REA: throwing out the baby with the bath water

It is taken for granted that reliable and affordable electricity is a basic condition for self-sustained economic development. This is because electricity plays a major role in providing lighting, communication, information, transportation, health services and education.

power transmission
power transmission

Moreover, lack of electricity constrains the economic development of rural areas. The present government has stressed that Nigeria ‘s electric power sector requires substantial reform if the country’s economic development and poverty alleviation program is to be realised.

This understanding is also behind the reform programme initiated by the previous administration which led to the privatization of the national electric power monopoly, NEPA, as well as the creation of electricity-based commissions and agencies including the National Electricity Regulatory Commission and the Rural Electricity Agency, all geared towards improving the supply and distribution of electricity across the council. As things stand today, the country faces serious energy crisis due to declining electricity generation from domestic power plants which are basically dilapidated, obsolete, unreliable and in an appalling state of disrepair, reflecting the poor maintenance culture in the country and gross inefficiency of the public utility provider.

But with the announcement, last week, by the Minister of State for Power, Mr. Nuhu Somo Wya, about plans by the ministry to dissolve the Rural Electrification Agency following series of contract scandals that rocked the agency recently, questions have arisen as to whether such an action may not amount to throwing away the baby with the bath water.

According to the minister, government had sent a bill to the National Assembly asking for the repeal of the Act establishing the agency. According to him, “As far we are concerned, we have to address internal problems within the ministry. We have sent a bill to the National Assembly for the repeal of the law establishing REA. That does not stop us from doing any internal administrative work to address the perceived problems that exist in the agency. It is not scrapping; it is administrative measures taken to address issues that we have established in the agency.”

The bill to amend the Electricity Power Sector Reform Act so as to repeal REA followed investigations by the Economic and Financial Crimes Commission into allegations of N5.2bn scam in the award of contracts for rural electrification projects provided in the 2009 Federal Budget.

The EFCC filed a 158-count charge against the former Chairman of the House of Representatives Committee on Power, Mr. Ndudi Elumelu and the Chairman of Senate Committee on Power and Steel, Senator Nicholas Ugbane over the alleged scam. Also facing trial are the former Chief Executive Officer of the Rural Electrification Agency, Mr. Samuel Gekpe, the former Permanent Secretary in the Ministry of Power, Alhalji Abdulahi Aliyu as well as the 21 companies that benefited from the contracts.

But employees of the agency criticised the plan to wind up the agency before the bill is considered, insisting that was in breach of due process. The employees explained that while they were not opposed to the repeal of the REA, they insisted that the minister must wait until the National Assembly passed the bill before taking any action regarding an agency created by law.

In a letter by the Permanent Secretary of the Ministry of Power, Mr. Isa Bello to the Administrator of REA which was obtained by our correspondent in Abuja on Wednesday, the minister was quoted to have convened a meeting on September 10, 2009 where the decision to wind up the agency was taken.

The letter read that, “REA is hereby closed and that all outstanding rents due for payment should be compiled and forwarded to the Ministry and no further tenancy agreement is to be renewed on any rented property. All the property and assets of the agency should be documented and properly secured and all signposts of the defunct agency should be removed where they exist.

“Only expenditure related to staff emolument and welfare should be processed for approval and all correspondence to the defunct REA should henceforth be addressed to the Ministry.”
The workers further argued that efforts to scrap the agency would make nonsense of the Federal Government’s objective of achieving about 6000MW of electricity, since, according to them, massive electrification and expansion of grids in the rural areas would enhance development of power infrastructure needed to distribute the power when generated.

According to Bello , “Any effort designed to achieve economic and industrial development would be impossible without a dedicated and robust machinery to take power to the rural areas. Four out of five people without electricity live in rural areas, especially in peripheral urban and isolated rural areas. The lack of electricity deprives people of basic necessities such as refrigeration, lighting and communication and, consequently, hampers development.”

Such argument highlights the basis for the creation of the REA in the first place. Over the two-thirds of Nigerians reside in the rural areas, and according to a recent survey by UNICEF, energy services and water supply topped the list of the most pressing needs of rural households. In the survey, 53% of rural households lack access to energy, especially electric power. The return to democratic rule in 1999 created an environment conducive to overhauling the machinery of government. One objective was to increase the effectiveness of service delivery, especially in the power sector. This led to the enactment of the Electric Power Sector Reform Act in 2001, which provided for the establishment of a Rural Electrification Fund and a Rural Electrification Agency.

The Rural Electrification Agency of Nigeria was inaugurated in March 2006 to rapidly expand rural and peri-urban access to electricity in the country in a cost-effective manner, employing the grid and off-grid options. It emphasizes the application of subsidies primarily on access expansion rather than consumption, since the intention was to encourage greater participation of the private sector providers and indeed, the new distribution companies in the access enhancement programmes.

The primary objective of the agency is to provide reliable and affordable electricity supply to all rural dwellers irrespective of where they live and work. This implies full use of both grid and off grid approaches, with subsidies being primarily focused on access expansion rather than on consumption. Rural electrification was based on the belief that affordable electricity would improve the standard of living and the economic competitiveness of the family farm. Rural electrification has been claimed to have substantial benefits, promoting production and better health and education. Yet coverage rates remain very low across the country.

Electrification brings a plethora of social benefits and is a key component in poverty reduction. But, virtually every effort by the government to achieve adequate and stable supply of electricity appears to be along the road too far.

The national power generation, transmission and distribution infrastructure has remained in a state of gross disrepair for several decades, resulting in a dismal electricity supply capacity. An Energy Commission of Nigeria study revealed that for a gross domestic product (GDP) growth rate of about 13 per cent to be achieved, the country required an average electricity generation capacity of 11,686MW per year by 2030.

In 1999, the challenge of the then new civilian administration was how to raise generation capacity from less than 1,750 to 4,000MW in the short-run by 2004, 10,000MW in the medium term between 2007 and 2010, and about 100,000MW ultimately in 25 years time through a National Integrated Power Programme (NIPP) designed to utilise the nation’s abundant gas resources to generate electricity. An adjusted schedule, however, targeted 6,000MW by December, 2009, and 10,000MW by 2011.

But, even though meeting next December’s target appears remote, Minister of Power, Lanre Babalola, remains optimistic that the nation’s aspiration is on course. According to the minister, with current national electricity demand in the range of 5,100MW, with the rehabilitation of some of the old power generation plants and the completion of some of the new projects under the NIPP scheme, meeting the 6,000MW capacity is almost fait accompli, though he envisaged challenges in the areas of availability of gas to run the thermal stations and adequate water levels at hydro-power stations.

Besides, he said equal attention is being given to the area of reinforcing and strengthening the power transmission and distribution systems to enhance their capacities to transfer the available electricity to consumers across the country. “With adequate funding (an average of $10 billion annually in investments in the next 10 years), the country will be able to generate and supply about 35,000MW to meet her aspiration of joining the world’s 20 top economies by 2020,” he said.

A former Head of State and Chairman, Infrastructure Concession Regulatory Commission (ICRC), Chief Ernest Shonekan, had revealed last month that Nigeria has so far spent over $10 billion in an effort at improving the power situation in the country. According to Shonekan, the issue of providing adequate power was a huge challenge for many countries of the world, even as he insisted that achieving 6000MW of electricity is a challenge that must be won. He said, “The 6,000 megawatts is a target. It is a task that must be won. We are on course. We are making progress. As of today, we have 5,200 megawatts capacity available. The issue of power is peculiar. It is not something you solve overnight.”

Further attempting to explicate the energy situation in the country, the former head of state said, “In the power sector, there are two challenges. There is the issue of water level. It is normally towards the end of the year that we have full capacity. Now, we have low capacity in our dams. The second challenge is that of gas supply. And our generation in the sector is over 70 per cent gas thermal supply. In the eastern side, we have enough gas but not the stations to use them.

In the western side, which is in the Niger Delta to Lagos axis, this is under serious challenge. But the amnesty is yielding very positive result. We are getting our contractors back on site to work on the damaged pipelines. There is hope these pipelines would be repaired. ‘I want Nigerians to give us a chance because never in the history of Nigeria have we had such massive efforts in the power sector.

“I assure Nigerians that we mean business this time around. With the NIPP (National Independent Power Project), we are going to generate 4,600 megawatts. As of today, a total of 2,450 is being generated and distributed.

Shonekan added that all must commit themselves to “the task of addressing the issue of corruption, if we are to create a PPP that can be internationally competitive. We must ensure that our process conform to international procedures.” He said all the ministries and parastatals should adhere strictly to the provision of due process, adding that that ICRC would be at the forefront of ensuring a working relationship between government and the private sector in the supply chain.

The REA was formed to spearhead the supply of power to rural areas. The task was previously undertaken by power distributor, NEPA. The minister, Babalola has said government plans to connect millions of new consumers to the power grid, adding that that the agency would enable people living in rural areas to benefit from power that will spur development in these areas. He said the government seeks to connect all public facilities by 2012, and provide electricity to every Nigerian by 2020 under the strategic plan. Achieving the country’s long-term development blueprint famously referred to as Vision 20:2020 is pegged on most if not all Nigerians accessing power.

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