Buhari’s Energy Crisis –A Clarion Call to Lead/

This must be tumultuous times in Aso Villa, but the President’s travel itinerary definitely does not give it away. Confronted as the Petroleum Minister with the longest fuel supply crisis coupled with a persistent collapse of the electric grid that is very dependent on gas supply, one will expect a laser focus from the government at this particular period on this sector that impacts everyone, and all Nigerians.

The energy crisis we confront today of course was not the sole result of anything the President has done in nine months, but a lot can attribute to that which he has not done. While nine months pale in comparison to the over thirty years neglect of Nigeria’s energy policy even while Nigeria’s population quadrupled, one will be pressed not to pin the blame of indecision or poor decisions on the President and his men since they mounted saddle about nine months ago.

While it is true that Mr. Buhari met an hydra headed monster in both the power and petroleum ministries, the approach to resolving the issues have lacked the depth of understanding, or the creativity required as well as the speed required for such sensitive sectors where vested interests have been entrenched- and whose impact is direct on Nigerians more than ever before.

The initial unintelligent praise singing of the President’s social media warriors ready to ascribe every small victories to the president in those early days did not help matters, even as the saboteurs in the civil service and government owned enterprises like NNPC and NERC swung into action to cover up problems and flatter the President’s men while spawning an elaborate web of sabotage, sucking in the man in charge into their ever enlarging vortex of deceit without adult supervision.

Even the few good things the President have done to date in the sector; have been somewhat incomplete or shoddily done. The first of this class would be the appointment of new leadership for NNPC at an attempt to reform that behemoth of corruption and inefficiency. Rather than ensure a complete clean slate, he brought a clearly knowledgeable leader with reform credentials then went on to handicap him with an internal team that are largely children of the PDP era. That attempt even when revised few months later still shows that the President reform perhaps still born is at best subject to prolonged gestation of the type witness when a woman have been bewitched by her enemies. Or how else can one explain the last reshuffle, and strike and back-pedaling on reorganization, unbundling and all sorts of drama in that enterprise?

It is also true that the idea of giving him a Ministerial portfolio was the correct one in the context of the President as a subsisting Minister of Petroleum to avoid the perennial issue of ‘mis’managing NNPC when two people occupy the posts, but this should have been balanced by appointing a counterpart in the related Power industry, under a merged Minister of Energy portfolio which the President can retain. The idea of merging ministries and making the government smaller and nibbler was not an end to itself, and the random merger of Power ministry with an unrelated Works and Housing portfolio, made no sense. This is especially the case, when a counterpart Minister of State Energy for Power (just like Dr. Ibe) to walk through the related issues of gas supply, power generation, vandalization and cabal control that bedevils the sector.

(Note to all: Nigeria generates 5000 MW at peak even as grid capacity stands a little above 5500 MW, and she has 5000 MW or so idle power stations built under the NIPP not generating power as we speak because they lack gas that the petroleum ministry has not been able to supply)

It makes no sense to subject the production of power largely by gas turbines to the bureaucracy of two ministries. In reality, as NNPC goes so goes TCN; as DPR is moribund so is NERC asleep at the wheels. Indeed, the behemoth of a single company controlling 80% of fuel imports or 60% upstream production is analogous to the insistence of the law that TCN must manage a single point of failure grid into which all GenCos must dump 100% of Nigeria’s produced power even when adjacent mega cities lack electricity and industries are crippled as a result with the eventual transmitted power bearing the natural line losses that could be eliminated by adjacent transmission and distribution. Egbin that lies at the coast of Lagos produces 1000 MW yet only a quarter of that flows into Lagos even if it gets any at all,

Speaking about vested interests, both the generator and fuel import cartel have similar motives and modus operandi, and perhaps even filial relationships and it is deliberately foolish to fight that battle on three fronts when they can be combated by a Minister of Energy led by the president himself coordinating with his two czars who are compelled to work cooperatively as Ministers’ of State. Indeed, the mentality underlining award of over 40 private refinery licenses that have only yielded fuel importing cartels instead of refining giants also underlined the bungled privatization of the power sector with front companies for Nigeria’s elites without technical or financial capacity to deliver more power to Nigerians, even as they seek to charge more and remit less in taxes!

Lastly, fixing such gargantuan problems as have been laid out here requires creativity but also some high level of communication skills and urgency. For one, it is not enough to seek to turn around Nigeria’s power fortune and continue to budget for Mikano Generators across MDAs. Perhaps the president can insist all such allocation must go to solar power panels to jumpstart a new industry, while solving an immediate problem and creating jobs.

Indeed, the President must understand that at no time in history has a President with insufficient response to an energy crisis been able to come whole politically without the people firmly on his side. The President must put “people” at the middle of his reforms, and engage in an equivalent of a weekly fireside chat like FDR did during World War 2. It is a battle to determine if Nigeria will continue on the path of government supported corruption in the name of subsidy, or if we are determined to attract outside capital to rebuild our infrastructure. It is a battle to determine if we will continue to lack in the middle of plenty, or if we will re-discover our inner giant and reposition Nigeria for greatness by exploring all the various sources of energy the creator have blessed her abundantly with. This is the choice for President Buhari and Nigerians.

Bottom-line:

Given the chance to advise the president on what his top 5 acts in the energy sector should be, here is what we would suggest:

1 Merge the Power and Petroleum into a single ministry, with supervising Minister of States (preferably professionals with deep experience in the industry) reporting to the President (as the substantive Minister) everyday on clear benchmarks after being given clear hire and fire powers without interference; communicate their progress weekly to the Nigerian people.

2. In the immediate, throw open the borders for importation of petroleum for the next 18-24 months while we get to really fixing those refineries or better still partnering with the private sector to do it, and change the fixed pricing and subsidy policies that drain the national purse. Have the Minister of State for Petroleum to strengthen the DPR to perform its regulatory function.

3. In the immediate, revisit the bungled privatization process that saw DisCos and GenCos privatized into separate companies; use NERC to enforce consolidation of the existing system players and require increased financial capacity to issue upgraded licenses. Be prepared to nationalize companies that don’t comply while enforcing 100% metering of the end user at their premises and transformer level to curtail theft. Ban estimated billing.

4. Unbundle and commercialize both the existing structures in Power (TCN) and Petroleum (NNPC); the unions will battle the President but the EFCC is his best friend as Nigeria’s energy sector union leaders are notoriously corrupt.

5. In the case of Power, approach the issue of breaking up the grid deliberately, by focusing new generation on ring fenced population centers and stop sending power from existing GenCos into the national grid while their adjacent population centers suffer from lack of juice. The grid (and off grid renewable solutions) would increasingly be freed to serve the hinterland with the large hydro power sources and rural areas, as top 10 population centers attract investors.

Word of Advice: Eschew all manner of socialism and attempts at subsidies in the traditional energy sector. Instead, in the long run provide for strongly regulated tariff system in the power sector that is predictable and clear, and police anti-competitive behavior in the related petroleum sector. The subsidies worth exploring should target individuals and encourage them to go off grid with solar and other renewable sources. Remember, Nigeria is not exempted from basic economic laws- of supply and demand, and human motivation principles.


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