21102019 - BORDER CLOSURE:‘How neighbouring countries worked against Nigeria’

18 — Vanguard, MONDAY, OCTOBER 21, 2019
President Muhammadu Buhari presented
the Federal Budget for 2020
to the National Assembly on October
8, 2019. It is expected that this early
submission should give ample time
for deliberations and final approval,
especially as the current leadership
of the Assembly seems in sync with
the Executive.
Consequently, it can safely be assumed
that the political leadership has
turned a new leaf in terms of timeliness
in fiscal planning and execution
as well as a return to the January-
December cycle. To the extent that this
target is met we applaud the government.
Our perusal of the content shows a
four-dimensional focus: Fiscal Consolidation,
Infrastructure and Human
Capital Development, Incentives for
the private sector and enhancing social
investment programmes.
Again, this focused agenda seem
laudable at first glance, but budget
allocations and the minuscule sizes
suggest a shaky foundation that could
The positive, negative profile
of Budget 2020 (1)
affect progress.
We would have been slightly comforted
by the bold effort to match expenditure
with revenue but for the
seeming over-reliance on cheap, easy
target which burdens the tax payers
with Value Added Tax, VAT, increase.
We, therefore, call on the government
to quickly redress this with counterpart
policy measures that would not
only cushion the effect of the additional
tax burden. They should widen
the tax base to increase revenue from
taxes. More people must be made to
pay their taxes.
This brings us to the erroneous assumptions
of a new dawn on revenue
performance, ignoring the lessons
from the recent dire straits of the government
over its revenue. On this, we
note that Federal Government’s revenue
projections underperformed
actual collection by 47.8% in 2017. It
went to 44.7% in 2018 and 41.6% as at
first half of 2019.
Surprisingly, government expects
revenue of N8.2 trillion in 2020, which
is 17.1% higher than N7.0 trillion in
2019 and more than twice the actual
collection of N4.0 trillion in 2018.
Where would the money come from?
It appears that this single inordinate
ambition may become the budget’s
greatest undoing. As usual the capital
side of the expenditure profile would
take the downside effect. Then how
would it achieve economic growth without
robust capital expenditure?
The government never exceeded 40%
implementation level for capital expenditure
in recent years. Obviously, 2020
might go the same way. But it could
even be worse. The consequential adjustment
for the implementation of the
minimum wage is expected to gulp
over N500 billion in the recurrent expenditure
profile.
The implication is a sad devil’s alternative:
either an abandonment of the
minimum wage or its implementation
to the detriment of other overhead
items in the recurrent expenditure. This
would eventually lead to total underperformance,
or under-implementation
of the recurrent expenditure.
OPINION
Revocation of Discos’ licences: Why electricity equipment
should be protected
BY INWALOMHE DONALD
I
am appealing to President Muhammadu
Buhari to give adequate protection to electricity
equipment before the revocation of licences
of power distribution companies. Electricity
equipment must be protectedd from vandals
and internal sabotage before the revocation
of licences of power distribution companies
and the implementation of power agreement
between Nigeria and Siemens of Germany
Ṫhe Nigerian Electricity Regulatory Commission,
NERC, recently notified eight power
distribution companies, DisCos, about the
withdrawal of their licences as the nation
continues to grapple with persistent power
outages and unreliable electricity supply.
President Buhari needs to establish and inaugurate
electricity regulatory committees in
all the states to monitor suspicious activities on
any electricity installation or equipment, and
report to state governments and the Federal
Government.
Factually, issues of vandalism will be a major
contribution to the challenges that the discos
are currently experiencing in Transmission
Company of Nigeria’s,TCN’s, infrastructure
and technical limitations in wheeling power to
the proper areas of a Disco’s geographical footprint
after revocation of discos licences.
It is important to protect electricity infrastructure
before the implementation of Siemens and
the Federal Government of Nigeria agreement
for the Nigeria electrification road map. The
goal of the road map is to resolve existing challenges
in the power sector and expand the capacity
for the future power needs of the country.
The Power Holding Company of Nigeria,
PHCN, lost equipment worth millions of naira
to theft and vandalism less than two months to
the January 2014 deadline for the power generation
and distribution companies to start operation.
Materials such as cables and wires,
among others, could either been stolen or vandalised.
Electricity cables, transformer winding
coil, laminated cord, feeder pillar, laminating
sheets must be secured before licences revocation.
More than five years after the privatisation of
the sector, the investors who took over the six
generation companies and 11 Discos that
emerged after the unbundling of the PHCN are
still grappling with the old problems in the sector.
The sector is plagued with problems of gas
supply shortages, limited distribution networks,
limited transmission line capacity, huge metering
gap, electricity theft and high technical and
commercial losses, among others.
As the nation’s power sector remains in crisis
mode, the Presidency has met with electricity
distribution companies in a bid to resolve some
of the issues affecting the electricity supply industry.
As the clamour to revoke licenses of the
buyers of the privatised power assets continues,
the Electricity Generation Companies, GEN-
COs, have disclosed that they have increased
Nigeria’s generation capacity from 12,500
megawatts, to 13,496 megawatts.
The Federal Government may cancel the licences
of eight power distribution companies
as the Discos breached some provisions of the
Electric Power Sector Reform Act in July 2019.
In a notice posted on its website, the power sector
regulator said it intended to cancel licences
issued to the eight Discos pursuant to Section
74 of the EPSR Act.
In the eight-page notice to the Discos, which
was signed by one of the NERC’s commissioners,
Dafe Akpeneye, the commission stated that the
power firms had 60 days to explain why their
licences should not be cancelled. It said: “Take
notice that pursuant to section 74 of the EPSR
Act and the terms and conditions of electricity
distribution licences issued to the distribution
licensees by Nigerian Electricity Regulatory
Commission has reasonable cause to believe
that the Discos listed below have breached the
provisions of EPSRA, terms and conditions of
their respective distribution licences and the
2016 – 2018 Minor Review of Multi Year Tariff
Order and Minimum Remittance Order for the
Year 2019.”
It identifies the Discos as: “Abuja Electricity
Distribution Company Plc; Benin Electricity
Distribution Company Plc; Enugu Electricity
Distribution Company Plc; Ikeja Electric Plc;
It is important to protect
electricity infrastructure
before the implementation
of Siemens and the Federal
Government of Nigeria
agreement for the Nigeria
Electrification road map
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Kaduna Electricity Distribution Company Plc;
Kano Electricity Distribution Company Plc;
Port Harcourt Electricity Distribution Company
Plc; and Yola Electricity Distribution Company
Plc.”
The commission said it considered the actions
of the aforementioned Discos as “manifest
and flagrant breaches” of EPSRA, terms
and conditions of their respective distribution
licences and the order. It stated that the commission
“therefore requires each of them (Discos)
to show cause in writing within 60 days
from the date of receipt of this notice as to why
their licences should not be cancelled in accordance
with section 74 of EPSRA.”
Further analysis of the notice showed that the
eight Discos failed to meet the expected remittance
threshold for the month of July 2019 billing
cycle to the Nigerian Bulk Electricity Trading
company.
The Federal Government had unbundled the
Power Holding Company of Nigeria, PHCN,
into 18 firms and sold them to private owners at
$2.5billion (about N903.750bn) in 2013. The
assets consist of six generation companies and
11 distribution companies. “Today, the BPE
confirms that most of the GENCOs have
exceeded their contractual obligations. Overhaul
has been successfully carried out on one of
the generating units at Jebba plant. Capacity
recovery process on other unavailable units continues
which will enable the plants recover to
full installed capacity.”
The report noted that the privatisation of the
country’s power sector had exposed the inherent
structural weakness in the sector, adding
that investors, GENCOs are worst hit in the
electricity market logjam. It further stated: “Historical
generation data for the period 1st November
2013 to 31st December, 2,018 shows
that there has been 75 per cent increment in the
available generation capability, amounting to
about 3,169.95mw (4,214.32 in 2013 –
7,384.27MW in 2018) within this period.”
The report, however, disclosed that investment
on generation is at the instance of the off-taker
(the buyer of the power generated), adding:
“GENCOs were promised 100percent payment
of all they are capable of generating by the government
through its agency called NBET. The
promise provoked some additional investments
by GENCOs with its attendant high cost of capital,
increased regulatory risk, increased debt
profile.
*Donald, a public policy analyst, wrote from
Abuja via inwalomhe.donald@yahoo.com