The Punch Editorial Of Tuesday, December 22, 2015: An Analysis Of A Poorly Considered Editorial
On December 22, 2015, The Punch published an Editorial Opinion titled 'Fashola's False Start on Electricity'. It left me, and I imagine others who have for decades keenly followed developments in the country's Power Sector, confounded. The OpEd fell into the sad trap of attempting to criticize that which the writer did not fully comprehend, just for the sake of having a contrary opinion.
The warning signs came early enough and perhaps I ought to have stopped reading when the writer said, “Unfortunately, what he (the Minister) said about power while recently outlining his vision for the sector was not exactly heart-warming”. I remember reading Fashola's statement on the sector a few weeks ago and being glad that he had a total understanding of the problems of the sector and was taking a holistic approach to them without trying to pull the wool over the eyes of Nigeria with falsely optimistic statements.
In truth, the job of a Minister is not to warm hearts but to solve problems by being practical and deploying realistic solutions. In talking about the need for consumers to pay a tariff that is commensurate with consumption, the Minister was only stating economic realities. What can he do if the price of the component commodities that go into rendering a service or provide a utility affect the cost of that service? This relates to the cost of Gas and other inputs in the value chain leading to the production of electricity.
The fact is that a business model or practice that does not make it possible for costs to be recovered cannot be sustainable. The implausible option, which hopefully is not what the PUNCH Editorial is suggesting, is to move from Fuel Subsidy to endless and unsustainable Power Subsidy.
To prevent erratic tariff reviews, the Multi-Year Tariff Order (MYTO) has been introduced by the new Government to correct this. By introducing a 10-year Tariff structure the issue of constant Tariff review has been addressed by the new Government. If the writer of that article had done their research, they would not have goofed thus. However, it would appear that the PUNCH Editorial took a prejudiced position given the fact that it was published on the same day that the new Tariff structure was introduced. Indeed, one was left wondering if the Editorial was written as a pre-emptive response to an answer or to achieve an unclear preconceived objective.
The writer goes on to authoritatively declare that cost reflective Tariff Review won't solve the problem of the Sector or bring succour to Consumers. I had earnestly looked forward to a clear-headed identification of the problem with solutions proffered. Unfortunately none was forthcoming from this economically deficient Editorial as what readers got were mere contradictions.
At one stretch, it agrees with Prof. Yemi Osinbajo on the necessity for “cost-reflective” Tariff, but disagrees with the Minister whose Ministry is supervising the Sector and with the “cost- reflective” Tariff just introduced by the National Electricity Regulatory Agency.
The fact is that there isn't just one solution to the problems of the Power Sector. The Minister took his time to outline several solutions to the myriad problems.
Thankfully, the PUNCH Editorial recognizes and agrees with the Minister that the Power Sector is moving from Government to a Private Sector concern by acknowledging that investors in the Sector had bank loans to service. But it failed woefully to ask the next logical question: From where will the loans be serviced? It failed to ask that question in order to avoid coming to the conclusion that the business must pay for itself. A sustainable business must, out of necessity, revolve around taking loans or allied facilities from banks and returning to the banks to service same as we have seen with the Telecommunications Sectors.
Instead, of recognizing this, it called for “a massive injection of foreign investment that can bring about a significant improvement in the quality of electricity supply in the country”.
This is a further display of ignorance because if Nigerians fail to invest in their own Economy and would rather keep their money abroad, then how would foreigners be encouraged to come and invest in the Nigerian Economy. Perhaps it would be interesting to know how many foreigners participated in writing the PUNCH Editorial in question.
Again, the PUNCH Editorial showed ignorance about the Power Economy when the writer 'advised' Fashola to “ensure that people pay only the correct cost of power they consume through the enforcement of deadline for the installation of pre-paid meters”. The simple fact is that Metering is about measuring the unit of electricity consumed; while Tariff is about the cost of the unit. The incentive to continue to invest in metering and other inputs won't be there if costs can't be recovered or the business fails to cover costs.
It is part of the ignorance of the entire process to compare users of pre-paid Meters and those without it the way it has been done in the PUNCH Editorial. Using any utility on a pre-paid arrangement attracts further credit in addition to aiding conservation than when paid at the end.
It is troubling that The Punch failed in its duty to inform and educate its readers intelligently by publishing an article that advised that the Minister “should not hesitate to explore the option of revoking existing contracts to pave the way for foreign companies with the relevant expertise and financial capacity to deliver the goods”.
We must stop looking to foreign investors and foreign companies to fix our country. This dependence has done us next to no good in the past decades and it is time for us to start to build and encourage the local players who are building, instead of tearing them down.
The conclusion of this wishy-washy Editorial shows the ignorance of the Editorial writers of the intricacies of commercialism, investments and contracts. No responsible Government whimsically cancels contracts involving local and international entities without considering the longer term effects of such an action. The analogy is that if you slaughter your own children recklessly no discerning neighbour would want theirs to come near your home.
The success of our democracy rests on the ability to constantly interrogate Government policy. However, such a privilege ought to be premised on a sound understanding of the basics. Questioning Government initiatives without a fundamental grasp of the underlying policies themselves is irresponsible and misleading. Thus, the PUNCH Editorial published on December 22, 2015 rather than Editorial Opinion must be considered a rubric failure.
Written by John Nnachukwu, Power Sector Analyst.