Did Minister Babatunde Fashola Get It Wrong? – By Simbo Olorunfemi

We cannot, for the sake of some agreement and a rigid reading of the law, continue to short-change ourselves by not removing the hurdles in the way of off-grid solutions that will enable independent power plants set up, based on potential demand, to generate and distribute directly to customers without any go-between in form of a distribution company and an overbearing regulator.

Starting out, Mr. Fashola seems to have gotten it wrong. From the outside, one would think his quick and wholesale embrace of what he met on ground in the power sector was rather disconcerting, even if one can see that he felt he needed to ensure continued investor confidence in the sector. Some of us who felt that his coming in would unravel the knotty problem that has almost grounded power supply were unnerved at his pat-on-the-shoulder approach.

He could not have been helped by the fact that the same team that led us to where we are were, under the previous regime, were left intact to baptise the minister into the industry. These are folks whose fixation seemed to have been only on what they call right or appropriate pricing of energy, while all that has to do with the consumer was regulated to the back, fit for occasional talk-shops pretending to be Consumer Fora. It was discouraging to see the minister so quickly integrated into their camp, speaking for an increase in tariff, even in the face of the harsh economic reality and reprieve from an immediate increase supposed to have been obtained from the court.

It was understandable that these people chose that teething period to quickly sink their teeth into another chunk off the flesh of the consumer. That was the reality forced upon us. The Nigerian Electricity Regulatory Commission (NERC), which had disingenuously politicised the issue of electricity tariff, even claiming some reduction on the eve of the 2015 election, was quick to lead the minister into sanctioning an increase in electricity tariff, even when DISCOs had failed to meet the pre-agreed obligations to meter customers and improve infrastructure. It was a case of pushing the consumer down the slope, with the mouth of the Distribution Companies open.

There were no guarantees for the consumer and we were worried. We said then that the minister had only sanctioned placing the cart before the horse, but our concerns did not seem to matter. A decision to proceed, irrespective of complaints, seemed a fait accompli.

That was quite strange. From what we could see, Mr. Fashola had inherited a defective sub-structure in the sector, with the questionable process under which privatisation of power asset took place. There were allegations that some of those who bought some of the entities neither had the technical competence nor the financial muscle for the task at hand. The least we expected was a review. But the lawyer in the minister seemed to have weighed in on the side of the sanctity of agreements already executed.

…I equally felt that with Mr. Fashola’s experience in Lagos, especially with how the State’s power generation initiative got caught up in a storm induced from the centre – something which the minister, as governor, was quite vocal about – whatever legal or constitutional reforms needed to free up the system will be his immediate charge.

With speculation that some of these entities might have, in fact, breached some terms of the purchase agreement, it did not seem that there was going to be any review. So, we got stuck with same of the same. Rather than interrogate that process and possibly reconsider that foundation, we elected to continue to erect this superstructure of reforms and new dreams on this suspect substructure. Over a year after, it is difficult to tell where we are. For the consumer, he is in darkness, literally and figuratively, unsure of what is going on and where we are headed. It seems even with privatisation sold as the elixir, it has been one step forward, two steps backward.

Can we continue to carry on like this? I am no expert in the field but I doubt that this arrangement in which generation, transmission and distribution sit on different platforms is the best approach to urgently meeting Nigeria’s power need. I have always felt that we critically need to open up the off-grid window to enable power companies come in, generate and directly distribute to consumers, without this complicated framework by the NERC under which evacuation is supposed to be done “through a distribution system which is connected to a transmission network operated by a System Operations Licensee”.

I understand there might be some legal or constitutional bottlenecks in the way of a robust implementation of that which has largely rendered even the embedded power generation option and licensees by the NERC, under the present regime, largely ineffective, making little or no impact.

But I equally felt that with Mr. Fashola’s experience in Lagos, especially with how the State’s power generation initiative got caught up in a storm induced from the centre – something which the minister, as governor, was quite vocal about – whatever legal or constitutional reforms needed to free up the system will be his immediate charge. Perhaps, he is working on it. But what we are faced with is an emergency in that sector. We cannot, for the sake of some agreement and a rigid reading of the law, continue to short-change ourselves by not removing the hurdles in the way of off-grid solutions that will enable independent power plants set up, based on potential demand, to generate and distribute directly to customers without any go-between in form of a distribution company and an overbearing regulator.

This arrangement where the entire country is dependent on the national grid has run its course. It simply does not make much sense. It can no longer meet or sustain our needs for the future. There is also the security implication of our reliance on the grid for the whole country. Off-grid solutions are at the heart of what some countries are doing to increase access to power.

While we sort out the issues of upgrade on transmission lines, gas supply to plants and all those niggling issues, we need to urgently move in the direction of bypassing the present arrangement which has only delivered darkness and offers little hope of delivering anything else.

The legal framework which allows for the farming out of territories to DISCOs, where they operate as monopolies, does not seem to be with the best interest of the country at heart. Why replace one national monopoly with regional monopolies, locking everyone in?

Needless to say that the DISCOs will protest any attempt to break a hold on their territories, citing investment made and agreement signed. That will only be, if they are not found in breach of one or two of the clauses in the agreement. This elaborate system which seems to have engineered disconnect between GENCOs and DISCOs on one hand and other ‘Cos’ out there, is simply all over the place.

As difficult as things are, there must be many companies who will be interested in taking advantage of the off-grid window on commercial basis to set up power generation plants in Nigeria, to tap into the different resource bases – water, sun, etc. and light up Nigeria, if the window can be fully opened.

While we sort out the issues of upgrade on transmission lines, gas supply to plants and all those niggling issues, we need to urgently move in the direction of bypassing the present arrangement which has only delivered darkness and offers little hope of delivering anything else.

I am no expert though. I am just another Nigerian, sweating it in the dark, while figuring out what to make of our local monopoly, Ikeja Electric. It has been investigating, for 16 months now, the crazy estimated bill it slammed on us, with no result forthcoming. There have to be other ways out of this enduring darkness.

Simbo Olorunfemi works for Hoofbeatdotcom, a Nigerian Communications Consultancy. Twitter: @simboolorunfemi