Dr Sam Amadi, Former Chairman of Nigeria Electricity Regulatory Commission (NERC) in this interview, speaks to QUEST TIMES’s Matthew Tabe on the current proposal by the Federal government to increase Electricity tariff, persistent fall of the National Grid, Customers bring subcharge through bills payment among other sundry issues.
QT: Sir, can you give us an overview of the current state of electricity power supply in Nigeria?
The state of power supply in Nigeria is pathetic and extremely poor. Evidently, we can see that with the population of over 200millions people average generation daily of supply is less than 4000 megawatt to families and homes. We have acute power failure. Again, if you compare with countries that have lower generation like Togo, Benin Republic and even those that we sell power to, they have better per capita wattage meaning that because of their population they have more access per capita on average than we do. So, Nigeria is probably one of the most power starved country in the world. The frequency outages and long duration of outages, poor service, relatively high tariff and many of our customers up to 40 to 45 percents unmetered which means they are subject to extensioning pricing which is very bad to the electricity market.
QT: What is your position on the recent pronouncement by the Federal Government to hike the electricity tariff in July 1st, 2023 considering the fact Nigerians are suffering from the fuel subsidy removal?
I think that what happened to the proposed tariff hike is what we called minor review and it’s very interesting because this is not a tariff that goes with any proportional increase. You see the Discos are not increasing tariff to say i want to improve service, i want to add more megawatts or we want to build more Infrastructures. This is a tariff change arising from microeconomic outlook. The Federal Government has set the rates that means that Naira is devalued into Dollars and pounds, so the implication of that is investment in Dollars and foreign currencies are now higher. So if your total production cost is $20,000 when dollar was between N1 to N300 and now Dollar is about N700 then that N20 million pounds is now close to 60 or 70 million pounds, so what the proposed tariff is doing is reindexing the price in changing the cost arising.
QT: Findings indicate that some manufacturing/ industrial companies are collapsing as a result of inadequate power supply and cost of bills payment for their operations. Can you suggest solutions for the investors, FG?
One obvious consequences of poor power supply and the collapses of Nigeria Electricity grid is that companies that depended on power will probably face shrink capacity and ultimately collapses their market. We saw that with the textiles Industries around Kaduna area which they could not compete with lower cost textiles from abroad with smuggling but primarily because they’re not price cost competitive because logistics compete about their 30 to 40 percents of their cost of production and they don’t have affordable grid energy and so they were priced out of market, we’re going to see that again with the way the discos will be forced to increase tariff to meet up with the devaluation of naira and ofcos will cause spark in energy, gas cost and other forex related cost. It would mean that if we don’t reduce inefficiency and deal with the shortcomings we might have excessive high energy cost in our businesses and not competitive even within the region. And ofcos we won’t take advantage of the African Continental Free Trade Area (AFCFTA) now what can be done is when I was the Chairman of NERC we proposed the Industrial mini-grid for industrial clusters the idea is to bring different Industries, Industrial parks and to create a special purpose vehicles and give them modular power, affordable and regular electricity through Special grade. Again, government need to be clear minded whether to change the pricing methodology to outsource more cost to Presidency and left to business. In many countries in the world businesses enjoy cheaper energy because of the pillers effect of low energy to general pricing to economic development so government can consider all these.
QT: The Nigeria’s available power generation capacity fell by 981.8 megawatts between 2015 and August 2022 despite the over N1.51tn intervention in the sector by the Federal Government during when the Buhari’s administration came on board in 2015. The National Grid collapsed 98 times under former President Buhari era. What is your view on this and the remedy to end the collapses of grid?
Amadi: It doesn’t not quit it for the crisis of the Sector, I meant 98 times the grid collapsed under former President Buhari inspite of huge money put in the system it tells us that the problem is not properly diagnosed and we need to stay back and do a reexamination of National Electricity power policies to rethink the assumption under privatization and begin to be more adaptive in managing this technical inefficiency it is not engineering but commercial. It is about rethinking the sector and public sector entirely and being more efficient to create a presidential taskforce to focus in ensuring ultimation of available capacity, the taskforce should ensure that rural compact, ministry and policies makers, regulators NERC and the Distribution Companies (Discos) and Generating Companies (Gencos) are delivering their mandate. There should closer monitoring and supervision, there are some degree laxity in monitoring so that even before we expand capacity significantly we can optimize the available power to ensure less inefficiency, less outages and we can ensure that during the rainy season some of the faults are clear on time that calls for High Grade Project Management and that is what we need in the short medium time now.
QT: Surveys indicate that many customers pay huge amount of money for electricity bills consumption without equivalent power supply in their residents by Discos. What is the way forward?
Amadi: As long as there is inefficiency in this market the customers will carry the shot poses, all inefficiencies are covered by customers so the customers are the victims of this market. The customers are deceived by price increase and the same time service delivery is poor at the same time low metering. Some meters customers are suffering because they’re experiencing double warning the tariff is high at the same time they don’t have any way to control their consumption if they don’t have meters. Even if they reduce their consumption they will still receive same amount of money they have been consuming. I think we need to first provide meters for everybody, we need to localize customers protection activities so that states can now setup Customers Protection Agency which jobs will be to use NERC regulations to do retail monitoring and enforcement of these regulations at the state level because several of these laws are not implemented. We need to have local retail attention at the local level so that customers demand can be fulfilled.