Between Energy Committee and Tariff

Despite the Federal Government’s denial of a plan to increase the electricity tariff for consumers, it would seem that the controversy already generated by the Minister of Energy (power), Hajia Fatimah Balarabe Ibrahim’s original announcement is not about to disappear. On a daily basis, it has been one condemnation or the other from different sectors of the economy particularly from the Labour Unions, the Manufacturers and Commerce Associations. What this clearly shows, is that the Federal Government still needs to do a lot to make Nigerians believe that it means well and that its plan to revamp the nation’s important energy sector is actually on course and devoid of other social conditions.
About ten days ago, during the Nigerian Oil and Gas (NOC) conference, the minister had announced that for the nation to enjoy a stable power supply, the ailing sector needed a minimum of $150 billion. This she claimed would enable the sector to generate a minimum of 100,000 mega watts of electricity by 2015. She said there was no way Nigeria could achieve a 13 percent growth and also attain the world’s top 20 economies by 2020 unless the targeted quantum of power supply was met. She envisaged that by 2020, the nation would need to generate no less than 290,000 megawatts. And since the government does not have that kind of resources now, the need to attract huge private investment into the sector has become more than imperative. Unfortunately, she argued, poor electricity regime which currently stands at N6.00 per Kilowatt hour (km/h) discourages investment and draws back development of the power sub-sector. Therefore for serious investors to be attracted to invest in the energy sector, she said the current price being charged consumers would have to go up.
The outrage the minister’s proposal has since generated is quite justified. The proposal only reminds Nigerians of the old lazy argument used to legitimise the almost annual increase in petroleum products prices since the last 20 years without any improvement or iota of efficiency in the sector. Here we go again with the energy sector! It appears as if Nigerian policy makers have stopped thinking and instead have become accustomed to duplicating solution from one sector to the other. Their understanding of social conditions and reality of Nigerian economy appears illogical and unrealistic. Since 1986, Nigerians have lost confidence in the government’s ability to deliver on promises after calling for sacrifices from all and only to fail woefully thereafter. We had thought the challenge before Yar’adua’s government was first of all to regain that confidence by delivering on such promises as constant electricity supply before calling for more sacrifice.
Even by government’s own admission, it has over the years mismanaged the energy sectors. Compared with South Africa with 40 million people which generates 36,000 megawatts and Iran with a population half of Nigeria’s which generates 45,000 megawatts, Nigeria today can only generate 3000 megawatts. With 14 available generating plants, three hydro and 11 thermal, they run at undercapacity. Most of these plants have become obsolete and in the last 20 years some of them have never had turn-around maintenance. Even the new plants at Geregu, Omotosho and Papalanto could only operate at 50 percent capacity due to shortage of gas supply in a country with excess gas resources.
While we note the presidency’s retraction of the Minister’s proposal when it said “Nigerians can be rest assured that no kobo will be added until they begin to enjoy stable electricity”, we wish to caution on frequent flip-flop on policy matters by government officials. New measures are announced by one official today only to be denounced by another official tomorrow. In this particular case, it is yet to be understood how a minister who was made a chairman of an 11-man presidential committee on energy inaugurated on the 19th of February and mandated to look at ways to deliver 6000 additional megawatts over the next 18 months and add extra 11,000 megawatts by 2011 from various sources and submit report in 30 days, could come out a day after proposing a tariff increase when the committee was yet to even sit. This is like putting the cart before the horse. This is not good enough for a government that claims to have an economic master plan and wants to be taken seriously.