N80-something billion in that order. You can see that the problem is not lack of money, but getting our priorities wrong. So, if we work on how to stop corruption from happening, that will be great. But when it has happened, even if you give them one million years, nothing will change.
What are your thoughts on the crisis in the power sector?
We have fought over these things again and again. There is an enshrined interest in that sector. In fact, the issue of privatization was kind of settling the members of a political class. In the first instance, it was not properly done. It was done by proxy. On a few occasions, where people gathered to hurriedly form a company in CAC, the parameters for them to have taken over such companies in the first instance were wrong. For instance, they were supposed to be financially strong, have managerial ability, and attract FDI (Foreign Direct Investment). No one dollar came into the Nigerian economy by that privatization . No one dollar, I repeat.
They took loans from Nigerian banks to buy Nigerian utility companies, which in the first instance created liquidity problems in the banks. When they couldn’t pay, the banks took over almost 70per percent of the DisCos. Ibadan electricity, Kaduna Electricity, Kano Electricity, Port Harcourt Electricity, Abuja Electricity, Bini Electricity, etc all those. How do you expect efficiency from a bank running an engineering company? Now, the current government seems to be showing interest in reselling the companies instead of nationalizing them.
You do not seem to buy that idea?
The first thing you should do is to take it back. And then put it into shape and find out what the problem is so that even if you want to still go on with that policy, you’ll have clarity. Before privatization, you had a company that was producing 4,000 megawatts with one MD and four EDs. You balkanised it into 18 companies with 18 MDs with EDs four times 18. They are collecting their salary, bigger salary, on these same 4,000 megawatts. In the last 10 years, no power plants have been constructed. How do you expect the 4,000 megawatts to serve the country? The 4,000 megawatts have remained constant, and demand is increasing. Even in your house, you are buying new gadgets that are contesting for the same 4,000 megawatts.
Countries all over the world make sure that even if it is half a year, they bring in 500 or 1000 megawatts. And as of today, Nigeria should be thinking of a power plant that they will commission by December or by 2025, 2026, because it takes a gestation period of about three or four years. If you are not constructing anyone today, there is no one you can commission in the next three years. All of us are saying the power situation, power situation, 3000 megawatts.
Former President Ibrahim Babangida administration did a feasibility study on the Mambilla power plant. Twenty something years later, Mambila has not been constructed. Mambila is supposed to be a hydro plant that is capable of giving us 3, 600 megawatts, which is what they are producing now. But one plant could have given us all that. The same thing with Zungeru, 900 megawatts. Politicians are fighting over power plants. Nobody is constructing any power plant.
What we are seeing are political power stations. Someone like Agagu, doing papalanto Omotosho, Geregu power plants where you don’t have sources, where you need to draw a gas pipeline from Bayelsa or from any other place to where the power plant is built. What happens all over the world is that where you have too much heat, like in Yola, you tap the solar and supply the people around there. Places such as Enugu, Benue, and Kogi states where you have a large deposit of coal, you build a plant there that will serve the whole country. Where you have water, like if you go to Niger State, those are the ones sustaining us. Like Shiroro, Kianji, and Jebba because it is hydro.
If you go to a place like Katsina because of the wind there, you can install wind turbines. When we have various energy sources, Nigeria will be moving, and there will be construction on one or two periodically. Maybe it was during the time of Lyle Imoke that they achieved 4,000 megawatts. 20 years later, no new power plant has been constructed, and once constructed, there is no gas to fire them.
That’s a scary situation you have just painted?
Now, if you have such a situation, the power situation will continue to worsen. By the time you now sell it to people, and then they are increasing the tariff on that same 4,000. The basis is that there must be availability before you talk of accessibility and affordability. A commodity that is not available can not be affordable. It can not be accessible. The Nigerian government has not looked at this.
The global index is one million people for 1,000 megawatts. You have a country of over 200 million battling for 4,000 megawatts. How can you develop?
South Africa, they have 50,000 megawatts, is around 45 million or so in population. We have not even started. That is why Nigeria is seen as a country with the highest number of power poverty. Nothing is being done to change it. I can’t tell you of a power plant that is to be commissioned this year or next year. The private sector can not do it. That brings us to privatization. At what return on investment are they going to build a power plant to recover it? An average Nigerian investor will wait for 20 years to recover his investment? It is not possible. That is why in developed countries, investment such as this is a pre-industrialization activity. If the government has given us the number of megawatts that we need, we can talk about who now manages it?
There used to be Niger Dam Authority, NDA, and ECN, which is the Electricity Corporation of Nigeria. In those days, ECN was in charge of the distribution angle. They collected money, and they were not remitting to the generating arm. And that was what led to NEPA. They now merged them. But what the Jonathan government that finally did the privatization did was to break them again. They now have transmission, they now have distribution, they now have generation. Now, the distribution companies are still collecting. Today, you discover that the generating companies are saying they are owing them. We didn’t learn from history. What led to the amalgamation of those companies to form NEPA is still happening now. We complained then and warned them that this problem would happen again.
The same problem is here again as if we are people without institutional memory. That is the challenge we are facing.We are still waiting for this administration to show their own power policy. It’s important.
In summary, what is the way out?
Well, the issue of tariff increase will continue because they are passing the cost to the consumers. Then, depending on gas or fossil oil, it’s very expensive. If you have renewable energy, renewable in the sense that if you are generating water, water is flowing. We are not looking at the cost of oil or the cost of buying gas and all that. Now, if you have it, assuming Nigeria diversifies and we look at Mambilla and Zungeru, we will be having about 4,000 to 5,000 megawatts in addition to the ones we are having now. Then it will be cheaper energy to us. There are over 30 river basins in Nigeria. Some of them can give us even 30-30 megawatts or 50 megawatts.
If you store turbines in those river bases, in an emergency, we can even shore up to almost 1,000 or 1,500. You can see that we can do more with solar. There is one power plant in South Africa, ESCOM, producing about 2,000 megawatts through coal. Nigeria is not even talking about the large coal deposits in the country. If we diversify all these areas, before long, we can make even 20,000 megawatts. It will go a long way for us. But if we don’t generate, there is nothing to transmit and distribute. If we are not building today, you can not say ‘let there be power’. Tomorrow, there is nothing that we are going to commission. It is important we start now.
But if we say we have privatized it, it has been there for the private sector since 2005, over 20-something companies were licensed to generate. None of them has generated one watt. Power is central to development. You can’t run an economy without power or run it on generators. It is not done. Those are some of the challenges. Even Nigeria is talking about having a country where you have zero tolerance on emission by 2060. How can you achieve it if you are still burning fossil fuel in terms of power generation? Climate change is already here with us because of the way we are not conserving our energy.
The minister is telling us that we are going to hear it if they don’t increase tariffs. But he is not providing any option. The calamity, the irony even, is that the government said they have privatised. The issue of pricing is not the role of the government. If you deregulate a sector, it should be subjected to market forces. Now you are talking of cost reflective tariff. You are not talking about service reflective tariff.
They are not providing meters. Have you seen any product, even rice, and a guy without a cup to measure it? It is not possible. I was even in one committee with Festus Keyamo on the six million metering project.
We moved around the country and identified indigenous meter producers, and I said, “Give them this job because in India, you can enter a shop and buy a meter.” But today, I don’t know what has happened.
Now to the issue of tariff, looking at this high rate and putting everybody on the same band, or band A. Why will you give this man 20 hours and give me three hours? Is it fair? It is social injustice. Is it by choice? If you give me a meter if I like, I burn 20 hours now. Does it concern you?
There is already a regulatory capture. When the regulator only listens to what the investors in the sector are saying, or they appoint a regulator, they will be telling you to increase tariffs . A regulator is supposed to be independent. Why must you increase the tariff if you have not done ABCD? When the powers are in the situation has not improved . The very moment you have a regulatory capture in any sector, that sector is gone .
