•Borrowings necessary to stabilise sector – Akinsiju, BMO
By Mudiaga Affe, Kassim Omomia, Ben Ogbemudia, David Lawani, Cajetan Mmuta and Idu Jude
Concerned Nigerians, including economists and technocrats, have faulted the huge sum reportedly expended by the federal government in support of electricity generation in the country.

The expenditure, they said, was a huge waste, considering the epileptic power supply and worsening blackouts recorded in many parts of the country.

According to the World Bank, the federal government has since 2017 borrowed N1.3trn even as it plans to borrow an additional N3.08trn before 2023, the bank disclosed this in its recent report entitled ‘Resilience through Reforms’.

It noted, “To ensure that Gencos and gas suppliers receive enough payments to continue generating electricity since 2017, the FGN has borrowed a total of N1.3trn ($4.2bn).

“In 2019, total FGN support reached N524bn ($1.7bn), 0.4 per cent of GDP – higher than the N428bn budget for health and just 20 per cent less than the N650bn budgeted for education.”

Nigerians, however, posit that despite this huge amount, electricity supply in the country has remained a mirage.

They were unanimous that most industries had folded, while artisans, small and medium scale sector operators faced hard times occasioned by inadequate power supply.

Those who expressed concern over the development include a professor at the Benue State University, Armstrong Adejo; his colleague at the Department of Electrical Engineering, University of Nigeria, Nsukka, Prof. Michael Nwaokobia; an economist, Niyi Akinsiju; an Agro economist, Prof. Agbarese Osifo; Chairman, Nigeria Labour Congress (NLC), Anambra State, Jerome Nnubia; First Deputy President, Awka Chambers of Commerce, Industry, Mines and Agriculture, (ACCIMA), Caroline Ajuora, among others.

Adejo, while decrying the waste, called for a proper review of all financial transactions in the sector from 1999 to date.

Nigerians, the academic added, should engage the authorities so as to ascertain the reason for continued poor and degenerating power sector in the country.

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Adejo said, “We should begin to systematically document the financial transactions in this sector right from the Obasanjo era where N18bn or so was said to have been spent on the power sector to Goodluck Jonathan era and the present government. Let us systematically try to know what came in and hold those who presided over them responsible.”

“Let us start showing them that we are concerned about issues, otherwise, if you talk from now till eternity, there will be no solution”.

According to him, there are cover-ups, especially for those who may have been responsible for the epileptic power Nigerians suffer, which the media can deploy the Freedom of Information Act to unravel.

“A lot of things happened that Nigerians are not bringing out because those who are involved are still alive. That is why they are covering a lot of things. But while they are alive, freedom of information will gradually yield certain things,” Adejo said.

Nnubia, who described the development as unfortunate, said the waste contradicted what the All Progressives Congress (APC)-led administration of President Buhari promised Nigerians some years back.

He wondered what privatisation of the power sector meant when the citizens had no access to electricity.

Nnubia said, “It is an unfortunate development because the idea of what we were told when some of these assets were being privatized was for the private sector to run them efficiently. So, one wonders why after privatisation of the GENCOs and Discos, the government is still investing in the same sector. That shows you the level of corruption in this country.

“You can see that the economy is in a shambles with inflation and even high electricity tariffs. So, one begins to wonder the essence of the privatization? Why is the government still investing in the assets and establishments they have privatized? It is unfortunate.

“For me, I don’t see any reason for this. If the privatization is not working, the government should retrieve those assets unless they are doing it for their cronies and political gimmickry. This government had told us they were coming to fight corruption for a better economy but day in, day out, things are worsening. So, it is very unfortunate”.

Frowning on the development, Osifo blamed the shortcomings in the sector to corruption and inefficiency.

He also noted that the subsidy regime in the petroleum sector was being replicated in the electricity sector.

The agro-economist said, “The money guzzling is to guarantee steady payment to the GENCOs and gas suppliers for them to continue generating electricity. The power generated is sold to the Discos.

“Even though the six GENCOs and 11 Discos are private sectors investment outfits, the Federal Government through the bulk electricity trading company buy electricity from the GENCOs and resell to the Discos.”

According to him, the federal government uses the Nigerian Electricity Regulatory Commission to dictate what tariffs the Discos can charge consumers.
He described the scenario as an aberration as well as a clumsy economic policy arrangement.

He said, “Having privatized the sector, market forces ought to be the determinant of the tariffs paid by consumers. The vexed issue of subsidy in the petroleum sector is being replicated in the electricity sector.”

The don added, “The FGN is subsidizing corruption and inefficiency. However, high tariffs translate to a high cost of production of goods and services to the economy. This also led to cost-push inflation.”

“The world bank and the other Brent Woods institutions are in the habit of prescribing the macroeconomic model used in the developed economies for the underdeveloped and developing countries.”

He posited that the “Privatization of the electricity sector has been a disaster compared to the success story of the telecom sector.”

“Electricity is a key sector that affects the industrial and economic sectors. The government needs to invest and manage its investment in a sustainable manner before privatization.

“The current poor electricity supply, especially access to grid electricity is responsible for the low production and productivity of the Micro, Small, and Medium Enterprises (MSMEs). This makes made in Nigeria goods to be very expensive and uncompetitive in the international market.”

“Virtually every household and every MSMEs own gasoline generators. These stand by generating sets generate far more than twice electricity than the national grid.”

“The Federal government needs to formulate sound policy arrangements for the sector. The current hybrid of the combination of privatization and government control is responsible for the very poor performance of the electricity sector in Nigeria.”

Ajuora, who also lamented huge borrowing, said the citizens were not witnessing any corresponding positive impact.

The ACCIMA boss, nonetheless, called for synergy among experts and stakeholders in order to redress the anomalies in the sector.

But contributing, Nwaokobia said there was nothing wrong in borrowing to finance a project worthy of alleviating the lives of the people.

He, however, faulted the idea channelling the money for other purposes.

Nwaokobia said that the World Bank in its wisdom could not have said it without due investigation and prior knowledge of Nigerians’ style of implementing projects.

The don added, “Just in case the power intervention borrowing hits N3.08tn by the year 2023, how can we pay back and from which source? Despite all this money coming in, Nigerians are still in the precarious situation over non-availability of power and we also have challenges involving possible economic recovery and after ward”.

Toeing the same line, an engineer with Julius Berger Plc, Maxwell Ibitoye, said the Nigeria would surpass the World Bank prediction of N3.08tn, on power intervention, especially as he alleged that she has failed to empower local engineering companies to help protect the sector from collapsing.

“Check out the indigenous companies and how they are being treated. Ordinarily, when a country goes for a foreign loan, it should include empowering the indigenous companies but the reverse is the case here and the way we are going, we will soon surpass the World Bank prediction. Why do we keep borrowing?

“Had it been that the local companies source loans through the federal government then they can be involved in the building or maintenance of the existing facilities across Nigeria? Here we do not imbibe this culture of encouraging our indigenous industries.

“How can we be a giant of Africa, with no industries to employ workers? We forget that steady power ensures vibrant industries that can create employment for the youth. It is a source of economic stimuli. It is because of these inadequacies that many companies have left Nigeria for neighbouring countries such as Ghana and Republic of Togo.”

But the Managing Director of Abuja Electricity Distribution Plc, Ernest Mupwaya, said that the same World Bank Board of Directors in 2020 gave about $750 million to Nigeria and that was after they cried out in 2017 that the country’s borrowing might hit a record-breaking level.

“The organization did it to ensure success and to improve the reliability of electricity supply, achieve financial and fiscal sustainability, and enhance accountability in the power sector in Nigeria.

“About 47 per cent of Nigerians do not have access to grid electricity and those who do have access, face regular power cuts. In addition, the economic cost of power shortages in Nigeria is estimated at around $28bn- equivalent to 2 per cent of its Gross Domestic Product (GDP).
“Getting access to electricity ranks as one of the major constraints for the private sector according to the 2020 Doing Business report. Hence, improving power sector performance, particularly in the non-oil sectors of manufacturing and services will be central to unlocking economic growth post-COVID-19,” he added.

Also, Dr. Sam Amadi of Baze University, Abuja, said the bank might have reacted negatively since the same body some years realised the need for power intervention in the country.

“The World Bank on its own realizes the importance of power and did say that lack of reliable power stifles economic activity and private investment and job creation, which is ultimately what is needed to lift 100 million Nigerians out of poverty.

“So, how can they turn around and say something like this. I know that the objective of this borrowing is to help turn around the power sector and set it on a fiscally sustainable path,” he added.

Meanwhile, an economist, Niyi Akinsiju,said the country needs the additional N3.8trn to fund the power sector properly.

The economist said, “The borrowings are compelled by the need of government to ensure that generating companies are funded enough to purchase gas, to, in turn, generate power and supply distribution companies which they are to sell to the power-consuming public.

“It is both an operational and fiscal anomaly given the privatised status of the power sector through minus the transmission segment of the electric power value chain which is still owned 100 per cent by the federal government. However, the reason for this fiscal malaise is that power is being supplied to the user at tariffs that are below the cost of generation and distribution.

“This is further exacerbated by insufficient tariff collections, sometimes, not up to 70 per cent of the total invoice. So, essentially, the government is subsidizing electricity consumption”.