Minister of Power, Works and Housing, Mr. Babatunde Fashola recently spoke to journalists in Lagos, where he reviewed the efforts of this administration to improve power supply and defended the recent tariff hike, insisting that the distribution companies must also improve service delivery to justify the review in tariffs. Ejiofor Alike presents the excerpts:
Why this sudden visit of the Honourable Minister and all the Chief Executive Officers in the power sector to Alagbon Transmission Substation in Lagos?
We started a monthly meeting last month and the purpose of that meeting is that we felt that it will be beneficial to all of the operators, who are now private companies – except for NDPHC (Niger Delta Power Holding Company), which is government-owned and TCN (Transmission Company of Nigeria) – to go round and share experiences. They have taken over power assets. They are experiencing different things; they are experiencing different problems. Some are doing well with one problem and not doing too well with some other problems. I thought that if we could go round and take the gas people from the Ministry of Petroleum also and transmission people, we can actually see on-the-spot, what really the problems are and what needs to be done. We can have everybody who is connected with problem solving in one house once in a month and then, we can feedback. This is our second meeting and Omotosho Power Plant and Eko Electricity Distribution Company agreed to jointly host us. We ask each generation company or distribution company as it may be to combine or singularly invite us to host this meeting. Today, we will know who is going to host us next.
The first meeting was Abuja Distribution Company that hosted us; the second one was here and they are beginning to share experiences and learn from one another. All of them are not going to get it right at the same time, the same day. As I say, even identical twins have different – they are only identical but they are not the same; they have different outlooks in life ultimately and they do different things. Our meeting is going on; we just took a break to inspect the projects development here and what you will see to my right is the intake line that takes power from Egbin Power Plant into this distribution substation in Alagbon. And from there, it goes into Eko Electricity Distribution Company’s distribution facilities. I just showed your colleagues that it is not me they have come to photograph – it is actually the work that is being done here, so that people can also understand that some efforts are being made and in that way, take ownership.
This place sank completely many years ago and it is being rebuilt. That is why it is still under construction. Now, if you go in there, you will see the distribution panels – to Federal Secretariat to Banana Island to Idumogba and all of that. I think you should also go and have a look because what you will also see there now are meters. As the power is coming in, the distribution company must meter what it is receiving because it has pay for it.
And so, as it is pushing it out through cables and all of that, that is why it is now imperative that at the receiving end too in my house and in your house, there must be a meter. So, the distribution company is not just collecting and taking away; it is also paying the supplier of power, who pays the supplier of gas. So, it is an economic value chain. So, this is where we are and our work continues. I think it is important to also say that the stability we have experienced in the market is comforting and we must do everything to protect the stability we have in the market. That stability has given confidence to the banks; to the gas investors; to the generation companies and all of that – a lot of people are coming into Nigeria. They want to participate in power and it is because of the stability that the government and leadership of the President have provided since they came. We must not disrupt that stability.
The power that we have now is not enough for 170 million people. So, we need more power and it has to be produced. So, we must allow people to come in to play. You will see that in the last week of January, we recorded our all-time high generation of 5,000 megawatts. Nigeria has never reached that level of generation. They will need a lot more. But even with that 5,000megawatts, there is a lot of service work that needs to go on so that people can access that power. And so not paying for power, you are disrupting the system; diverting lines, you are disrupting the system, vandalising cables- you are disrupting the system; illegal connections, you are cheating in the system – it is part of anti-corruption. Everybody must pay for what he uses.
You have had first-hand interaction with the operators and seen the actual problems in the power sector through this monthly meeting, but that is not the same with the users of this power. They don’t seem to understand this connection. Are you overwhelmed by what you have seen and what is your biggest headache from what you have seen so far?
I think that you owe a bigger responsibility now- all of you in the media and I have spoken to Engineer Olotu (Chief Executive Officer of NDPHC). He is one of the very foremost knowledgeable people in this industry. I think you should just sit down with him; let him take everybody, who holds a camera through the energy process so that you are better able to help us enlighten the people. As I have complained today, coming to photograph me – it is not me that people want to see. Okay, it is what is happening to their power supply that they want to see. That is important and everybody must know how power is produced.
What is then the actual problem you have observed so far?
The problem is everywhere- the problem is within us; the problem is with gas; the problem is with transmission; the problem is with how the privatisation exercise itself was conducted. But as I said before, I am not going to lament what has happened in the past. So, the first move we have made when we accessed the situation, nobody was happy with it when we took over. So, this is a problem that has been here for 16 years if you put it mildly; it is a problem that has been here for 100 years ago if you put it really extremely. I have been here for less than 100 days and I think we can solve this problem if you give us the tools that we need to do it. I say that this problem can be solved and the day I see that it cannot be solved, I will gladly come and tell you that I don’t think it will work.
You are here consulting with the operators but out there other people are not happy with you; the labour is there protesting?
I understand that people who have been disappointed over a long time feel a sense of concern that again tariffs have gone up. But the truth is that this tariff – we ought to have been there from day one. I don’t know why the government of yesterday was not courageous enough to tell us the truth. This is why they have MYTO (Multi-year tariff Order) every two years. So, they have given the impression that tariffs should be increased every two years. What we have done now with NERC (Nigerian Electricity Regulatory Commission (NERC) is to give Nigerians a 10-year tariff. If you look at that tariff painstakingly, you will see that in about two years from now, it will begin to go down on a sliding scale. Whatever price the tariffs offer now is a lot cheaper than diesel generation; than petrol generation. I think the important question is this: It is a question which my own relation has asked me. You are the minister of Power and where is the power? It is a painful pill and I must appeal that we swallow it; it is a pill that is painful. This is the first major decision in power that this administration is taking. There are other problems- we are fixing the transmission; people are not investing in gas- they are just beginning to show interest. So, even if you have all the power plants, where is the fuel? I can only appeal for some understanding and some trust that we do this in the best interest of our country. It is a hard decision but I think that down the line, we will have cause to be happy.
Now that tariffs have been increased, how can service delivery be improved?
The distribution companies must improve service delivery. That is why we are having this monthly meeting with the distribution companies. They have to install meters; they have to install lines; they have to install transformers and that is the question I was going to earlier that the question on the mouth and lips of everybody is: why can’t we have the power first before increasing tariffs? The answer is that power business is funded with finance from banks. So, no bank is going to lend money to you if cannot show a recovery price. So, if you want to do a transport business, and you want to buy a bus and you are telling the bank that you are going to run it as social service where no price is paid, the bank will say that you are joking and that it will not lend you money.
That is the reason why we can’t have power first before increasing tariffs; it has to be produced before we have it and it has to be paid for. The supplier of gas is not going to supply unless he sees his cash. So, that is the painful thing; that is the different thing about this business; it has to be paid for before you have it. So, I hope that you will help us find the words to convey this to our people. But we are saying to the distribution companies now that you must improve service delivery. It is even in their best interest really- they have contractual obligations on many sides- government and the distribution companies. Before we came, some of these contracts have not been complied with. So, let’s move forward; let’s share the problems as they come up. We are going to improve transmission. We are working also with NNPC and Ministry of Petroleum to improve the supply of gas. It is a journey and step-by-step, we will get there.
What is your future projection in terms of generation?
The simplest thing to do is to commit to megawatts. But even if I have 1,000 megawatts only on the grid, can people access it? That is the real deal. That is the real service. As far as megawatts growth, from 5,000 megawatts we are calibrating them with a meeting we are holding now and I don’t have to discuss megawatts. I said before that we will see incremental power output if everybody allows the stability to stay.
Once you shock this system, gas will hold on, generation will hold on and contracts will stop. This will set us back because the person who has taken gas now can’t retain the gas. So, it has to push it out. The people must understand how fragile this system even at the best of times can be. In terms of service delivery and all of that, broken transformers have to be replaced; even your car breaks down.
So, maintenance issues, spare parts; we do not manufacture many of these things; we import them; they are stuck in the ports; we are trying to get some out, they have released some; some are in courts; some people have been in courts for 13 years. We are meeting with them and trying to negotiate. Happily, they are listening to us to settle out of court So, those who are fighting are beginning to stop the fight; they understand. So, our friends in the labour should not start a new fight; we don’t need one. We need productivity. In any event, their members in all these distribution and generation companies are still working. So, let’s stop fighting; let us produce.
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