Monday, 14 December 2015

PALAVER TREE COMMENTARY: Hard Road To Solving Power Problem

Babatunde Fashola at ministerial screening on Wednesday, October 14, 2015

By Emeka Anuforo (The Guardian, Nigeria)

The new Minister of Power, Works and Housing, Mr. Babatunde Fashola perhaps looked more determined than ever last Tuesday when he was speaking to the press about his 2016 agenda for power, housing, and road infrastructure.

The two-term former governor of Lagos, whom many Lagosians consider as ‘action governor’ came to the meeting with some conviction that the electricity problem can be demystified and solved after all.  So he came up with a plan for power that rests on key components: Strengthen the regulatory agency, National Electricity Regulatory Commission (NERC), hold the GenCos and DisCos to their contracts with citizens, and make gas available and expand the Transmission Network. There is one more. MDAs at all levels as well as corporate and private individuals must be prepared to pay their electricity bills, said Mr. Fashola.   With this road plan, the minister is optimistic that power will improve. But has the minister appreciated the frustration experienced by his predecessors well enough to answer the key question: How soon will Nigerian start to enjoy electricity, at least, to a reasonable extent?

Well the former Permanent Secretary, Ministry of Power, Ambassador Godknows Igali, attempted the question in an interview recently.

He said the Federal Government would need an estimated 12,000MW of electricity to achieve steady power supply.

At the moment, Nigeria is reported to be generating approximately 4,600MW at peak hours and approximately 3,900MW at off-peak hours.

As the situation stands today, it remains uncertain if Fashola-led ministry will generate that much before his tenure lapses.

And there is no need searching for the reason why this may not happen in the next few years. The reason sticks out prominently: There is no gas in sufficient supply.

Speaking recently at a National Assembly inquiry into the power sector, NERC Chairman, Dr. Sam Amadi, reiterated the gas challenge, attributing the low generation of electricity largely to problems associated with gas supply.

According to him, the huge investments put into the National Integrated Power Project (NIPP) by the three tiers of government, and the power plants so far built under the scheme are largely idle because of inadequate gas supply.

The question of gas supply and the attendant problems also were the major subject discussion at a forum of the National Association of Petroleum Explorationists (NAPE) in July.
At that forum, the NERC boss identified corruption, incoherence in gas-to-power policy, low commerciality in gas supply to power, poor gas to power infrastructure, incompetence in project management and lack of prudent public sector investment as part of the biggest challenges of the sector.

“The lack of gas supply necessary to fire available generating plants is the main reason we don’t have at least 5,500MW of daily generation.”

The problem of gas supply, he said, has manifested in two main forms: vandalism of gas pipelines and poor project management of gas facilities.

According to NNPC, there were 3,700 cases of pipeline Vandalization in 2014.

“Due to incessant repairs of the pipelines, there is now an issue of technical integrity of these pipelines, further constraining supply of gas to power plants,” said Amadi
He also highlighted how the country lacks adequate capacity to process gas and facilities to transport gas to power plants.

“This inadequacy is itself a result of the structured disconnection between power generation and gas business. Gas policy and regulatory framework until recently were not consciously focused on power generation. So, the gas market did not process enough gas for the power sector. Much of the gas produced goes to the export market and other domestic industrial users,” he added.

Former Chairman of the Nigerian Electricity Regulatory Commission (NERC), Ransome Owan is in agreement with his successor.

Speaking at Powering Africa Nigeria Summit held recently in Abuja, Owan lamented what he described as the lack of concrete gas supply agreements for the power stations.
He said:  “Even with over US$5billion invested in the NIPPs, they are down as gas is not there to power them. The projects cannot come to a financial close because there is not enough gas for the plants.

“The Nigerian Bulk Electricity Trading Plc (NBET) cannot sign their Power Purchase Agreements (PPAs) unless they answer these two things: do you have gas and can you evacuate power? The seller, which is the government, cannot answer the questions.”
He charged the federal government to live up to its responsibility in gas supply to the power sector.

“To have a sustainable gas sector, the risk should not be with the IOCs, the gas transporters or the power companies. It is the federal government of Nigeria because it has the army and the joint taskforce to protect the infrastructure,” said the former NERC chief who also made a case for a single gas regulator.

“To gasify our economy, we would need to have a sector regulator to set a foundation, the rules, and regulation for the market. This was done in the power sector.

Also speaking, President of the Nigerian Gas Association and CEO of Oando Gas and Power, Mobolaji Osunsanya alleged that the NIPP was defective from inception.  “The NIPPs were designed to fail,” he said.

It is difficult to disagree with Osunsanya because it makes little sense to builds power plants so huge the way federal government did without being sure of gas supply.

Former Minister of Power, Prof. Chinedu Nebo attributes the failure of gas supply to those he described as saboteurs who stood in the way of government’s full plans for the sector.
In an interview he granted The Guardian in May, he urged the new government to wield the big stick on those who disrupt gas to power efforts including the pipeline vandals but observed that a lot more would have been achieved if gas producers were sincere with the commitments they made to the power sector.

“Commitments were made to give us gas, but we haven’t seen gas. It is just as simple as that. It is very painful. I blame a lot on vandalism. But I also blame the oil firms and gas producers for what I consider to be hypocrisy. They have been hypocritical with this whole issue of making sure that we have gas and bringing us out of the darkness and so on.”

He also accused the gas producers of exporting most of the nation’s gas and diverting the remaining available quantity for the domestic market to the industries, instead of the power sector where it is greatly needed.

His words: “The greatest undoing of the administration, and my greatest regret, is that we lost the war against vandalism and we lost the war against inadequate gas supply.

“These turbines are ready to go. Some of them were operating at 30 percent capacity. I think I feel so sad about this, because if we had gas going to these turbines, every Nigerian would have been hailing President Jonathan today. But unfortunately, there was no gas. When gas was produced, even more, you find a preference by the oil companies to give gas to the industries instead of to power generation. It is still happening today, whereas the profile for gas to power continues decreasing, the profile of gas to industries increased. Something is wrong.

“This new government should take a cue and make sure that the petroleum sector does what it ought to do to make sure that there is enough gas going to the power plants. It is very critical. If the new administration does not do that, Nigerians are going to keep suffering in darkness.”

He expected that the new administration to fight vandalism and bring the vandals to their knees. If we don’t do that, we are still going to have a problem. Every two weeks the pipelines are blown up and it takes two weeks to fix them is not good for the sector. Within 24-48 hours of fixing them, they are blown up in other places to the point where the integrity of the pipeline is now in question, and a lot of major works has to be done.

“I think that it is scandalous that we produce over 5 billion scfs of gas every day and we sell 4 billion scfs and return only1 billion scfs for local use.  The one for local use is preferentially given to industries and not to power, starving the power sector of the needed gas to industrialize this country and I think that is a shame.”

He called for action on the Petroleum Industry Bill (PIB), noting that it would liberalize the market, and make it easier for more gas to be available.

Apart from the challenge of inadequate gas supply, there is a general consensus in the sector that the Nigeria Electricity Supply Industry (NESI) is starving for capital and cash flow – all of which originates from customers who are said to be ill-informed, frustrated by poor reliability, poor power quality (low voltage, voltage fluctuations), frequency and duration of power outages, estimated bills and lack of meters.

Investors say tariffs have not been cost-reflective for decades and has persisted post-privatization. The need for a cost reflective tariff, a bedrock requirement of the Power Performance Agreements has remained elusive for many investors who have eagerly looked forward to it.

There are also calls for the outright privatization of the TCN.
The Managing Director of the Transmission Company of Nigeria (TCN), Mr. Mark Karst, says the firm needs about US$1 billion yearly to wheel 20,000MW of electricity by the year 2020.

Thursday, 29 October 2015

PALAVER TREE COMMENTARY: Why Some African Leaders Cling To Power, Whilst Others Walk Away — Christina Okello

Congolese President Denis Sassou Nguesso votes in the country's referendum on October 25. Tanzanian leader Jakaya Kikwete at the UN General assembly, September 27, 2015. Reuters/Montage

By Christina Okello

Following a weekend of elections on the African Continent, analysts are drawing parallels between Congo-Brazzaville and Tanzania even before results are announced. One leader is accused of tampering with the constitution to extend his grip on power, whilst the other has been credited with respecting presidential term limits.

In one corner, you see a political beast, greying at the temples, but still fighting in the ring; whilst in the other, is a younger, sprightly politician walking away.

The contrast drawn between Congo Brazzaville's President Denis Sassou Nguesso and outgoing Tanzanian leader Jakaya Kikwete is striking. The latter has been in power for over thirty years and is still vying for a third-term. Kikwete on the other hand, after only ten years in office, is throwing in the towel. He's served his constitutional two-term limit, and says it'senough. But why is it not the case for many of the continent's other leaders who are seeking to overstay their welcome?

Congo Brazzaville is the latest newcomer in a growing list of countries where fiddling with the constitution for personal gain is becoming the norm: Rwanda is heading down that route, Burkina Faso's deposed Blaise Compaoré tried to, and Congo-Kinshasa's Joseph Kabila is keeping a firm eye on what's happening next door for any tips.

Changing the constitution to scrap presidential term limits didn't begin today. It's been a continued predilection among African leaders since independence. Most of the former colonies were not organized as democracies and are still figuring out what it means. Yet undoing the foundations of what constitutes good governance may be the wrong way of going about it.

Ironically, it was Sassou Nguesso who himself introduced term limits in the 2002 Constitution, only to jettison his ideals ten years later.

Unscrewing caps on term limits here and age limits there, is not anti-democratic per se. But it's when there are no more screws left to unhinge and you open the gateway to indefinite reelection as in some Latin American countries, that's when alarm bells start ringing, TransparencyInternational warns.

Shock of democracy versus a constitutional coup

Voters in Congo-Brazzaville seemingly heard them loud and clear, as many shunned polling stations on Sunday. Turnout was only 10 per cent, it was revealed on Monday.  Proof for the Opposition that voters had heeded their calls to boycott what they described a "constitutional coup d'etat".

On the government's side, the referundum is "above all an instrument of participative democracy."

But Bovid Atouta, an English teacher in the President's stronghold city of Talangai told RFI he wasn't convinced.

"The government needs to do much more. Fine, they're building roads, but what about schools? The main university doesn't even have rest-rooms for students to use and basic social services are lacking," he said in frustration.

African leaders have long dangled the illusion of stability to induce their populations into complicit silence, and Brazzaville is no exception.

Yet, the real power grab comes not from the former French colony, but its colonizer France, suggests Dr. Yves Ekoué Amaizo, head of the panafrican think tank Afrocentricity.

Whiff of neo-colonialism

"People need and must stay in power in order to protect this relationship with the former colonial power. Big companies like Total have vested interests and are making big money," he added.

Total this summer signed a 20-year deal to extend its drilling operations at three major offshore sites in the Congo.

Meanwhile, French President François Hollande rattled featherslast week when he suggested that Sassou Nguesso had the right to consult hispeople. A move hardly likely to reassure opponents of the referendum, who see it as a ploy to extend the long-serving leader's 31-year rule.

Asked why the former Marxist leader is hell-bent on clinging to power in comparison to Tanzania's Kikwete, Amaizo told RFI: "Number one it's a francophone country. Second, you have a lot of major ethnic problems in the Congo, which means that the power which should be at the sub-regional level never took place, and they even had a war because of that."

Indeed, Sassou Nguesso was re-elected in 1997 at the end of a bloody civil war. But strong leadership no matter how stable does not tackle the root causes of poverty. Many Congolese still live on less than U$1 per day.

The situation in Tanzania is slightly different. First, it never experienced ethnic conflict, Amaizo says.

"It's true that Kikwete is supposed to leave, and he will leave," he told RFI.

"From the outside it looks very nice but when you look closer, you'll see that the person who is running as the opposition guy is Kikwete's former prime minister and that same opposition guy was part ofthe ruling party, before joining the opposition."

Amaizo suggests that Tanzania's political change is tainted by association.
"You never get what we call political change. If you want democracy to function you have to have political change in Tanzania and that doesn't exist. The only difference with Congo is that it's peaceful," he concluded.
Originally published in RFI