FG should revoke sale of power stations – Stakeholder

The Federal Government has been called upon to revoke the sale of power stations and look for investors as a result of non-performance by the power companies. The Executive Chairman, Mak Mera Nigeria Limited, Chief Michael Olorunfemi stated this in this interview with SIMON UGWU

Debt owed electricity generation and distribution companies
It has always been so for a long time. It is the government that is owing the Gencos and Discos, even when it was a complete monopoly under the government, it was government owing government. But since the power sector is operated by private companies, something has to be done with regard to the payments that should have been made to them. If you owe somebody like they owe now, you are more or less paralyzing his business so that he cannot operate. This should be addressed so that the power companies can forge ahead.

Vandalisation of power equipment and energy theft
There should be a law stipulating punishment, the unemployed today have taken to crimes like vandalism of power equipment, may be as a result of insufficient number of police to police the whole nation and the power installations. Sometimes when we hear news of arrest of the vandals, we don’t get to hear the news of prosecution.

Until people who involve themselves in this crime are punished, there will not be a deterrent to others. So there must be enough police personnel to police the whole area and there must be a law that will stipulate punishment for those who are arrested with regards to vandalism of power equipment. For instance in the case of kidnapping, the law says if a kidnapper is caught, he faces death sentence. Unless there is serious punishment attached, people will not be deterred from vandalising the power equipment.

Subsidy of the downstream
The truth of the matter is that the government is no longer able to subsidize petrol price. So we have said that there should be no more subsidy. There should be total deregulation so that the private sector will be able to come in and invest in the sector. Once a market is regulated, people are not eager to go in there. Until there is total deregulation, government will be the only one shouldering the responsibility.

The masses are afraid that deregulation will bring an increase in price, yes, they do not understand that it will make people to become more rational in the use of the products. This is the only way you can introduce efficient use of the products. The days that you are subsidizing to help the man on the street is gone because the man may not see the products.

Gas development
The gas producers are in a dilemma to recover their investments because they produce in dollars and sell in naira. Most of the investment is done in foreign exchange. The exchange rate is not helping matters.

Benefit by Nigerian companies in the oil and gas business
Yes, some indigenous insurance companies have had the benefit of providing insurance for the International Oil Companies. Others companies in oil and gas have also benefited. So also the banks and other indigenous services companies have benefited from rendering services to the IOCs.

Have Nigerians benefited from the unbundling of power sector?
I don’t think they have benefited because the government favoured their friends who didn’t have the financial muscle and the technical knowhow in the power business during the sale of the power stations. They should have given them to companies with the resources and the knowhow. Up till now they are still using estimated billing because they have not been able to provide meters for the residence. This is in their interest because they bill the houses more than what they consume. Assuming they have provided prepaid meters, if there is no power supply, they credit won’t burn but whether there is power supply or not they still bring bills for the power not consumed.

Government should revoke their licenses and get new investors who have the financial muscle and the technical knowhow so that the power sector can move forward. They are now raising tariff especially when they have not been able to increase power supply. They want the consumers to contribute to them to procure prepaid meters. They should have come with the fund to acquire prepaid meters for metering the houses. The sector needs an over hall as far as I am concerned.

Dissatisfaction of the masses in the performance of power companies
When Babatunde Fashola was appointed the minister for Power, Works and Housing, everybody was happy because he is a man who knows his onions, who can perform. He has seen for himself that these people are not really the investors who should be there. So, they cannot improve, notwithstanding the pressures on them, because they don’t have the competence and the resources to perform, and there is nothing anybody can do.

From the year 1999 to the present, we are yet to ascertain how much investment that has gone into the sector. The former minister of Finance, Dr. Ngozi Okonjo-Iweala told us that they spent about N3.3 billion, Bankole said they spent about N16 billion, we don’t know the actual figure. If General Electric in United States should spend $1 billion, people will see clearly what the company has invested the fund on. This was why we supported privatization of the sector but it was given to the wrong people who were not properly scrutinized and therefore they just gave it to friends and so nothing has improved since then.

This thing should be scrapped and then go back again to the tender board and look at people who really have the competence in terms of finance and experience. Until, you can improve generation of electricity in Nigeria, we cannot move forward in terms of economic development. If South Africa about one third of our population can generate about 48,000 to 50, 000 megawatts and we are still struggling with 5,000 megawatts, I think you can see the difference, one of the major huddle to development in Nigeria is lack of power, so power generation in Nigeria is a big problem as far as I am concerned.

Benefit of divestment
If you look at the Oil and Gas sector since 2014, you can see that oil prices crashed globally. So, I am not too sure those who bought from the IOCs are doing very well now. This is because they came in when the oil prices collapsed and that may affect them very seriously.

Issues of tariff increase
We have been used to Father Christmas in this country, personally as an economist, I believe there should be a system whereby we pay the market price. People should understand that the average consumer is willing to pay the tariff commensurate to what he consumes. This is because, if one uses his generating set, he spends three times more than he should have spent on electricity bills. Electricity is much cheaper than alternative power supply.

So nobody will mind paying the increase in tariff if electricity is available. I think raising tariff is not bad but there must be power supply. Then there must be the metering, it is the lack of metering that makes people to pay for what they have not consumed, so, if we have the companies that have the way withal to increase the power supply, then raise the tariff, the consumers will not be unhappy. If there is prepaid meters, people will be more rational in usage of electricity.