Hon. Patrick Ikhariale, who represents Esan South/Esan Central/Igueben federal constituency of Edo State, is the chairman of the House of Representatives Committee on Power. In this interview with ADESUWA TSAN and EDEGBE ODEMWINGIE, he speaks on the status of the Hydro Electric Power Producing Areas Development Commission (HYPPADEC) Act and why the power sector has not made much progress despite several efforts to improve it.
The National Assembly passed the HYPADEC Act which was duly signed into law by the president. Why hasn’t the project kicked off several years down the line? Has it been abandoned and if so, why?
From the history, HYPADEC first came up by way of a motion sponsored by late Hon. Idris Kuta. From a motion, it became a Bill and got assented to by the president way back in 2010. The truth of the matter is that after the assent to the bill, the Federal Ministry of Power was unable to implement as expected. In my wisdom and that of the House Committee on Power, we called on the relevant minister to attend a meeting to brief the committee of the House about why the HYPADEC Bill as assented to by Mr. President has not been given the kind of attention it deserves, by way of setting up a commission and getting people to man the commission for take off to fulfil the hopes, dreams and aspiration of all those who took part in sponsoring and supporting the motion and subsequent Bill.
It is always difficult to explain? but there is always a line of distinction between the ‘is’ and the ‘ought’.? What it is and what it ought to be are usually not one and the same thing. Having got this far, the minister came alongside principals of the ministry, including, of course, the permanent secretary. The explanation was very clear: that the Bill, as it was passed before being assented to, gave 30 per cent of gross profit of whatever revenue that was going to be derived from the operation of HYPADEC to the immediate communities – which is like derivation of some sought. The argument of the minister was that the? percentage was not going to be realistic in the sense that there is no investor that will invest in an environment where 30 per cent of the gross will not out of his hands, not minding the intricacies and the overall cost of production. He added that the standard? is 10 per cent. So they took that? argument to the Senate, canvassed it well and the Senate bought into it. As a House, we were not privy to this when we summoned the minister and relevant officers of the ministry to give us background information as to the cause of the failure to implement the HYPPADEC Bill as assented to, particularly when over N350 million was appropriated in the 2011 budget. We were concerned by the fact that the people within the benefiting state had their hopes raised and they were expecting that something was going to come to them. Two, amongst other reasons, if the commission is in place, it is definitely going to increase socio-economic activities within the area. It will certainly lead to generation of employment. Over and above all that, the socio-economic benefit to Nigeria as a whole certainly overrides any other interest.
The way it is, once a position has been taken to any of the chambers of the National Assembly, there is the need for understanding by way of giving it the same level of acceptance in order to harmonise it in both chambers. The minister made a plea for a review of the HYPPADEC Act, so the Senate already had agreed in principle and it has been amended and we, as a committee of the House, have listened to the argument, looked at the paperwork from Senate and that of the ministry and we didn’t see anything materially dangerous or inimical to the success of the HYPPADEC. We have agreed also that as soon as we get the necessary documentation we certainly will, in line with the thinking of the Senate, based on their submission to the Senate which they have equally submitted and presented to us, we certainly will not have hesitations in agreeing with that level of percentage. But we went further to take a commitment from the minister that as soon as the paper work is done, that the ministry will go into action without delay.
I can say without fear or favour or without the least hesitation of any kind that the HYPPADEC Act will be given all the flesh and blood it deserves in no distant time; particularly when we know that Nigeria, as it is today, needs a lot of hydro power. As we speak now, the volume of generation is low because of problems of gas. Most of the thermal stations are having difficulties. In terms of generation, Egbin power station is about the largest we have. Recently, the information we have is that two of the turbines are down and that is because there is not enough gas to power the turbines. If you go to most the other thermal stations we have here and there, there are problems also. It is equally very reasonable that we give it holistic attention. We need to diversify our power generation sources – solar, wind, coal and others.
At present, what are the problems in the power sector and how are they being addressed?
Without being immodest, I will say that the problem in the power sector today is something that is becoming? a reoccurring decimal. There is hardly any discussion today in Nigeria, social critique of whatever form, where the power sector problem does not come into focus. This is essentially because the power sector over the years has suffered near absolute neglect. There were no investments in the area for a long time.
For a very long time in Nigeria’s socio-economic history, the power sector, like most other public sectors, was ignored; and, of course, there is this rather wrong perception – that power is one of the social services. Even if it were, even if you were in a welfarist state in the past, I think we have gone beyond that by any standard. It is absolutely capitalist in nature now, and at no point will the government of any country have the capacity, the financial muscle, to be able to deliver energy to the populace – at least not with the way things are right now. But unfortunately the average consumer doesn’t want to see it that way.
This takes us to a motion that came up recently on the floor of the House. The purpose of that motion was that in the course of my visitation to some of the distribution companies in Nigeria, we (the Committee on Power) discovered that most of them are being owed colossal amounts of money and one will expect that to whom much is given, like they say, much is expected. In the course of analysing critically who and who owes, we discovered that government ministries, departments and agencies (MDAs) were neck deep in this indebtedness. Over and above these MDAs are essentially the armed forces – the Nigerian Army, Air Force, Navy and the Nigerian Police. Of course, it includes para-military bodies – the Customs, Immigration and all that.
The prayers to the motion were three-legged: all MDAs including the Armed Forces, Police and paramilitaries that owe should be made to pay within 30 days. Secondly, if they fail to pay, they should be disconnected forthwith after the expiration of the grace period. Thirdly, if they do not pay as directed by the resolution of the House, the minister of finance should instruct the relevant office which has the responsibility of disbursing their monthly allocations to deduct bills owed from source. Lastly that the House committees on Power and Public Accounts should investigate in clinical terms what happened to the monies that have always been appropriated on yearly basis to these MDAs, Armed Forces and the likes for the purposes of paying their utility bills.
There are about 11 distribution companies in Nigeria, so from every the committee visited, they all have virtually the same story to say. So when the motion was moved, I took inventory of eight out of the 11 distribution companies. These eight were being owed a total sum of over N44billion. It is a matter of concern. The indebtedness of MDAs lacks justification in the sense that every year, there is budgetary provision for these MDAs, Armed Forces and other para-military outfits to pay for utilities, including electricity bills. So it got to a point that we needed to pause, and try to fashion out how best we can get this money paid back to the distribution companies. The truth of the matter is, just like you are the ultimate consumer in your house with a metre which the distribution company determines your consumption with over a determined period, that is the same manner that the transmission companies that feed the distribution company have metres with which they can tell the distribution company – ‘this is what you are owing us based on the quantum of energy we have supplied to you within a period’. At the same time, generation companies also have their metre with which it reads and tells the transmission companies – ‘this is what we sent to you’. So you see, it is a cycle. Invariably, the concept of give and take applies. It is what you generate that the generation company will send to the national grid for transmission. From here, it is onward to the distribution company which, of course, are usually in close contact with the average consumer.
We have seen in many cases that in an attempt to go for collection, some of these PHCN officials have been subjected to inhuman treatment. Some have been beaten to a state of stupor. Some have sustained injuries that they may never recover from, particularly from barracks. Over the years, they have become untouchable and it is the little money that you and I, the common man on the street, pay that PHCN manages to augment. For how long can you continue to do that? That is why privatisation has now become the key language. If you recall my line of debate on the floor of the House on this subject matter, I started by giving a historical perspective of the Nigerian experience – by saying that we have utilities like the Nigerian Airways, NITEL, the railway corporation to mention a few – they have all gone moribund. What happened is that the level of patronage was largely parasitic. A minister travels with a retinue of staff, cooks, aides and they never paid for their bills. This reckless attitude gradually led to the winding up of the Nigerian Airways. The analogy of the Nigerian Airways, NITEL and the Railway Corporation in relation to PHCN is very straight forward, and like I did mention in plenary, PHCN indeed is the last of the endangered species.
People point to the unavailability of prepaid metres, Nigeria Airways did not die because of the absence of prepaid metres. It is the question of attitude of people, particularly those in authority. Even if the federal government of Nigeria chooses to pump all money required for power generation, it means it must be prepared to do that annually if people are not paying for their utilities.
Nigerians are anxiously awaiting the results of the much-touted reforms in the power sector. What is the essence of the reforms? How will it make a difference where other interventions have failed?
I am not aware of anywhere in the world that is progressive and has energy in sufficiency like expected that will say government is solely responsible for generation, transmission and distribution. It is in line with this that I had? to move for a constitutional amendment, specifically the Electric Sector Reform Bill, with a single prayer: to shift focus from what it is today where the constitution allows states, corporate bodies, as the case may be, to do generation only. My argument is straightforward and simple: allow states and corporate bodies that have the financial capacity and technical knowhow to do so by relaxing the law and amending relevant aspects of the constitution to enable them go beyond generation.
The limitation which has always been there, over and above political will and understanding, are actually issues relating to finance. The cost conservatively to get one megawatt of electricity is almost $1million; so if you are talking about 1,000 megawatts of electricity, when you do the computation, you can imagine the cost implication. Electricity generation is an intricate process where, apart from the money aspect, there are other factors that need to be factored in.
PHCN is the last of the endangered species – others have gone comatose because of wicked customers, wicked patronage. Business survives on patronage, but when your patronisers are such that you don’t have the capacity to get from them that they have taken from you, it is a question of time (before you crumble). But the end to this is in sight – and that is the privatisation process. There are government offices, houses and MDAs that still owe NITEL colossal amounts of money until it folded up. But I do not know how many of such government outfits have the capacity to owe MTN, Glo, Airtel, to mention? few. That is what privatisation can do for you. There have been semantics between the concept of commercialisation and privatisation in recent times. Some have argued that what Nigeria needs is to commercialise its power sector and not privatise it. It is an ongoing debate. People have posited that government has no business doing business.
Can you clarify what the position of the federal government is on the Rural Electrification Agency? Has it been scrapped?
At some point, there was clamour for the abolishment of Rural Electrification Agencies (REAs) but I think in the wisdom of the present government, having taken a look at the presidential roadmap in the power sector, it became imperative of some sort that the REA needs to be given more flesh and blood; it has to exist. Principal among other reasons is the fact that you have so many projects scattered across Nigeria that are being handled by these REAs. Two, there is no gainsaying that we still have quite a large number of communities in Nigeria that are still very rural in nature. Three, even if you decide to privatise today, you can be sure that the investors in this business will want to deal with areas where their turnover will be higher and that of course will mean that if you don’t have REA put in place, you are likely to have a segment of the Nigerian society thrown into darkness. This influenced the federal government’s decision to allow it to remain.
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