Angry Fashola takes on Electricity Distributors; cautions builders – The Full Speech

REMARKS BY BABATUNDE RAJI FASHOLA, (SAN) AT THE 15TH MONTHLY POWER SECTOR OPERATORS MEETING HELD IN JOS ON MONDAY THE 8TH OF MAY 2017
 
I would like to start my opening remarks at this 15th Monthly Power sector meeting by expressing my sympathy, and that of the Electricity Industry represented by the participants at this meeting, to the families of our brothers and sisters who were victims of the unfortunate electrocution accident in Cross Rivers state.
 
While we pray for the full recovery of the survivors who suffered various forms of injuries, we pray for the peaceful repose of the souls of the departed and may I request that we all rise to observe a moment of silence in honour of our dear departed brothers and sisters.
 
Whilst the accident is regrettable and the consequences very saddening, they were clearly man-made and avoidable, and if we must learn any lessons from the accident, it is to honestly and truthfully admit that it occurred as a result of non-compliance with laws and regulations. And if there is a time to learn the lesson, there can be no more auspicious moment than now.
 
Yes, I know that there are difficult challenges and people are struggling to eke out a living. But every business set up in a place of danger is a threat to life,that ultimately defeats the essence of survival.
 
We must admit as a People that the time to stop cutting corners and violating regulations has come upon us, and the time to change those non-compliant conduct is now, for our own long term benefit.
 
This is because the situation in Calabar, where a building was located under or close to an electricity line, exists in almost all cities in Nigeria and they are all accidents waiting to happen unless we prevent them.
 
The burden of preventing them, rests with all of us –  Government and the governed.
 
TCN, the Discos and NEMSA all have roles to play. Their success however will depend on the will, support and collaboration of state governments who have the responsibility for granting construction permits and removing illegal structures.
 
For the information of the general public and the benefit of the state planning authorities, the applicable regulations for set back and approval of structures are as follows:
 
A.   For the 330 KV lines the set back is a total of 50 meters, that is 25 meters on both sides from the centre of the line.
 
B. For the 132 KV the set back is a total of 30 meters, that is 15 meters on both sides from the centre of the line.
 
C.  For the 33 KV lines which come close to our homes the buildings should observe at least 3.5 meters from the closest line and
 
D.  For the 11 KV lines, it is at least a 3-meter set back.
 
E.   For 415 volt lines it is 1.5 meters.
 
F.     For underground cables they should be buried at least 3 meters below the ground surface.
 
I know that there may be a debate about whether or not it is fair to relocate those noncompliant structures. Indeed, there will be arguments about whether it was the transmission line that got there before the buildings were erected or vice versa.
 
My response is that we need to keep people alive and we also need the electricity to improve our lives.
 
Therefore logic dictates that it is those non-compliant structures that must give way to save lives and to keep electricity on.
 
It is this logic that ensures there will be no repeat of the Calabar incident and that those who lost their lives would not have done so in vain.
 
I will now return to the subject and agenda of the meeting proper first by thanking our hosts the owners of the Jos Electricity Distribution Company for hosting us.
 
I will like to recall your attention to the purpose that I set out to achieve when I mooted the idea of these meetings.
 
The first was to provide an opportunity for me to visit one power asset or installation at least once a month to familiarize myself with their status, capacity, challenges and requirements in order to enable me make proper decisions without the need to be on the road for days on end.
 
I can say that this objective for me has been largely achieved. I now know most if not all of the power assets and I can visit and inspect the remainder at my convenience.
 
The second objective was to provide a monthly meeting for 2 (TWO) representatives each of every power distribution and generation company who could make decisions.
 
You will have to decide whether this objective has been achieved, because whilst I, the Honorable Minister of State and the Permanent Secretary have endeavored to attend all meetings some of you have sent junior officers who had no powers to bind your company to the meetings.
Nevertheless, I acknowledge that some problems have been solved and we remain committed to solving more as proof of our commitment to enabling businesses.
 
The third object was to provide a monthly forum where accurate information could be disseminated to the members of the public about what we are doing to resolve the problems of electricity and provide service to them.
 
I regret to announce that at best this objective is not being fully achieved or at worst is being frustrated by the Distribution Companies who have formed themselves into an Association of Distribution Companies, and have persistently issued statements on issues they either did not present for discussion at the meetings, or which contradicts the communiqué that is jointly agreed and released after each meeting.
 
The latest of such statements, which are wholly misleading and substantially untrue, because they conceal facts from the public, was issued and published on April 18 in the This Day newspaper.
 
I will come to the content of the statement shortly; but before doing so, I wish to state very clearly that while the right of association is a constitutional right which you are entitled to exercise, as is the right to free speech, the Ministry of Power, Works and Housing reserves the right to recognize or deal with you as an association.
 
As head of the Ministry, I regret that I will not deal with an association because the Bureau of Public Enterprises (BPE) acting for the National Council on Privatization (NCP) did not contract the asset sales and performance agreements with an association and neither did Nigerian Electricity Regulatory Commission grant you licenses as an association.
 
The Government contracted with 11 (ELEVEN) investors in the distribution companies and the Commission licensed 11 (ELEVEN) distribution companies. Government will continue to relate with you as such, through meetings such as this, or individually to ensure that you discharge your duties to consumers.
 
I am certain that NBET (the Bulk Trader) and the Nigerian Electricity Regulatory Commission (NERC), your regulator, will communicate a similar position to you.
 
Now I will address some of the issues raised in the statement you issued.
 
A. Centralization and escrowing of Disco revenues and Regulations to guide your procurement
 
Under this heading the statement alleges that attempts to escrow your accounts amounted to “nationalization or expropriation” of the Discos, and that attempts to make regulations to guide the pricing of your procurement was at best an intrusion into your business.
 
What you failed to say in the statement was that the escrow condition was agreed by you with Central Bank as a condition for offering you stabilization funds by way of loans to fund the business you invested in because commercial banks were reluctant to do so.
 
What you also failed to state was that the loan was at 10% interest which is well below commercial rates.
 
What you also failed to state is that you also agreed under that arrangement to establish letters of credit to guarantee future payments to NBET and TCN Market Operations, that the agreed commercial terms of the letters of credit authorizes NBET and TCN Market Operations to draw on the letters of credit for any default in payment to them, and that such defaults have occurred and continue to occur.
 
Any right-thinking person will accept the principle that any person lending you money must have the right to know what you are doing with the money especially when under collection and under payment has been a major feature of many Disco performances.
 
As far as the regulation on your procurement is concerned, what the public needs to know, which your statement was silent on, is that you are entitled to fully recover your costs and investment by law and this is the function of how tariffs calculated.
 
Since Government holds 40% of the shares of Discos on behalf of states and local governments and the Nigerian people, it has a duty to ensure that you buy parts and other equipment at reasonable and competitive market prices and not through inflated contracts to relatives as we have seen in some Discos in respect of which NERC will take action in due course and sanction those who are involved.
 
B.   Declaration of eligible customers
 
Your statement claims that this provision, which allows certain classes of consumers to deal with the generation company directly is premature and results in extra cost to consumers.
 
Your statement is silent about the inability of some of your members to invest in feeders and distribution equipment to get power to consumers.
 
This has led to the emergence of the terminology of load rejection for an economy that does not have enough.
 
As you rightly acknowledge, the power to declare eligible customers is provided by law, and what it does is to entitle certain types of customers to deal directly with their power provider or Genco once they can bear the cost of constructing the distribution facility in cases that we currently have, where their Discos cannot or will not invest the money to do so.
 
Your statement does not address the ill-logic of standing in the way of a consumer seeking to get by himself what the service provider Disco has failed or is unable to give them.
 
As for the alarm and panic which your statement seeks to raise about increased tariff, eligible customer declaration is not compulsory and applies only to those who elect to benefit from it, and they are in a position to decide whether a tariff of over N60 per Kilowatt hour of generation by diesel which they currently use is preferable to investing in a distribution asset that gives them power at a lower tariff.
 
What is important is that the law is followed, consultations are held with prescribed and decisions are taken.
 
No Disco has exclusive rights over any area and its ability to retain an area must be consistent with the ability to provide service to the area.
 
C.  Corporate Governance at Disco level
 
Your statement alleges that the complaint about lack of corporate governance in the Discos is not as important as other issues like payment of MDA debts, ensuring cost reflective tariffs and so on.
 
The statement is silent on the efforts being made at these monthly meetings to help you ascertain and prove the debts that you claim that Government owes you.
 
The statement is silent on your failure to provide up-to-date audited financial statements as required by your licenses.
 
If a company cannot produce all the records of its transactions and accounts does that not allude to gaps in its governance?
 
Your statement is silent about the number of times your consumers have contacted the ministry in Abuja about failure of service.
 
 
Does the fact that consumers go beyond their service provider who collects the money monthly to complain to Government who does not collect money for their power not call for a look in the mirror about your corporate governance?
 
If corporate governance was not an issue, your statement will not be silent about plans to improve service to consumers that by supplying them meters and rebuilding the trust that has been damaged by estimated billing.
 
Good corporate governance will ignite the conscience of an electricity business to first provide meters to its customers before seeking tariff increases so that a metered consumer will at least have the ability to fairly measure from his meter how he is being billed.
 
In order not to take any more time than I have done, I will only say about the other issues addressed in your statement relating to:
 
A.   The N701.9 Billion intervention
 
B.   Load rejection
 
C.  The Nigerian Electricity Market stabilization fund and;
 
D. Disco performance under which you allege the power infrastructure you inherited is old and that some progress has been made by you
 
that I am the first to publicly defend your contributions to the sector, but to the extent that consumers are not yet satisfied, you must do more to improve service.
 
Rather than complain about old infrastructure, I wish to remind you that nobody forced you to buy those assets and you knew what you were buying.
 
The N701.9 Billion intervention fund is consistent with Government’s policy and determination to enable businesses flourish, and it was intended to save the Gencos, the gas companies and their financiers who were providing service, from collapse.
 
Your statement did not tell members of the public that these companies were not getting paid because you were not remitting all of what you should remit to NBET and the market operator, admittedly because of reasons that are partly and not partly your fault.
 
As I said when I convened the first of these monthly meetings, it is entirely voluntary and nobody is under compulsion to attend.
 
As I have done at almost every previous meeting, I will now ask you all again to vote whether we should continue the meeting.
 
If the outcome of the vote is to discontinue the meetings, this will be my valedictory statement to the meeting.
If the outcome of the vote is to continue the meetings, then I will demand that this meeting must remain the platform for ventilating and resolving issues relating to the sector without prejudice to other meetings that the regulator may convene.
I will also, in that event, issue statements like this as the need arises where any group within the industry seeks to mislead or misrepresent our common actions.
 
Thank you very much for listening.
 
 
Babatunde Raji Fashola, SAN
Honourable Minister of Power, Works and Housing
Monday 8th May 2017