Fashola: ‘Power Sector Is In Transition’

280815F-Babatunde-Fashola

Minister of Power, Works and Housing, is this your ministry not unwieldy? It used to be three separate ministries. 

I don’t think so. The emerging practice now is that ministries that relate to infrastructure are being merged for integration. They often depend on one another and when one needs to do something like building an estate or doing electricity, you want to write to the other ministries. So it is better to integrate. In the Republic of Benin, my colleague there has three portfolios; so also in Zimbabwe, South Africa and some other countries. Let us understand this: I am not the only one in charge of this ministry. I have a Minister of State, Mustapha Baba Shehuri. We have Permanent Secretaries and a stream of senior management cadres. The whole world, including Nigeria, is clamouring for managing the cost of governance. These three ministries used to have three ministers each and in some cases ministers of state as well. Even though we are managing three ministries, we are collecting the salary of one minister.

When you were the Governor of Lagos State Nigerians thought of you as a miracle worker. People expected the same type of miracle when you came here but we have not seen it. Did you leave your magic wand behind in Lagos?

There is no magic wand. Go and look at your record in 2009, that was when I was governor for two years and see what the people were saying at that time. I have been here for only one year and seven months. I am working with a different team and we are still getting to know one another. We have just implemented our first full budget and we are beginning to at least see some momentum. For me, don’t measure the event; measure the trend and we will get there.

I always use one example; Nigerians love football and if they don’t play well, we say they haven’t jelled. So it is with government. We are a team too with different backgrounds and experiences so we need that time to get things done. We understand the expectations but people must just understand that there is a lot of time required to plan and deliver. In respect of roads for example, most federal roads are interstate and it takes years to design and build. People won’t see the result for years but it does not mean we are not working. It is the same with building transmission lines.They run across hundreds of kilometres and sometimes there are issues of right of way across communities. These things are unseen to the public. I just finished a meeting to see how we can evacuate 100MW power from Ajaokuta Steel Mill plant. The Governor of Kogi State was here a few weeks ago to help us talk to a community demanding for compensation where we are building a transmission line. The same thing applies with Ogun State. I called the Governor, who has intervened. My team in Lagos said they are on board now and these are the things that the public doesn’t see.

With the launch of the N701bn Payment Assurance Guarantee, we expected to see serious improvement in power generation. Or has the payment not started? 

The payment has commenced and that is why you see around 4,000MW now. There is need for understanding because most of the power is coming from gas. We are on 4,000MW now because we have evacuated the stranded power at Ibom Power, Calabar NIPP and Alaoji. Before now, almost 1,000MW of power was stranded there because of the Ikot Ekpene Transmission Switching Station. By implementing the 2016 budget we completed one line of that station to evacuate that power. This is in the absence of the Escravos Lagos Pipeline System (ELPS); it is not fully operational yet. It was vandalised many times in 2016 and that is the pipeline that sends gas to Geregu I and II, Omotosho I and II, Olorunsogo I and II to Egbin in the Western axis. Egbin has an installed capacity of 1,320MW and after the privatisation they have repaired all the turbines but now that the gas is down, it is doing about 300MW. Without what we did in Ikot Ekpene, it would have been worse than this.  This 4,000MW now is the added power. On the day President Buhari was inaugurated, the total power on the grid was 2,690MW.

People must quantify what we have added and what we have lost as a result of vandals trying to get back. We must all also understand that we have power from two sources – hydro and gas. During the dry season, hydro is not often efficient because the waters are low. Now that it is raining, by July and August, the water level will be higher and you will also get more than what the hydros are currently giving. What we are doing is to use more gas in dry weather which is what other countries do. To use solar which we are now planning, we have licensed 14 developers, and do a lot more coal which we stopped doing. We are working with two coal developers now so that throughout the year, we are able to move from one source of power to the other.

During the rainy season and at night, the solar will not be effective too and that is why there is coal. Other countries also have nuclear power to supplement with it. That is the energy mix that we developed and presented at the National Council on Power (NACOP) in Kaduna last year. Although it has not translated to the kind of power we all want but it is moving slowly. I was in 100MW Afam two weeks ago that was damaged in 2015 but we have refitted and the transformer is back. The problem now is gas as the line from Shell is out and they are trying to fix it.

All of this is consistent with our incremental power. There is also the 240MW Afam Fast Power initiated by the President. The turbines are in and hopefully before December, we will complete that and add another 240MW. We also had a project review of 40MW Kashimbilla but we owe the contractor as it is an inherited project and said what is approved in the budget will not finish it, so we are looking at the financing so it can end latest by next year.

What are you doing about the vandalisation of gas pipelines which is responsible for gas shortfalls to power plants?

Gas is fuel for our power plants, just like water for hydro plants and coal for coal plants. Gas is under the Ministry of Petroleum Resources and not under my management. Coal is under Ministry of Mines and Steel Development. Water is under the Ministry of Water Resources; they approve the water impoundment for hydros. These are interconnected to the question on merger. If we did not merge this, we will be running around many more ministries. For example, the problem with getting the turbines for the 240MW Afam Power is the road network but because the Federal Roads Maintenance Agency (FERMA) is my parastatal, I can get them to quickly respond.

Government is getting a mixture of solutions to reduce and eliminate pipeline damage. There are consultations, sensitisation and integration, which is part of the Niger Delta clean up. It is part of the visit that the Vice President has paid to various communities in the region. It is part of the many consultations that the Minister of State, Petroleum held with the communities. Somehow there seems to be a significant reduction in the number of attacks on the assets but it is still work progress.

What is the status so far of MDAs debt payment that you initiated? 

We have verified some debts. I said from inception that I will pay debts that are owed but only debts that are verified and the process of verification is quite painful. You need to see the invoices and where the power is supplied. Some of the verification has revealed interesting results as some of the places supplied do not belong to the federal government. They are debts belonging to state and local governments. There are also debts belonging to multilateral agencies but have been classified as government debts. We are sorting all of that. There are over 250,000 invoices from the 11 Distribution Companies (DisCos). It will be irresponsible of me to ask government to pay a debt I did not verify especially when it was not contracted under my watch. We are almost done; we have closed some books but some of the DisCos have not provided all the details. What we are doing is that we don’t want to hold back on the payment of those who have complied and those who come later, we will pay them thereafter.

You recently declared eligibility in the electricity market but the DisCos fear it may lead to revenue losses for them.

I am told that the DisCos are preparing a position. When that position comes, we will address it. I don’t want to pre-empt them. The Nigeria Electricity Regulatory Commission (NERC) has been mandated to hold a consultative forum so we can hear everyone as a law abiding government. I understand the DisCos see it that they will lose revenue. What I see is service improvement to customers. There must be a point where we put this together. What they see as potential loss may become clearer to them how the mechanics will work. It will enable them to charge premium tariff to certain set of customers while protecting the tariff of poor people. That may not necessarily lead to loss of revenue. For example if an eligible customer applies to a generation company (GenCo) to build its distribution network, it will still pay some money to the DisCo to use the system, so where is the loss of revenue?

The reason that the customer is applying is because the DisCo can’t build that distribution service to connect that customer. If the DisCo then leaves that customer and the customer begs the minister to allow him use his money to build the network and get power, why should I stop that customer?If the DisCos don’t want to lose revenue, assuming there is a loss of revenue, they should provide the services and collect the money. But you can’t fail to provide the service and insist that it should not be done.

We received input from Ikeja and Kaduna DisCos asking us to share modalities and we have referred them to NERC. We also received input from a company licensed to generate 14MW power in Isolo, Lagos. They have 14MW and can only supply 8MW; the other 6mw has been wasting. They apply to build a two kilometre network to supply different companies who are ready to take the power and are within the same industrial estate. If all those industries have a dedicated power, is that not where our people will find work? If the DisCos in those areas do not want to lose customers, let them go and provide the services

The Senate recently called for a revisit of power sector privatisation, saying it has failed.

We are already revisiting the privatisation. There were so many things that should have been done before the handing over that were not done. Enumeration of the consumer base, investment in distribution assets, capital adequacy to run the business, competent and technical support by those who have bought them to ensure they have technical partners on metering, distribution and utility management.

The last administration did this privatisation in the heat of politics and they did not tell Nigerians that it was going to take a while for the results to show but we knew and I kept telling them that they have to manage expectation because Nigerians were thinking that once they hand over there will be electricity.  It is not magic. They did not do it and they thought that it will result in electoral votes. We are now saddled with the responsibility to make it work. The restructuring of the privatisation is what is now in the Power Sector Recovery Programme (PSRP).

Part of the debts inherited including the MDA debts were created by that administration because once you privatise, you must also adjust tariff.  They adjusted tariff and the people did not like it and because election was coming, they reversed it. But operators have paid for gas and other inputs and who is going to carry that debt? It became a government debt. I am ready and working to re-engineer the privatisation to solve these problems. NERC is working with us and the Ministry of Finance, the chairmen of National Assembly committees are working with us and the World Bank too, so I don’t know where this call is coming from.

If the call is for a cancellation of power sector privatisation, I will not support it. I am not the government; I am only an adviser to government but I will advise against it. Whatever it decides to do will have consequences. Once you cancel a contract, you send a negative investment signal to the whole world. Secondly, where is the money we collected from those who bought it? It has been spent before we came in, most of it. They paid in dollars then; do we have the dollars to pay them back?

Yes, it has not resulted in what we want but it is heading towards what we want. People can buy their credit online in some DisCos, which wasn’t there before. The turbines in many of the GenCos are now working. Egbin was 600MW before; now it is 1300MW. Jebba, Shiroro, Kainji, Ughelli have invested in their turbines.

The power sector is in transition. As government we have done these things for 60 years and it was because it was not working that we said let private sector do it. It is going to be four years by November. Is four years really enough to see the kind of results we want to see with all of the problems of transmission, liquidity that is in the sector? Was four years enough to give everybody telephones in Nigeria? Even today there are still some places where telephones don’t work, 15 years after privatisation, so it is a journey.

Why are you planning to restore the toll gates when it did not work before?  

One government cancelled it but that does not mean it didn’t work. The question is that, what were the conditions of our roads then and now that there are no tolls? There were accusations that the money went into wrong pockets but the solution in my view is different. I am reluctant to criticise public officers who have served before me on the decisions they took because I don’t have the full facts about what they saw then.

I am able to express my views as to how I would have acted given only what I know. If the problem was just financial loss, all we needed was to introduce technology, collection system, more rigorous audit. The world collects tolls, even in communist China.

The plan going forward is to return tolls especially on the high vehicle operating ways so that government can institutionalise a regime of maintenance with the proceeds of tolls. In terms of security, it will be helpful if you have cameras, ID of vehicles passing through plazas, you have more data. Thirdly, it will create jobs. No matter how electronic they are, the tolls still have to be manned by people and it’s a good job for mostly young people during vacation and shift works. That’s what people do across the world. Those roads that had toll plazas before that are now under construction, we have asked for data of them and my teams have submitted them to me. I have asked them to make new designs to reflect the modern ones. We are also looking for Information Technology infrastructure to support it. We are going to use platforms like GSM, Nigeria Inter Bank Settlement System (NIBBS) and some of the BVN database so that people can buy their cards for tolls.

Will that be done before the end of this administration?

It depends on how quickly our road construction projects end.  I can’t toll Shagamu, Ibadan Expressway if the road is not finished. It will be unfair to commuters. What they paid for is the service, that the road is motorable. So I am dependent on the construction, the budget, financing the budget, the man-hours it takes to finish the road. But I am moving ahead to position our ministry, and our team to be able to start issuing concession for the tolls as the roads finish.

Many major federal road projects have remained uncompleted for years. Any timelines on when they will be finished?

I spend what I am given. I don’t control the budget. I can only utilise what is appropriated. For instance, the budget provision for Kano-Maiduguri was reduced by N10 billion. The second Niger Bridge was reduced by N5bn. Lagos-Ibadan by N21bn. That was part of the reason why the budget was not signed on time because we were complaining that without these key projects, how do we address the issues in the economy? Enugu-Port Harcourt road was also reduced, as was Boro-Bonny. These are the key roads that connect Nigeria. That was the reason for the meetings we were having with National Assembly to get the adjustments back. There are many variables that I don’t control but I am optimistic that things will get better.  Contractors were owed for three years when this government came in but there is momentum now as they are being paid. We need to sustain that momentum to take us out of this recession.

What about some of the bridges that were recently washed away? 

We have authorized emergency procurement there and contractors are moving to the sites both in Niger State. On both sites we have mobilized contractors and also the one in Michika town of Adamawa State which is an old bridge. It did not just fail but was damaged during the Boko Haram crisis. It is part of the contracts that were recently approved by the Federal Executive Council (FEC). The bridges are under emergency works and our contractors have been mobilized to the sites under emergency sites.

What about the long delayed construction of Mambilla hydropower project?

Here; this is the ‘No Objection’ for Mambilla project from the Bureau of Public Procurement (BPP). Now we can go to FEC, get approval and award the contract. For the cost, I won’t say until FEC approves it. The Permanent Secretary is working on the memo.

The Presidency recently said the National Assembly has no power to alter budget estimates from the Executive. As a big lawyer yourself, what is your take on this?

It is unfortunate that we do not have an agreement on this matter. My views are that the Appropriation Act is a law and therefore subject to usual legislative processes. But it is a law on different terms as it is not a law that is made once and for all. It is a law that is made every year and relates to planning and development of the country.

All the agencies that manage and control planning and development like Federal Inland Revenue Service (FIRS), the National Bureau of Statistics (NBS), Debt Management Office (DMO), Ministry of Finance that deals with fiscal policy, Central Bank of Nigeria (CBN) that deals with monetary policy, Budget and Planning Ministry that deals with the overall architecture, they are all executive agencies. It is my view that the intention is for them to plan development and present the development seeking approval to spend so much to do so much.

Can I seriously say that once it comes the National Assembly should just approve it? I won’t say that. What I will say is that they are entitled to review it, make inputs but that power is not a power without limits. I will now tell you what the limits are. I have heard things like, we have the power of repulse. There is no such thing in the Constitution. the power given in the Constitution is that of appropriation. There is no power for repulse; if you want to call it that way, then that is a terminology of convenience. There is nothing in the Constitution like ‘constituency projects;’ it is also a political creation to respond to some of these demands. The question is where do they end? These reductions in our capital projects are now going into funding projects chosen by legislators so that in my ministry, I now have responsibility to build boreholes, primary schools and street lighting.

The limit therefore is that every law the National Assembly makes must be subject to the Constitution. The Exclusive Legislative List shows what NASS can legislate on. Borehole, primary school or primary health centre is not among them. Those are powers vested on local governments in Schedule 4. Therefore they cannot make federal law in respect of that.They cannot also insert a project that is a state project or that of the local government. This same thing will cover the Concurrent List and anything that is not in the Exclusive List or Concurrent List should not be in the Appropriation Act.

I am ready to take contributions from the National Assembly on a federal university that needs a new hostel, a federal government college that needs a classroom, a federal government road that we haven’t touched in their constituencies but certainly not roads in their local and state governments. Those, for me, are the limitations. The reason why legislators do this is because the public does not fully understand that legislators’ roles are not to build roads. Instead of educating the public about their responsibilities, it seems that some of them have succumbed to promising the public everything and then seek to get it. I think that we must circumscribe it.

We also had committee hearings and we spent a lot of tax payers’ time and money in this meetings and I expected that if these things were going to be done, that is where it should have been done. I would have been able to say okay I concede this or that. But it is one thing to generally listen to us, allow us to go and then go back to do what they like. I don’t think the developmental interests of Nigerians are being served by this.  What the governors ask us for is different from what the legislators from their states ask us for. So it is a problem that must be solved if Nigeria must develop. Federal budget should be used to develop federal assets; state budget should be used for its assets and the same with local governments.

This is not a matter of right or wrong. This is one of the most ideal situations where we must have judicial interpretation. Let the Supreme Court act quickly on this.  We have so much to do; decide and delimit all of these rights and powers. If the conclusion is that legislators should make the entire budget and give to us, so be it. We will be relieved of the burden of planning for the country and we will go and implement what they bring.

The Apapa Wharf road project was also delayed for so long.

We need to understand what Apapa Port is all about. It was built around 1908 or 1913, am not too sure. It was built by the Europeans and they built a rail system with it. All of those rail tracks are still inside the port and right behind it because all the ports that I have been to outside Nigeria, like Singapore port have rail. For our own, we stopped using the rail and resorted to tankers and trailers. That was how the road condition got to this. That is what the Minister of Transportation is trying to revive. In the interim, that road has broken down not only because of government not doing enough—that is there—but it is because of the way we choose to live, leaving the rail for the road. And then over the last few years we have low capital budget with its consequence. Even the 10 per cent is not funded. It is President Buhari now that did 30 per cent capital budget and at least we have received close to 70 per cent for the first time. There were contractors who haven’t been paid for four or three years. For the Tin Can Island side, it was awarded in sections. A year’s budget to fund a section and then remove the other sections, which is part of the issue we are also trying to correct.

What has happened is that those who are affected by the road when the Nigeria Ports Authority (NPA) issued an order for 24 hour operation at the port, like Flour Mills, Dangote Group – major users of the port came together and told government they want to do the two kilometres of the road. We had to tell them how to go about it, got a design, the docks to carry their cables, pipes and fibre optics and the drainages as that place is a swampy land. We now got through the cost which they said was too much, so NPA had to come and take some cost. We had to also get the approval of Bureau of Public Procurement (BPP). No matter how private it is, BPP had to certify. BPP’s certificate came in only on Friday as they had to do a thorough job for the two kilometre length. It is our responsibility to continue the Tin Can Island side from what comes out of the budget.

Source: IWIN

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