BusinessDay 06 Feb 2018

Tuesday 06 February 2018
COMMENT
RAFIQ RAJI
“Dr Raji is chief economist at Macroafricaintel.
He was previously an
Africa Economist at Standard Chartered
Bank, London, UK. (Twitter: @
DrRafiqRaji)”
It is hard to wonder
what the ruminations
of South African president
Jacob Zuma was as
he watched his deputy,
Cyril Ramaphosa, take his
place on the global stage in
late January at the World
Economic Forum in Davos.
Now president of the ruling
African National Congress
(ANC) party, Mr Ramaphosa,
is nominally Mr Zuma’s boss.
Effectively, it is not so simple.
A party president is most
effective if he or she is also
president of the Republic.
This refers to the specific
South African case, where it
is the political party that deploys
cadres to government
when it secures power. The
imperative for Mr Zuma to
give way for Mr Ramaphosa
cannot be overemphasized.
True, Mr Zuma’s tenure as
president extends to 2019.
And should he decide to hold
on, and is not recalled by his
C002D5556
comment is free
Dirty Zuma exit fight inevitable
party or impeached, he would
be able to serve his second
and last term in full. Were that
to happen however, it would
be at the expense of the wellbeing
of long-suffering South
Africans. Firstly, Mr Zuma is
fighting corruption charges.
Secondly, his continued stay
would entrench increasingly
intractable differences within
his party. Thirdly, the ANC
needs time to repair the damage
done by Mr Zuma if it
hopes to be victorious in the
2019 polls.
Get out of jail free card
The primary concern of
Mr Zuma is likely how to
avoid going to jail. Finishing
out his term guarantees
he would not have to worry
about that for another two
years. Of course, he could
secure a deal to avoid prosecution
by leaving earlier.
But that would be hugely unpopular.
Even so, such is the
strength of the desire to see
him gone that South Africans
might not mind overmuch
if he is allowed to retire to
his Nkandla homestead in
peace. What is concerning is
that a typically clever Zuma is
reported to be obstinately insistent
on finishing his term.
Local media report Mr Zuma
would rather be recalled or
impeached than resign. He is
not being totally irrational.
On the recall, he still has allies
in the top echelons of the
ruling party, who despite his
The primary concern of Mr Zuma
is likely how to avoid going to jail.
Finishing out his term guarantees
he would not have to worry
about that for another two years.
Of course, he could secure a deal
to avoid prosecution by leaving
earlier. But that would be hugely
unpopular.
waning power are surprisingly
still loyal to him, albeit they
have begun to hedge their bets.
ANC secretary-general Ace
Magashule, a staunch Zuma
loyalist, may not be one of
those, though; albeit it may
be because he faces scrutiny
for corruption as well. Party
treasurer, Paul Mashatile, is in
the Ramaphosa camp, at least;
calling for Mr Zuma to step
down as recently as late last
week. The positions of the two
top men are indicative of the
entrenched and sharp divisions
within the so-called “top 6” of
the ruling party. So, a recall
would be difficult but not impossible.
But Mr Ramaphosa is
believed to be averse to such a
move. After the Constitutional
Court ruled in late December
that clear and precise impeachment
modalities be instituted
by the legislature, a potential
Zuma impeachment should
be pretty straightforward; if it
ever comes to that. But were it
to happen, it could take time.
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Thus, it would be much easier
if Mr Zuma simply resigned. In
any case, an umpteenth noconfidence
vote is scheduled
for late-February. Considering
the narrower margin in favour
of Mr Zuma in the last vote,
there is a greater probability
that he might not be so fortunate
this time around.
Fickle power
What is potentially pitiable
is how Mr Ramaphosa would
likely increasingly become
undermined the longer Mr
Zuma stays in office. Surprisingly,
Mr Ramaphosa has thus
far been making excuses for
his seeming timidity in taking
on Mr Zuma frontally. He
desires instead that Mr Zuma’s
dignity be guarded. Ironically,
Mr Zuma was not so gracious
when he found himself in a
similar position. After winning
the party’s presidency
in 2007, Mr Zuma moved
swiftly against Thabo Mbeki,
the country’s president at the
time; albeit Mr Mbeki still
managed to hold on for another
nine months. And even
afterwards, Mr Zuma had to
wait till after the 2009 general
elections before becoming
president. It is believed Mr
Zuma desires another “Kgalema
Motlanthe arrangement”
in exchange for leaving office
early. (Mr Motlanthe held the
fort after Mr Mbeki’s resignation.)
Reports suggest his
idea of another “Motlanthe”
is his ex-wife, Nkosazana
BUSINESS DAY
11
Dlamini-Zuma, the candidate
Mr Ramaphosa beat to clinch
the ANC presidency. Mr Zuma
had one advantage back in
2007, though: the table was
not as divided as it is today.
Should Mr Ramaphosa choose
to recall Mr Zuma, he would
need to bring the president’s
allies onside. There are indications
he is beginning to
win them over. The problem
is that Mr Ramaphosa is not
moving fast enough. Worryingly,
his momentum may
suffer great peril if anybody
other than him delivers the
state of the nation address
(SONA) on 8 February. Mr
Zuma knows this. So does Mr
Ramaphosa. Because when he
was recently asked about the
dilemma in Davos by Zainab
Bedawi, one of the anchors of
Hardtalk, a hard-hitting interview
programme by the BBC,
his response was a palpable
departure from what was a
smooth interrogation hitherto:
he took a very deep breath
before answering; betraying
his erstwhile take-your–time
rhetoric. It is probable these
considerations were put to
Mr Zuma when the ANC’s top
officials met him this past
weekend. Whether they got
his attention is another matter.
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The eligible customer declaration; pros and cons
CALEB ADEBAYO
Caleb Adebayo is an Associate with Wole
Olanipekun and Co. where he straddles
dispute resolution and commercial practice
especially in the areas of Energy, Finance
and Environmental Law. He can be
reached at calebadebayoc@gmail.com
Nigeria’s power sector is
one with a chequered
history, from the days
of yore where we had
the Electricity Corporation of
Nigeria and the Niger Dams
Authority all the way to the
National Electric Power Authority
(NEPA) and the eventual
unbundling. In May 2017, the
Minister of Works, Power and
Housing made a declaration
in line with Section 27 of the
Electric Power Sector Reform
Act (EPSRA) that allows certain
classes of end-use customers
to purchase electricity directly
from the GENCO’s. After much
speculation on the regime of the
eligible customer, the electricity
regulator recently released a set
of regulations for the Eligible
Customer Declaration. With
that, certain speculations have
now either been concretised or
dispelled. However, there are
areas that still remain to be addressed.
The declaration sways in
different directions for different
players in the electricity industry.
For the GENCO’s, it seems
to be a period of ecstasy, as
they can now directly deal with
customers and retrieve their
tariff by and for themselves.
It will enable them deal with
large electricity consumers and
perhaps solve the illiquidity
problem in the power sector for
which the GENCO’s have borne
the brunt in the past. For the
transmission company, it portends
a regime that demands
a properly functioning grid, as
the eligible customers who fall
under the category that have to
execute a Transmission Use of
System (TUOS) agreement will
require at all times that the grid
is functioning and reliable, the
failure of which will result in
consequences and grave penalties.
The DISCO’s however,
see this as a bleak moment for
them as their large and Maximum
Demand (MD) customers,
which provide the bulk of
the tariff received from customers
by the DISCO’s are included
under the categories of eligible
customers. I do not find it to be
an unworthy development, because
truly, the time has come
for this sort of transition in the
country’s power sector. If the
DISCO’s have not been able to
effectively supply power, meter
customers, ensure proper billing
rates, erode electricity theft and
collect tariffs since the unbundling,
then perhaps the eligible
customer declaration creates a
necessary competition that will
put them on their toes. The good
thing too, is that, the eligible customers
are not mandated –only
allowed- to purchase power directly
from the GENCO’s, thus the
DISCO’s have a shot at keeping
their customers by ensuring effective
delivery of services. There
is also the Distribution Use of
System (DUoS) agreement which
gives them the opportunity to
distribute from the GENCOs to
the eligible customer, a service
they have to ensure high quality
delivery for in order not to be
facing lawsuits from the eligible
customers for failure to deliver
middleman minimum obligations.
The Eligible Customer
Regulations provides too, that
DISCO’s in the area of supply of
the eligible customers with serve
as suppliers of last resort in the
event of failure by a contracted
supplier. With this string of duties
and the need to bolster the confidence
of customers, especially
those who fall into the eligible
customers category, assuredly,
the DISCO’s are prompted to be
more up and doing.
Yet there are certain things
that in my opinion create a
Pandora’s Box for this regime.
First the competition transition
charge which is to be used
to offset any shortfall in the
returns by DISCO’s as a result
of the Declaration puts endusers
at risk of high tariffs, a
development that was fought
tooth and nail by the NERC
when the MYTO 2 attempted to
increase the tariff rates in a bid
to recoup losses of the DISCOs
by transferring the burden to the
customers. It is pertinent perhaps,
to consider the question
of what fate befalls customers,
especially R1 and C1 customers,
having, potentially a spike
in the tariff rate. In any event,
since Section 30 of the EPSRA
requires a public hearing before
the fixing of the charges, then it
is only fitting to wait patiently.
There also is the problem of
priority. Just like in financing,
where you have subordinated
debts and senior debts, with
senior debt holders having a
first right over subordinated
debt holders, there will arise the
question of priority of distribution
with the DISCO’s. When the
DISCO’s have to service their
usual customers and also have
to supply eligible customer endusers
as per the DUoS agreement,
which of the two sets will
take priority? The regulations
are silent too, on the method
for determining the cost by the
DISCO’s and TCN for use of
systems by the eligible customer.
The regulations are commendable
though, as the financial
requirement for end-use
customers applying for the Eligibility
Status to post Letters of
Credit or Bank Guarantees in
order to cover certain charges is
forward looking and will ensure
there are no stalled payment
challenges.
In all, there is no scintilla
of doubt that the rules of the
game in Nigeria’s power sector
are changing, and power has in
a manner of speaking, shifted
from the DISCO’s, to enable a
liberalised market where endusers
can now purchase directly
from parties with generation or
trading licenses. I am hopeful
the Declaration addresses the
conundrum that the sector has
grovelled in, for the past four
decades.
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