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Making Power Sector Work

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Nigeria’s increasingly precarious energy supply situation took a turn for the worse last week when the
national grid suffered a system collapse for the 7th time this year on September 26, 2022. This is about three months after the last national system spill in July. The embarrassing development further compounded the woes of Nigerians. While relevant stakeholders are not in short supply of excuses for total blackout, the incident verges on institutional incompetence and regulatory imprudence.
To the extent that the state of power supply in Nigeria is a barometer for measuring the health of its overall physical infrastructure, it is fair to conclude that the country is in a sorry state. A recent media analysis of industry data gives a picture of the sordid situation. One thing that jumps out is the revelation that over the past 12 and a half years, the national power grid has suffered at least 222 partial or total collapses. The national power grid is a network of electricity transmission lines connecting generating stations to loads across the country.
The causes of these recurrent and seemingly interminable collapses are varied. According to the report, they range from “low water levels at the hydropower plants, low gas supply at the gas power plants, fire at the largest power generating station, load rejection,” to the “inability of the transmission companies to wheel electricity from generators to distributors.” If the causes are well-known, what makes it so difficult to arrest them and restore sanity to the electricity supply in the country? Why has the situation worsened despite all the ostensibly well-meaning efforts to bring it under control?
The recent collapse extends Nigeria’s wretched run in power generation. For a country of more than 200 million people, its installed capacity of 12,555 megawatts is abysmal. By contrast, South Africa, with a population of slightly less than 60 million, generates almost 60,000 Megawatts. Official figures from Egypt state that the country generates 55,000 Megawatts of electricity. In effect, Nigeria’s abysmal power generation has the same effect on its citizens as an invisible tariff in terms of energy that is bottled up and prevented from being unleashed.
Over the years, several proposals have been advanced to bring the Nigerian power sector up to par with what obtains in other middle-income economies across the world. Invariably, and to Nigerians’ eternal frustration, such proposals have foundered on the rocks of corruption and political nepotism. Yet, if the country is to fulfil its developmental aspirations, it is difficult to see past steady power generation, a dream, incidentally, that the nation boasts enough gas resources to accomplish.
The ever increasing demand for power in Nigeria, coupled with limited supply, has restricted the nation’s socio-economic development. The country’s policymakers have formulated energy development policies lately aimed at diversifying the current electricity mix and increasing electrification in rural settlements. Despite these efforts, electricity infrastructure projects have been side-lined, power outages are common, and grid unreliability is costing the industry significant amounts to secure the electricity supply necessary for business sustainability and profitability.
The power problem has remained intransigent to the gigantic investments sunk into the sector in the last two decades. It is shocking that instead of an improvement, the situation has continued to get worse. Since 2013 when the sector was privatised, the grid has cumulatively failed electricity consumers several times over. On each occasion, the incident practically grounded Nigeria and its economic activities. It is not surprising, therefore, that the economy is on a nosedive and companies are shutting down.
The Association of Nigerian Electricity Distributors (ANED), the umbrella body of distribution companies, blamed the recurrent power collapse on the Transmission Company of Nigeria’s (TCN) analogue system, describing it as largely responsible for collapses since the privatisation of the power sector in 2013. The TCN, a government agency that manages the asset under the privatised power sector, had, in turn, attributed the grid collapse to “multiple tripping”.
The Group Managing Director of Nigeria National Petroleum Corporation Limited (NNPCL), Mele Kyari, once said, there was enough gas to generate 8,000 megawatts of electricity, but the transmission grid could not support it. It is startling that the key power plants, including Egbin, Utorogu, Chevron Oredo, Oben gas-fired power plants, Ughelli, and Chevron Escravos could all shut down. The fact that Nigeria’s power generation relies on natural gas distributed through exposed pipelines that are vulnerable to destruction in many parts of the country, poses a significant problem.
But why is the Federal Government unable to provide good leadership in the power sector? The failure to address challenges in the sector amounts to insensitivity by the government to the fundamentals of development. The unbundling of the erstwhile National Electricity Power Authority (NEPA) has proven to be a massive failure. What we have is a considerable fraud. And the solution to the perennial energy crisis is true federalism that will ensure we do not have a single national power grid.
Several things point to the corruption and inefficiency in the power sector. President Muhammadu Buhari should demand an immediate investigation of the sector and begin to explore alternatives to energy sources. The world is scandalised that Nigeria, one of the leading producers and exporters of crude oil and gas, remains in darkness. Also, the Federal Government must relinquish ownership of TCN, so the sector does not stagnate.
It has become imperative to explore other options for power generation outside a consolidated national grid that is prone to mismanagement and graft. For instance, states should be able to band together to generate their power, and we are pleased to see that the House of Representatives is currently considering a law that would make this possible. The current system of power generation does not work. It is time to abolish it in favour of a more reliable method.
The national grid is designed to operate within a controlled range to ensure stable grid operation. Exceeding the limits leads to instability and often collapse. The transmission company, therefore, should allocate the load to the distribution companies based on the demand information received from the National Control Centre. This guarantees that there is no mismatch between power supply and demand to avoid the national grid system collapse.

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Editorial

Time To Account For 13% Derivation Refunds

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How did the other South-South states, aside from Rivers, expend their arrears of the 13 per cent derivation refunds that were illegally deducted from the oil-producing states by the Federal Government since 1999? That is the tough question on the lips of some stakeholders mostly in the affected states.
This came after the startling revelation by the Rivers State Governor, Chief Nyesom Wike, that Nigeria’s President Muhammadu Buhari authorised and paid the arrears to Rivers, Bayelsa, Delta, Edo and Akwa Ibom States. Wike spoke on the development last Friday during the inauguration of the N17 billion Port Harcourt Campus of the Nigerian Law School.
Responding to those who had been seeking to know how the Rivers State Government was able to obtain funds to execute projects many of which are being inaugurated or commissioned, Wike replied that President Buhari’s gesture was the major source of revenue for his projects, including the flyovers, the law school, the cancer centre, among others.
Hear him: “Monies that were not paid to the Niger Delta states since 1999 mainly 13 per cent deductions, the President approved and paid all of us in Niger Delta states.” Wike had reiterated a similar remark at two separate events afterwards. Following the disclosure, stakeholders have begun to ask their governors questions on how they spent or are spending their allocations of the money.
Now that the Rivers State Chief Executive has let the cat out of the bag, some of his fellow governors in the region have come out of their comfort zones to offer explanations or tell cock-and-bull stories better told to the marines. This divulgence indicates that Wike is truly fighting for the masses, even though he stands the risk of making more enemies for himself.
Speaking on the matter through his Chief Press Secretary, Olisa Ifeajika, the Delta State governor, Ifeanyi Okowa, said the state had drawn only N30 billion from its accrued share of N270 billion from the 13 per cent derivation arrears. He said his administration opted to access its share through a bridge finance loan of N150 billion from a bank. The Delta governor declared that since the Federal Government could not pay the money in bulk, the oil-producing states agreed for some part of it to be disbursed within three years and the other within five years.
Some Bayelsa stakeholders took to social media over the slow pace of development amidst considerable resources. The big question on their lips has been what happened to Bayelsa’s stake in the money paid by the Federal Government? Similar questions are asked by residents of Akwa Ibom and Edo States. While some have threatened to use the Freedom of Information (FoI) Act to compel their government to account for the money, others have called for a probe into the seemingly looted funds.
Astonishingly, some governors in the Niger Delta could receive such a tremendous amount of money in these hard times yet decline to pay salaries and pensions regularly. In some affected states, infrastructure is decrepit and development is apprehended. While Governor Wike has been building flyovers and executing other developmentally-oriented projects in his state with the windfall, the question is, what have the other governors who got a similar treasure-trove been doing with theirs?
It is time transparency and disclosure were enforced in the administration of the 13 per cent derivation by state governments. Reportedly, eight states have been benefiting from the scheme. The eight oil-producing states received about N6.589 trillion from the federation account under the derivation principle, between 2009 and 2019. Sadly, there has been little or nothing to show for such allocation in some beneficiary states as agitations for benefits continue among the people directly impacted by oil production.
For states receiving derivation payments, translucency is even more key, given the history of state governors’ management of these funds. That way, the temptation to yield to corruption risks is reduced, wasteful spending is curtailed and oil-producing communities have a greater chance of getting these funds to work in their interest.
Governor Wike deserves commendation for exposing the non-performing governors in the crude oil and gas-rich Niger Delta region, who collect huge derivation funds and arrears but without any corresponding projects on the ground to justify the allocations. But for his bringing the situation to limelight, many would not have been aware of it. The other governors in the region must ensure that their funds reflect massive developmental and infrastructural projects, as seen in Rivers.
We hail President Muhammadu Buhari for authorising the payment of the funds to the deserving states and not playing politics with it, particularly since the benefiting states are virtually in the opposition Peoples Democratic Party (PDP). This is an abiding testimony to the President’s political maturity and his commitment to the tenets of democracy and the rule of law. As can be seen, Buhari’s release of the money has enabled the Rivers governor to embark on more projects in the state.
Unfortunately, the 13 per cent derivation which is a form of royalty for mineral owners has been hijacked for political expediency rather than meeting the needs of the host communities. There must be a paradigm shift away from political expedience in the use of the funds to employing it to maximise the social and economic welfare of the oil-producing communities in particular and the state in general.
An energy expert and former adviser at Nigeria Extractive Industries Transparency Initiative (NEITI), Garuba Dauda, said extractive revenues face a huge utilisation challenge at both national and subnational levels in Nigeria. He stressed that there were far-reaching accountability gaps in the management of oil revenues at both national and subnational levels of government, especially the 13 per cent derivation.
Accountability remains key if benefit transfer must get to the citizens. The need to imbibe and integrate corporate best practices in the oil and gas industry in Nigeria must include holding the state governments accountable for disbursement of the 13 per cent derivation funds. Oil-producing communities in derivation-receiving states must be seen to be enjoying the dividends of the derivation.

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Editorial

Enough Of Attacks On INEC’s Offices

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A resurgence of arson targeted at the Independent National Electoral Commission’s (INEC) offices has again raised fears of a volatile electioneering season as the country begins its countdown to the 2023 general polls. In the latest direct assault on the electoral umpire, hoodlums attacked and set fire to its offices in Ogun and Osun States, destroying physical structures, equipment, and permanent voter cards (PVCs). These materials are critical to the successful conduct of next year’s election.
The attacks prompted INEC to summon an emergency security meeting with the head of security agencies, who are members of the Inter-Agency Consultative Committee on Election Security (ICCES), including the National Security Adviser (NSA). Amid other security challenges and the desperation of politicians and their hirelings, the President, Muhammadu Buhari, and the security agencies must take extraordinary measures to ensure hitch-free polling.
INEC’s Resident Electoral Commissioner (REC) for Ogun State, Dr Niyi Ijalaiye, reported that the commission’s office in Abeokuta South Council was attacked and set ablaze. The incident occurred when some unidentified persons overpowered the security personnel on duty and set the entire building afire. The main building and all the movable assets in the office were destroyed. They include 904 ballot boxes, 29 voting cubicles, 30 megaphones, 57 election bags, eight electric power generators and 65,699 uncollected PVCs.
Similarly, the REC for Osun State, Dr Mutiu Agboke, informed that the commission’s office in Ede South Council was under assault and also set on fire. The incident happened in the early morning when unidentified persons attacked the building and set it on fire. However, Agboke said the damage was limited to one area of the building and only a few pieces of furniture were destroyed.
Before now, serial violence and arson against INEC personnel and facilities in some states, especially in the South-East and South-South zones, had destroyed buildings and vital election equipment and loss of lives. The attacks in Osun and Ogun suggest that the violence could spread to the South-West. Those responsible for these acts can only be agents of lawlessness and disorder. The authorities must do everything to contain this rapid descent into lawlessness.
The growing violence and attacks on INEC’s facilities nationwide may raise the cost of next year’s general election. Rampaging hoodlums had razed no fewer than 11 INEC offices, 13 vehicles, 429 generators, and others in over 41 attacks in the last few months. In the past, INEC estimated that each card reader cost N167,063 while each memory card cost N6,000. Today, the cost will be much higher, given the depreciation of the Naira against foreign currencies. So, these attacks cannot be allowed to continue.
Furthermore, while enlisting the types of incidents and the parties that are responsible for violence, the electoral umpire revealed that one of these attacks was from bandits, one by the Boko Haram, four post elections violence, 18 EndSARS protests, 11 by unknown gunmen, six from election thuggery. The commission also stated in another report that over 1,000 people, including its employees and security personnel, lost their lives in the past three election cycles held in 2011, 2015 and 2019.
Besides the perturbations of Nigerians, the United States and the United Kingdom have expressed concerns over the recent irruptions on the offices of INEC nationwide. The United Kingdom Development Director, Foreign Commonwealth and Development Office, Chris Pycroft, and the United States Consul General, Mr Will Stevens, expressed the concerns while speaking at a forum recently. According to the diplomats, that prognosticated grave danger to the 2023 elections.
It is now up to the authorities to put in place measures that will prevent disruptions in future election operations and protect the lives of innocent citizens. While a combined technique of intelligence, law enforcement and special operations may help in containing the menace, it is also in the enlightened interest of our politicians to curb the attacks that could, if care is not taken, torpedo our democracy. It is imperative to deploy joint safety and security teams in all INEC assets and facilities on a national scale.
Security agencies will also need to upscale intelligence gathering, sharing, and utilisation of the same to stem further sabotage. Similarly troubling is the rising incidents of attacks on supporters and facilities of political parties, ostensibly by political opponents, so soon into the five months for campaign rallies, processions, and meetings as provided in the INEC timetable and schedule of activities for the 2023 general election.
In addition to the measures already taken for the arrest and prosecution of offenders, the Inspector-General of Police, as head of the lead agency in internal security, should convene a meeting of all political parties, candidates, and other critical stakeholders to reiterate the necessity of peaceful campaign and to convey the enforcement measures to be taken against violators. Purveyors of violence should be prosecuted in line with the Electoral Act.
Experience elsewhere shows that successful elections can be organised even in the middle of insurgencies. A report by Bridgewater Review recalled that with UN assistance, Iraq held three successful national elections in 2005 notwithstanding insurgent threats, with a voter turnout of between 58 per cent and 76 per cent. It cited a mix of mass security sweeps, effective voter education and trust in the rectitude of the electoral umpire as success factors. Nigeria ought to imitate this model.
Beyond the insecurity, an avalanche of pre-election cases before the courts is very unsettling. It is unhealthy for democracy. INEC’s chairman, Mahmood Yakubu, deplored over 600 court cases arising from the party’s recent primaries and the nomination of candidates for the 2023 election. The decelerate stride of the judicial system in Nigeria means that some cases will not be resolved in due course before the opening of election in February. This has an effect on INEC’s proficiency to print and distribute ballots before voting begins.
We applaud the Chief Judge of the Federal High Court, Justice John Terhemba Tsoho, for designating a team of judges subsequent to the large volume of pre-election suits that have swamped the court. The judges who are members of the task force will hold off all ordinary cases in their specific courts because of the seriousness of election cases, which are time bound. This will assist the commission to expeditiously prepare for the 2023 ballot.

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Editorial

G20: Resolving Global Crisis

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Indonesia gathered the leaders of the world’s 20 largest economies commonly referred to as G20 in its
island paradise of Bali for a two-day summit from November 15 to 16 to discuss how they could cooperate on building a more stable future. But while this year’s summit has a post-pandemic theme of “Recover Together, Recover Stronger,” geopolitical divisions are taking centre stage.
Unfortunately, this year’s G20 meetings attracted more international attention than in previous years. The summit took place against the backdrop of global political and economic crises: a challenging post-pandemic recovery, the ongoing Russian invasion of Ukraine, soaring food and energy prices, and the worsening climate crisis. It was expected that the gathering would provide an opportunity for the world’s biggest powers to address those pressing global challenges.
The summit was preceded by a bilateral meeting between United States President Joe Biden and Chinese leader Xi Jinping, the first time the two had met since Biden became president. Although there were few tangible results, it was overall a positive meeting after relations between the superpowers plunged to near-historic lows earlier in the year. Conversely, Putin’s in-person absence spared the summit a major distraction and helped it focus on economic matters.
The G20 is a multilateral forum representing the world’s largest economies. It involves 19 countries – Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, and the United States including the European Union. The forum represents more than 60% of the earth’s population, 75% of global trade, and 80% of the world’s gross domestic product (GDP).
This summit was organised as the world edges toward a global recession. Countries’ central banks have been hiking interest rates to curb inflation, but prices struggle to return to pre-pandemic levels. The World Bank reports that these hikes, coupled with financial market stress, could lead to global GDP growth slowing down to 0.5% next year, which would destabilise major economies and significantly slow poverty alleviation in developing countries.
During last week’s meeting, the world economic leaders adopted a declaration deploring Russia’s aggression in Ukraine “in the strongest terms” and demanding its unconditional withdrawal. They also recognised that while most members condemned the war in Ukraine, “there were other views and different assessments of the situation and sanctions”.
On the global economy, the G20 nations agreed in their declaration to pace interest rate rises carefully to avoid spillovers and warned of “increased volatility” in currency moves, a sea change from last year’s focus on mending the scars of the COVID-19 pandemic. The reference to spillovers was a nod to emerging economies’ concerns about the potential for huge capital outflows if aggressive U.S. rate increases continue.
Also, the leaders pledged to take coordinated action to address food security challenges and applauded the Black Sea grains initiative. But the body has come under intense criticism by Global Citizen, a civil society group, for the absence of concrete steps on hunger. The group says, “Fifty million people are at the brink of starvation as we speak. There is no time for the G20 to issue calls to action, they are the ones who have to act.”
About climate change, leaders of the foremost economic countries agreed to pursue efforts to limit the global temperature increase to 1.5 degrees Celsius, confirming they stood by the temperature goal from the 2015 Paris Agreement on climate change. That could boost negotiations at the U.N. COP27 climate summit in Egypt, where some negotiators feared the G20 would fail to back the 1.5C goal — potentially thwarting a deal on it among the nearly 200 countries at the U.N. talks.
However, is the G20 not merely repeating old commitments from previous years or noting developments elsewhere, rather than taking on leadership themselves? When the forum last met in April, the International Monetary Fund (IMF) had just cut its global growth forecast to 3.6 per cent for this year and next and experts warned this could get worse given potential downside risks. Since then, several of those risks have materialised and the multiple crises facing the world have intensified.
The human tragedy of the war in Ukraine has worsened. So, too, has its economic impact, especially through commodity price shocks that are slowing growth and exacerbating a cost-of-living crisis that affects hundreds of millions of people and especially poor people who cannot afford to feed their families. And it is only getting worse.
Inflation is higher than expected and has broadened beyond food and energy prices. This has prompted major central banks to announce further monetary tightening, which is necessary but will weigh on the recovery. Continuing pandemic-related disruptions, especially in China, and renewed bottlenecks in global supply chains have hampered economic activity.
Indeed, the outlook remains extremely uncertain. Think of how additional disruption in the natural gas supply to Europe could plunge many economies into recession and trigger a global energy crisis. This is just one of the factors that could worsen an already difficult situation. It is already tough in 2022 and possibly going to be tougher in 2023, with an increased risk of recession. That is why we need decisive action and strong international cooperation led by the G20.
Therefore, the global economic body must practically tackle the root causes of hunger, extreme inequality and poverty, human rights violations, conflict, climate change, food, and energy price inflation. G20 must develop an economic and social rescue plan that protects the rights of the poorest people and tackles extreme inequality. If the group cannot come together and function at this time of real economic hardship, then it calls fundamentally into question its effectiveness and relevance. So, the challenge for the G20 is to prove that it is still fit for purpose coming out of these annual meetings.

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