Hikes In Electricity Tariffs And Increase In Fuel Price, Inevitable Decision Or Punitive Measures?




 
I hate increase in the cost of anything; goods and services. I don’t like paying more for anything if I have a choice. I believe most Nigerians are like me- they hate paying more for things.
I don’t work for the government, therefore, I’m incompetent to speak for the government or hold brief for her on any issue. I’m writing this piece from my understanding as a citizen. Views expressed here, are strictly mine.
FUEL SUBSIDY
Fuel Subsidy is simply the difference between what it cost government to import, warehouse, distribute fuel, and the pump price it is sold to the public at Petrol Stations across the country. In strict business sense and environment, the pump price at petrol stations should be the cost of everything plus premium-profit, but because governance is not necessarily a business,( it is more about welfare of the people), the government decided to bear part of the cost to help reduce the cost of living for the people. This is what is known as fuel subsidy.
Between 2010-2015, Nigeria paid( some said lost), Trillions of Naira as subsidy on fuel. It was a time that every Nigerian connected to power at the right source were issued licenses to import fuel into the country at a debilitating cost to the country. We heard stories of shocking manipulations in the volumes of import and sharp malpractices in the administration of subsidy. We had cases of round-tripping of cargoes, over payment for unsubstantiated imports, and over-invoicing. Outcry by Nigerians, pushed the National Assembly into setting up the Farouk Lawan led Committee on Subsidy in the House of Representatives. You probably remember what happened to the report of that Committee. Farouk Lawan, “Mr Integrity”, was trapped in an intricate bribery scheme by Mr Femi Otedola that rendered the report useless and tainted. Farouk Lawan and Femi Otedola, were heard clearly negotiating on giving and receiving bribe on the audio that was released by Femi Otedola.
Farouk Lawan claimed to have received the money through a surrogate in order to expose the bribery attempt, but he did not disclose it to any member of the Committee or the leadership of the National Assembly. On the contrary, he kept the money and took steps to drop the names of Mr Otedola’s companies indicted by the report from it. Femi Otedola, on the other hand claimed that he paid the bribe in order to facilitate a sting operation because none of his companies indicted in the report, received subsidy. The problem with his narrative was that there was no sting in the sting operation. Mr Farouk and his surrogate were not arrested with the cash at the time of the exchange. A sting is organized for one purpose: catch the perpetrator in the act.
We may never know what Femi Otedola’s true intentions were, but whatever there were, he succeeded in flipping the case of corruption against the National Assembly members. The hunter became the hunted- bushmeat catch hunter as we say in Nigeria. The matter died a slow and painful death. The Aig-Imoukhuede Committee set-up by the government to look into subsidy payments and others, turned-in a damning verdict highlighting the abuses and corruption in the administration of subsidy. Some indicted companies and individuals were arrested and hauled before the courts,others had funds in their accounts seised, but nothing concrete happened. We don’t know what the government achieved.
In 2015, President Buhari’s Party, APC, used the issue of subsidy to maximum effect in campaigning against President Jonathan and PDP. The Party accused the Jonathan led government of corruption and misuse of scarce public funds by granting licenses to import fuel to fronts and cronies. It didn’t help that inspite of the huge funds being paid as subsidy, Nigeria was witnessing periodic fuel scarcity at huge costs to the Economy. APC and her presidential candidate, Muhammadu Buhari, promised to end the regime of Fuel Subsidy, build new Refineries or Repair and Restore the existing ones to full capacities. They also promised to prosecute all Subsidy thieves.
In May 2015, President Buhari, was sworn-in as president. We were told that Subsidy had ended, but rumors were swirling that Subsidy was still being paid in a more concealed manner. In response to the rumors, the government admitted that Subsidy was being paid in a more creative and beneficial way. Bretton Woods Economists and their agents, urged the president to end Subsidy and privatized the oil sector. They said the government was Subsidizing the rich and not the poor. For five years plus, the president steadfastly and stubbornly, resisted them. He argued that removing the Subsidy in favor of market driven price will hurt the poor and impose more hardships on them. In the 2019 campaigns, Atiku Abubakar and the PDP used the issue of Subsidy to hammer president Buhari. They said the country was losing scare funds to Subsidy and accused President Buhari of deceit and incompetence. They promised to privatized the oil sector if elected.
President Buhari won the 2019 election, and continued with the regime of Subsidy. When the prices of Oil fell at the International Market and the country’s revenue took a hit, the government reviewed the pump price of petrol downwards from N145 to N125 per liter. At the time, the PDP argued that the price should have been lower than N125. When the prices spiked, the cost of fuel went up to N142 per liter, and now to N151.56 as base price because of the debilitating impact of Covid-19 on the Global Economy, and particularly, the Nigerian Economy.
I’m not privy to the workings off the government or the conversation that led to this painful but inevitable action, but I can speculate that it must have been an agonizing one for the president. He had to succumb to the decision of the managers of the Economy because of the stark economic realities. To be honest, we expected this to happen sooner or later. No one believed that the Subsidy regimes was sustainable forever. We knew it was coming no matter the good intentions and best efforts of this president. It was fait accompli.
We as people( human beings) expect death to come someday, but we are never prepared for it. Whenever it comes or happens, we are left with broken hearts and pains. As the inevitability of death is not and will never be a shield against sorrow, so is the hike in prices of goods and services against pains and shock. We are pained and shocked by the removal of Subsidy more by the timing and the abruptness of the action. The government should have done more to sensitize the people and prepare them. In the coming days, I expect to see government agents and information managers make a convincing case to the Nigerian people on this issue. I want to hear them talk about the sincere intentions of government on the issue and the benefits that will accrue to the country and people the medium and long terms. This is not too much to demand.
ELECTRICITY TARIFFS HIKE.
President Buhari inherited a privatized( distribution) Electricity sector from President Jonathan. The Jonathan government appointed DISCOs( Distribution Companies) for different parts of the country to business fronts, cronies, and power scavengers, according to some people, before it was defeated in the 2015 election. President Buhari had two options at the time: Cancel the existing contracts( this was popular with Nigerians because of the process used to appoint them), or allow them to run and regulate them. He chose the second option to promote stability and credibility of the government as reliable. The DISCOs by the terms of the agreement signed, were under obligations to make critical investments in the sector, but many if not all, were unable to do so. The government had to bail them out not once or twice just to keep things going. This is because President Buhari believes that government is a continuum. He has the same attitude toward abandoned projects scattered all over the country.
What is the problem with the Electricity sector, and why was it difficult to get investors to invest their funds in this critical sector? Poor Return on Investment( ROI). Investors are like vultures- they go to where they will find carcass-dead bodies for food. Investors will only invest their funds where they can find or make profits- get good ROI. They are not government bound to consider other things. Even when they pretend to do CSR, it is to enhance their profitability and visibility-aimed at more profit. The Tariffs chargeable for electricity in Nigeria is unprofitable. The operators have complained to the government about this for years, but the government was determined to protect the people against higher tariffs being demanded by the operators. I live in an Estate that signed agreement for premium supply of electricity for higher tariffs. Under the agreement, we are paying N47-N49 per kilowatts. In return we get electricity supply for at least 22 hours a day. It is over a year that we started, and so far, they have done extremely well. Except for very serious problems,( rare and far in-between), we have power supply all day round. Other Estates with similar agreements are enjoying the same power supply.
What this means is that improved tariffs will guarantee improved power supply. Improve tariffs will attract more investors to the sector. The government cannot generate, transmit and distribute power, efficiently and effectively; it has to be privatized with the Subsidy removed, to attract investors. The government principal responsibility should be regulation, to ensure that consumers are protected against sharp practices and exploitation. Government has no business with business. President Reagan said” Government is not the solution, it is the problem”. There is the need to unleash the power and creativity of the private sector in the power sector.
My personal experience has been one of great satisfaction. I pay less on power with constant supply, and better quality of life, than when I was depending on public power supply and generating sets to meet my power demand. I have the power to regulate how much I consume and how I do so. I don’t have to buy diesel, service generators, and have all type of people invade my privacy all in the name of coming to supply diesel or service my generators. This is what the increase in tariffs is intended to do. But I understand the immediate pains and financial hardships it can impose on people. The president is also not unaware of the pains and hardships, but he has no option than to do the right thing. He knows that his decision will impose pains on the people and corrode support for his administration, but he has good intentions and he has got to do what is good for the country and people.
The president is not afraid to spend and diminish his political capital on this issues because he knows that not everything unpopular with the people is bad. He understands that leaders are called to make difficult but critical decisions on behalf of the people. He knows the risks-political and reputation. He fears for the blow-back, but he is resolute. John McCain said” We have been taught correctly that courage is not the absence of fears, but our capacity to act inspite of our fears”. President Buhari has fears about his decision, but he is willing to show courage inspite of his fears because he believes that it is the right thing to do.
Years ago, before the Mummy Calm Down kid video went viral, I was fond of negotiating with my mother( God bless her soul forever) anytime I was sick and needed to be injected. I will say” Mama you know I can be paralyzed from injection if given wrongly, why don’t you ask them to give me tablets to swallow”? I will say” do you want to see me cry in pains”? She will say “ don’t worry I will talk to the doctor or nurse to give you tablets”. But once we get to the dispensary, she will grab me and I will get the injections as recommended. She will say to me” Adam, you don’t like injection but it is the best to make you recover faster. You will see how quick you will get on your feet”. In my mind, I’m saying to myself” why do I need to recover quickly with all the attention”? But the pull of neighborhood football will soon get me back on my feet. She will remind me” Adam I told you that injection works better and faster. You are up running now”. The injections were painful and hard, but they turned out well.
President Buhari is not out to punish Nigerians. He cares for them. He wants to see them live better. His intentions may not be clear to everyone( some can’t see any good in him), but most Nigerians trust him to do the best for them. The people standing by the president are not all immune from the pains and hardships that this decision will bring, they are doing so because they believe that the decision is inevitable. The timing may be inauspicious, but there is no bad time to do what is right.
Mr. President deserves the benefit of the doubt.
*Kurtis Adigba, a Lagos-based Lawyer is also a board member of the International Association of Political Consultants

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