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In lieu of our monthly meeting for July 2018, I opted to brief the
public about our progress so far in our journey to incremental
power towards steady and, finally, uninterrupted supply.
In the process, I highlighted the challenges we have overcome
and those we are dealing with, and what needs to be done and
who has the responsibility to do so.
Those who know and who genuinely desire to solve problems in
this industry do not need to be told that the most pressing
challenge of the Sector today lies at the Distribution end.
Amongst the challenges at this sector of the value chain, (and
there are problems in Gas, Generation and Transmission), the
most urgent are Distribution of available energy to consumers,
and there is an unused energy in the region of 2,000 Megawatts
in this category.
The other, of course, is the supply of meters to consumers.
These two issues of power distribution and supply of meters
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rank highest in the feedback from the stakeholders in the
industry.
In order to address these challenges and find solutions to them,
I issued policy guidelines and directives to appropriate
institutions for them to act.
It is in this context that I think it is fortuitous that Mainstream is
our host today, because my remarks will focus on the review of
progress we have made with some of our policies.
I have always insisted that there must be methods to decision
making, and this includes evaluation of decisions to see how
they have progressed and what needs to be added or modified.
Therefore, we must understand that policies are not an end in
themselves . Policies represent an expression of our hopes and
aspirations and must be embraced, nursed and nurtured to
deliver on all their capacities and possibilities.
In a sense, I liken policies to the human being. At birth, he
represents the hopes of parents for tomorrow. Left alone, that
infant is helpless, so he is dependent for feeding, clothing and
all survival needs until he becomes ambulatory, able to stand,
walk, talk, run, and matures into adulthood.
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With this analogy in the background, I will address the progress
of some of our policies for the benefit of members and the larger
public.
A) N701 Billion Payment Assurance Guarantee
This was not in any law. It was a creation of the Buhari
Government to give comfort to investors in the Generation side
of the value chain that they will be paid for supplying power.
Since its implementation in 2017, recovery of payments by
GENCOs has increased from 20% to 80%; and power supply
capacity has improved from 4,000MW to 7,000MW and there is
an appetite by other players to participate.
Is it perfect? Certainly not.
Do the GENCOs like it? I am sure that they will tell that 80%
recovery is better for business than 20% recovery, but they
would rather have 100% recovery.
But this is only one side of the coin. The other side of the coin is
that GENCOs must transparently invoice for their output and, for
example, we must harmonise the price of gas for payment under
the scheme, where there are differential prices arising from
different Gas suppliers.
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Therefore, we must work as the parents and owners of the
policy to nurture and improve on its capabilities.
B) Eligible Customer
This was introduced on 15 th of May 2017, and the Regulations to
govern it were issued by NERC on 1 st of November 2017.
The purpose was, amongst others, to improve distribution side
of electricity and facilitate better power supply to consumers who
consumed up to 2MW and above.
From reports reaching me, 5 (FIVE) industrial customers are
now benefitting from the policy and taking their power directly
from a GENCO, who incidentally is our host today, Messrs
Mainstream Energy Ltd.
We also have a list of 26 (TWENTY-SIX) industrial customers
who are seeking to benefit from the policy.
The DISCOs must be interested to know that I have also issued
directives to NERC to work out and implement Competition
Transition Charges as provided by Law, to safeguard them from
any losses.
We will continue to monitor the impact of the policy and remain
flexible to keep what works and change what does not; and I
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urge everybody to remain open-minded, adaptive and
responsive.
C) Meter Asset Provider (MAP)
This policy was introduced to address the meter supply gap,
relieve the DISCOs of the financial burden of meters, allow
entrepreneurs to take up this as a business and diversify the
sources of meter supply.
The Regulations and Condition for its operation were issued by
NERC on 8 th March 2018.
Reports reaching me indicate that there is an embracement of
the policy. Entrepreneurs are showing interest and talking to
banks to raise finance.
Some DISCOs have signed up to the Government-Supported
fund of N37 Billion and we will keep an eye on the progress of
the initiative.
Government intervention in this regard is part of its role of
enabling to be effective. It does not relieve the DISCOs of their
contractual obligation to provide meters.
On the contrary it seeks to help them perform their contract.
D) Energising Educational Institutions and Markets
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These are Government-led initiatives based on the Rural
Electrification plan approved by the President in 2016 to provide
access to power for rural dwellers and vulnerable members of
our society.
We proposed to use 6 (SIX) small hydro dams that had been
abandoned for decades, Federal Government owned
universities and some markets as anchors.
Apart from the Universities, where Government is directly
funding the intervention, the markets are being privately funded,
contrary to the untrue allegations that have been made in the
media, and I challenge those who made the allegation to provide
proof to the contrary.
There are currently 15 (FIFTEEN) markets under contemplation
with Ariaria, Sabon Gari and Sura markets in Aba, Kano and
Lagos as flagships.
The 6 (SIX) hydro dams are to be concessioned to private
operators to build, operate, and transfer.
Our thinking is simple. While the whole value chain and power
privatization gradually evolves, it is possible to create Oases of
success by showing to our children that they can have reliable
power while in school.
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If that is a reason to get children to school and keep them there,
certainly, no good business can oppose this.
Indeed, it seems to me sensible to expect that the future of
today’s business and even Government, rests solely on the
quality of education that the current generation of students get.
As for the markets, the 37,000 shops in Ariaria, about 13,000 in
Sabon Gari, and about 1,000 in Sura represent SMEs, where
the majority of our people earn a living.
They are currently paying for expensive power from small and
environmentally unfriendly generators.
It seems to me that our nation will have come to their aid if we
deliver reliable power to the most vulnerable like them.
Ladies and Gentlemen, this is my update about the progress of
our policies and the rationale behind them.
I welcome you to this meeting and wish us fruitful deliberations.
Babatunde Raji Fashola, SAN
Honourable Minister of Power, Works and Housing
Monday 13 th August 2018
