I am re-posting the editorial from Guardian Newspaper on my blog. The biggest problem in Nigeria is corruption without end and the biggest headache from that corruption is electricity, a crisis without end.

This is the editorial from the Nigerian Guardian Newspaper:
Guardian Editorial 12 May 2008

LONG before the onset of civil rule in 1999, the lack of electricity to power Nigeria’s development has been a much discussed subject. First, the problem was to be solved in six months, then in 18 months, then by the end of 2007, when Nigerians were assured of 10000 megawatts of electricity. President Umaru Musa Yar’Adua in his inaugural address in 2007, also made the provision of electricity a major priority in his seven-point agenda. He later promised to declare a state of emergency on a project which by his own admission had cost the Nigerian people $10 billion under the Obasanjo administration with nothing to show for it. By last week, power generation had fallen to an abysmal 860 MW, a quantity not even sufficient for Lagos State.

It is clear that without electricity there can be no industrial development and all those grand visions of becoming one of the world’s leading economies by 2020 cannot be realised. The harm caused by the lack of power in Nigeria is incalculable. The statistics are daunting. In Kano, for instance, it has been estimated that more than half of the city’s 400 industrial establishments have been forced to close down due to lack of power. With these closures some half a million workers have been retrenched. The Kano example is being replicated all over the country and has compounded the already tenuous security situation.

Nigerians were expecting President Yar’Adua to hit the ground running with his emergency plans. In the event, he merely constituted a committee that submitted an unpublished report to him on the power situation. Not much was heard on this subject until recently when the Nigerian Electricity Regulatory Commission (NERC) came up with a proposal that government has accepted. Under this proposal, NERC explained that the cost of electricity consumption was low and therefore a disincentive to investors. It determined that an increase of N6 to N11 or 83 per cent per kilowatt hour might lead to “correct” pricing for the commercial viability of Nigeria’s power generation, transmission and distribution infrastructure.

The cost of this increase over a period of three years with effect from July 1, 2008 will amount to N178 billion. This amount phased over three years will be borne initially by government as front-end subsidy to attract new investors. Ultimately, the Nigerian consumer will indemnify government for its losses by paying a higher tariff. This arrangement has been described as Multi-Year Tariff Order (MYTO). Armed with an enhanced purse, NERC feels confident that at last the Power Holding Company of Nigeria (PHCN) will be able to sustain itself, repair decaying facilities and invest for expansion.

Optimistic as the NERC’s explanation may sound, it is regrettable that MYTO easily reminds us of the unsatisfactory arrangements with petroleum products where “correct” pricing had been a mirage against the backdrop of unending subsidies that inflicted pain on the consumer without achieving price stability. The galloping pump prices are the direct result of a failed policy now being mimicked, it seems, by NERC. We hope that the Nigerian electricity consumer will not similarly be driven down a bottomless pit.

The MYTO is quite unnecessary at this point; what Nigerians want is an immediate solution to the power crisis in the country. Nigerians have no electricity for domestic or commercial purposes. To begin now to warn them of an impending increase amounts to gross insensitivity and could be construed as double jeopardy in a country where individuals and businesses have had to provide alternative power at high cost to themselves. For the average Nigerian whose refrigerators have grown mould from lack of use, reminding him of an increase in tariff looks like putting the cart before the horse.

Surely the interest of government should first be to provide the electricity before charging for it. If it costs N178 billion to attract foreign investors, then so be it. What the Nigerian government ultimately charges the consumer is a separate matter of public policy that takes so many variables into account. The allusion to an increase in electricity tariff among a people in darkness is provocative. First let there be light and every other thing including tariffs can be considered.
A holistic approach to the power problem should be adopted including other sources of energy such as coal, wind and solar. Additionally, states should embark on the provision of electricity as service to their people. Older Nigerians will recall that Jos in Plateau State once had its own electricity generating company that provided uninterrupted power supply for years until it was taken over by NEPA, the precursor of PHCN.

In tackling the power problem government must be careful not to be seen to be inventing new solutions all the time. The neglected electricity infrastructure throughout the country should be rehabilitated. Selective on-going projects carried out under the umbrella of the National Integrated Power Project (NIPP) by competent and professional engineering firms should be completed. The nation’s electricity consumption for the next 30 years should be anticipated and a work plan drawn up to achieve this.

In commending President Yar’Adua for trying to find solutions to a rather intractable problem, may we suggest that one year down the life of his administration, the pace of handling this emergency has been disappointing. Nigerians want to see immediate, medium, and long term solutions to the problem. So far, there has been no immediate solution on the agenda. In the mean time, Nigerians continue to groan and lament the inability of their governments to come to their rescue in tackling a universal primary index of development.

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