Economic Confidential, March, 2009

INTERVIEW

Why We Suspend the Electricity Commissioners – Minister of Power

In what seemed to be his first major interaction with the media, the Minister of Power Dr. Rilwan Olanrewaju Babalola addressed some journalists in his office where he spoke on various issues in the power sector and the suspension of the chairman and six commissioners in the Nigeria Electricity Regulatory Commission (NERC). The Economic Confidential presents here excepts from the media interaction:

What is happening to power supply in Nigeria? Is it not being politicized?

I am surprise that some one is not mentioning saboteurs. On the state of power supply what I can say is that we are currently between 3,000 and 3,200 Mega watts. For us to get to 6,000 Mega watts we need to address a number of issues. The fundamental issue to be addressed is the issue of gas. We know that today the Power Holding Company of Nigeria(PHCN) has the capacity to generate close to 4,0000 Mega watts. The reason why they can not generate more than 4,000 Mega watts is the issue of gas supply. Gas is a big problem. We believe that government efforts and initiative will address the problem. The additional capacity to make it 6,000 Mega watts by year end is coming from the Independent Power Projects (IPPs). We, as a nation, have not  developed our gas to meet local consumption. More importantly you also have the problem of vandalism. So these are some of the realities on our table. I don’t believe that politics is affecting our ability not to generate more than 3,000 Mega watts a day. I think there are certain things which we as a nation need to do.  We can blame each other for our shortcomings but at the end of the day, the fact remains that we are still worth 3,000 Mega watts.  So I really don’t know how much mileage we can reduce everything to the in-fighting in the industry as to why we don’t have power.  This is a sector that does not have a master plan. Abuja as a city has a master plan. But we do know that if you want to be one of the 20 developed economies in 2020, we need to invest over $100 billion dollars.

So these are some of the realities. We always try to look elsewhere for the problem in the power sector. If we don’t put our heads together, we always say politics and other things are responsible for it. But if, as a nation we put our house in order, and we know that yes we have challenges in the power sector, then that is the beginning of addressing the problem. There is an appreciable improvement in generating capacity but the groans and cry of Nigerians still remain the same. Nobody will be satisfied until there is significant power improvement in the country. We have left the sector to auto pilot for a very long time. If you have a car for 10-20 years without you servicing the car once, you know that is not going to be possible.  That is what happened to the power sector. What keep surprising me is how did we get ourselves into this mess?

This is a sector that, apart from having ad hoc plan, we don’t have a master plan. We don’t have a long term power plan.  We need to go back to basis. It is not just about having power stations or gas but it’s about how do we run these assets. How do we ensure that as we deliver on the physical side, we also ensure sustainability on the commercial side? 

What is happening to power emergency?

We have been in crisis for a very long time. We cannot apply the normal day-to-day solution to solving the crisis.  The president has made it very clear that he is declaring emergency on the power sector. Now I am talking to you and it may not be the government position. When we talk about the declaration of the emergency, what exactly do we mean?  First of all, most of the equipments that we use in the power sector, we don’t produce them in Nigeria. We cannot rush to produce gas turbines. These are some of the issues that you need to address before declaring emergency. I think it is some thing we need to plan very carefully. If you are declaring emergency, you need to be clear about its objective and administrative arrangement should be put in place. I can assure you that the president’s commitment to the power sector is not ambiguous.

What is the update concerning the probe in the Nigeria Electricity Regulatory Commission (NERC)?

The Ministry of Power was informed of the invitation for questioning of the chairman and six other commissioners of the NERC for alleged financial misconduct by the Economic and Financial Crimes Commission (EFCC) on February 4, 2009. The invitation for questioning and the subsequent detention of the seven NERC commissioners was predicated on the petition earlier received by EFCC. By February 10, 2009, all the seven commissioners of NERC had been released on bail. Based on its preliminary findings, the EFCC recommended to the Federal Government the suspension of the commissioners to allow it proceed with detailed and unfettered investigation of the matter.  Following the recommendation of the EFCC, His Excellency President Umaru Musa Yar’adua GCFR approved the suspension of the seven commissioners of NERC pending the resolution of the matter. In view of the above development and to avoid  the emergence of vacuum in the activities of the NERC, His Excellency President Umaru Musa Yar’adua further approved the appointment of Mr. Imamudeen A. Talba, Secretary to the commission  to oversee the affairs of the commission pending the resolution of the matter. Furthermore, Engineer Alex Amakom will assist the aforementioned in running the affairs of the commission. The ministry will like to assure members of the public, in particular the power sector that this rather unfortunate development has not had any adverse impact on the operations of NERC, and would like to reassure consumers and investors that this administrative arrangement will continue to meet the need of the sector. Meanwhile, investigations by EFCC into the matter are still on-going.

What is the role of the presidency in this probe, and why must the commissioners be suspended before they can be investigated?

There have been reports in the newspapers. During my very first time with the EFCC on the matter, the issue for me was more of the organisation itself. How do we ensure that the place does not collapse? What ever happens to the regulatory commission, definitely may have adverse consequence on the sector now and into the future. When the issue of the EFCC investigations came up, there were two issues immediately: First of all, you need to be mindful that what ever question you are asked, you want to make sure that it is not misconstrued as stalling investigation. You would want to show that there is a concern for the people that are being detained. You want to show that the future of the sector would not be in jeopardy.  At the time, the issue of who triggered it was not the issue that was paramount in my mind. What I learnt was that there was enough evidence for the EFCC to request for an order to detain the commissioners for additional two days. Thus, we sent our representative to the EFCC and communicated that to the vice president. On the issue of the position of the law on their suspension, the law is very clear on this. The role of Mr. President is very clear as well. The president appoints the commissioners.  The president can ask the commissioners to vacate office in the event of financial misconduct. In terms of termination of their appointment, it is quite clear that the National Assembly can do that by certain majority but when it comes to suspension, the president has the powers to do that. I do believe that part of the recommendations of the EFCC is for the commissioners to be suspended. We shouldn’t lose sight of the fact that there is an allegation of financial misconduct on the table. The issue of remanding them in custody was to enable the EFCC carry out a preliminary investigation. It was after the preliminary investigation that the decision was made that in order for the EFCC to do a detailed investigation, it is important to have the commissioners out of the way so that they do not interfere with their investigations. They agreed from the preliminary findings that the issue was grave enough as to require detailed investigations. That, to me is the reason behind their suspension.

Can the Minister give us an insight into the EFCC preliminary report on the probe?

I wish I am able to talk freely on this issue. I think we should wait not to pre-empt the investigation and I want to assure you that there is no script being played out. I have been actually fingered to be behind it. But I am not. The reason to appoint new interim management is actually in order to avoid a vacuum.

How much is involved in this scam?

On the issue of amount involved in this investigation, I don’t know. I don’t want to be quoted on that. Otherwise I can only be speculating. I have read some reports in the newspapers about how much was involved. I think we should wait for the completion of the investigation. On the issue of $100 billion, it is a very rough and back of the envelop calculation. If we want to join the 20 developed economies by the year 2020, we need to have around 30 to 40 thousand Mega Watts. To solve the problem, we need to think out of the box. First of all how do we become more efficient and how do we attract more money? The only things somebody can tell me if the money is not there is to reduce your expectations. The problems were left on the table by our fathers. We should not leave the same problem for our children. We should do something different. The 6,000 MW is achievable and we would be having another parley with media houses where we shall unveil our road map. It is going to be challenging but not insurmountable.