el-Rufai’s Home Truth on Nigeria’s Electricity Sector: The Entire Sector is Broken; N1.7tr Drained in 3 Years

As Minister of the Federal Capital Territory, Mallam Nasir el-Rufai, was dubbed a mad man as a result of his devil-may-perish approach to his work. Reasons? First, he doesn’t call a spade by any other name. Two, if he has a job to do, he does it not minding whose horse is gored. Indeed, he was a terrible thorn in the flesh of lawless moneybags and unscrupulous politicians who violated the Abuja Master Plan with reckless abandon.

While enforcing the Master Plan, he brought down structures that violated the plan regardless of who owned them.

These awe-inspiring credentials perhaps recommended him for the job (of spokesman) he did on Wednesday, as the National Economic Council, NEC, rose from its first meeting of the year at the Aso Rock Presidential Villa, Abuja. Mallam el-Rufai told the truth that many people, including administration stalwarts, would hate to hear.

He threw two bombshells: one, that notwithstanding the humongous amount of money pumped in the sector, “the entire (electricity) sector is broken”. Two, he disclosed that the Buhari Administration had pumped N1.7 trillion into the sector, which has long been unbundled and privatised, and the investment hasn’t yielded much. He, in fact, submitted that such expenditure was not sustainable. “…you cannot privatize an industry and then over three years since privatization, you pump in N1.7 trillion of government into it, that is not privatisation,” he reiterated the concern of the National Economic Council.

“The entire sector is broken,” the Kaduna State Governor continued. “The tariff is an issue, the way the privatization was done is an issue to many. So, there are many, many issues. What we have agreed on is that there are fundamental problems in the electronic supply industry. And that you cannot privatize an industry and then over three years since privatization, you pump in N1.7 trillion of government into it, that is not privatisation.

“The federal government has supported the electricity sector with N1.7 trillion in the last three years and this is not sustainable.”

Despite the worrisome situation, however, the Kaduna State Governor appealed to Nigerians to be patient and not rush to conclusions yet.. He counseled them not to pass any judgement on the electricity sector yet until a NEC committee which he is part of, submits its report.

“I will plead that we don’t begin to pass judgement until we submit our final report,” he begged. “The problems in electricity are many, capacity is one perhaps. There are some that have shown lack of capacity it is true but there are many that are fantastic, so it is very difficult to pass quick judgement,” he said.

So, what is the way out? The governor said since a desperate situation deserves a desperate remedy, drastic solutions that may be unpalatable to some stakeholders may be applied to heal the sick electricity sector.

“Those solutions are not going to be nice, they may be painful but the only way to solve the structural problems in the industry is to take some very difficult decisions. There are many issues including the ones you have observed in Kano DISCO. Our hope is that when we must have presented our report, we would have identified issues and isolated these issues and would present options to the government that would have costs and benefits.

“Because we continue to spend N1.7 trillion every three years. The question is if we continue like this, are we getting electricity, industrialization, that is one option. We can also look at other options and have cost and benefits attached to it for the consideration of the economic council of government.

“So, my appeal is that let’s not be quick to pass judgement. Right now we are listening to all the stakeholders, of course, there is a lot of blame game. At the end of the day, we must have an honest conversation as Nigerians and know that unless we fix electricity we cannot make progress. And this electricity is required not only in the cities but in every home, every rural area. How do we fix the structural problem in the industry so that it doesn’t cost the government this much to cover the whole of the country.

“Today, there are 80 million Nigerians that do not have access to electricity. We cannot continue like this.

“So, we will ask all these questions, look at everything you have observed and even those that you have not observed. But we want to listen to Nigerians and get their own views and incorporate those views in every solution that we propose.”

President Muhammadu Buhari in handshake with Joe Kaeser of Siemens [Photo: Twitter @bashirahmad] (Courtesy: Premium Times)

According to Premium Times, Nigeria recently signed a deal with Siemens of Germany to revamp its electricity sector and ultimately produce and utilise over 20,000 megawatts of electricity, for a country barely able to generate and distribute 5,000 megawatts.

However, many Nigerians foresee obstacles to the implementation of the agreement especially as two of three key electricity stages have been privatised-generation and distribution. Both were privatised by the Goodluck Jonathan Administration leaving only the transmission component for the federal government.

Some Nigerians, and pressure organisations like the Nigeria Labour Congress, NLC, have been agitating and canvassing for the reversal of the privatisation scheme. Others have asked the government to buy-back the electricty generation and distribution firms from the private companies.