The Minister of Power, Oloye Adebayo Adelabu hit the airwaves on Thursday, February 15 with yet another sad news in an already anomic season, when he told Nigerians that it “is very difficult to sustain subsidy on electricity.”
For a Ministry that has been associated with collapsing Grid, blackouts, in fact, anything but good news in recent times, Adelabu compounded an already toxic socio-economic environment when he revealed that the Federal Government cannot sustain the debt overhang in the electricity sector, as it is owing Gencos and gas companies in the region of N3trillion.
According to Adelabu, the country must begin to move towards a cost-effective tariff model, because it currently owes N1.3 trillion to generating companies (GenCos) and $1.3 billion to gas companies. He said that though only N450 billion was budgeted for subsidy in 2024, the ministry would need more than N2 trillion to pay for the subsidy.
Hear him: “Today, we are owing a total of N1.3tn to the power generating companies, out of which 60 per cent is being owed to gas suppliers. Today we have a legacy debt, prior to 2014, to the gas companies of $1.3bn; at today’s rate, that is close to N2tn.
“Now, if you add N2tn legacy debt owed gas companies and the N1.3tn being owed the Gencos, we have an inherited debt of over N3tn in this sector. How will the sector move forward? Nigerians deserve the right to know this.”
Well, it is good he is informing Nigerians about the cold facts. The facts may be unimpeachable as far as the operation of the Power sector is concerned, but it is also good we tell the Minister that the socio-economic environment he was releasing the facts to is not receptive to the idea of subsidy removal in that sector whether in the immediate or not too long from now. I am even surprised that the Minister was talking about the subsidy on the heels of the declaration by the International Monetary Fund (IMF) that Nigeria must finally do away with subsidies in the power and petroleum sectors.
If he was spurred on by IMF’s declaration, let me tell him that it was not only a wrong move but one that can make him and the government see the red side of Nigerians’ eyes. With inflation at over 29 per cent and food inflation clocking at more than 35 per cent, what Nigerians are concerned about is how to feed and not how to end whatever subsidy is in the power sector.
Some years back when I inquired about what was amiss in that sector from someone who is deeply knowledgeable about the sector when it appeared that we were seeing a demystification of the former Lagos governor, Babatunde Raji Fashola, as Power Minister, the person simply replied in these words: “For all have sinned.” That was a clone of the biblical statement as recorded in Romans 3:23, which says: “For all have sinned, and come short of the glory of God.”
His submission is indicative of how fraud walks on four legs in the Nigerian system. The Federal Government was determined to sell off part of its stakes in the distribution segment of the Power sector. Some businessmen cooked up figures to qualify themselves for the purchase. The government could investigate the figures and claims submitted but went ahead to sign off the Distribution Companies (DISCOs) and utilised the money raised to pay off the restive electricity workers of the Power Holding Company of Nigeria. The DISCOs claimed they would mobilise offshore funds to service the sector, just like the telecommunication companies when they launched the GSM systems under President Olusegun Obasanjo, but they went ahead to obtain loans from the local banks.
Recall that local banks can’t guarantee long-term loans such investments need to thrive. So the DISCO owners took over the structure and started scavenging for funds. Instead of investing in the replacement of old distribution cables, electricity poles, transformers, and electricity meters, they started feeding fat on the people through estimated billing. They will encourage communities to buy poles and transformers and after installation, they start harassing the people with estimated billings for power not supplied. Never mind that many of the PHCN workers who were paid off in 2013 are part of those causing all managers of shenanigans in the Discos today. They teach people how to bypass meters or how to pay the least and use maximum power. Anyway, that’s a talk for another day.
The Distribution companies are the main point of contact by which funds invested into the sector even by the Federal Government can come to light. Because that is the only source of collection. The Federal Government through its agencies buys power from Generation Companies (GENCOs), which we are told, are doing far better than the DISCOs, supply the same to the Transmission Company of Nigeria (TCN), which feeds the DISCOS with the power. The DICSOs are either unable to receive the fullness of the power transmitted or cannot distribute the same to needy customers under one excuse or the other. At the end of the day, they come back with estimated bills for people they kept in darkness. Now, that is the scenario in the sector in which Minister Adelabu wants the overburdened Nigerians to further squeeze themselves and allow the removal of power subsidy.
My take is that the government should channel all its energy to first ensure ALL Nigerian homes have pre-paid electricity meters, while it criminalises estimated robbery called estimated billing. Let the Power Ministry sort out issues with the supply of transformers and poles. Maybe after that, Nigerians can consider the grammar of power subsidy.
But then, maybe Nigerians can take some solace in the Minister’s submission when he stated: “However, we are working underground to make sure that we resolve these issues and pay these debts either through cash injections or through guaranteed debt instruments to ensure the continuity in the generation of power.”