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“No” to protest against tariff increase

By Dele Sobowale

“The moving finger writes; and having writ, moves on. Nor all your piety nor wit shall lure it back to cancel half a line; nor all your tear wash out a word of it.” Omar Khayyam, 1123AD. (VANGUARD BOOK p 57).

meterMost of our Fellow Countrymen (“How many fools make up Fellow Countrymen”, asked Thomas Carlyle, 1795-1881, in despair) are emotional and unrealistic. Less than one tenth of one per cent understands the basic principles of economics. Most of the leaders, drawn from the same pool of people, are not different. Even those among the leaders who understand the principles of economics lack the moral courage to tell the truth when issues pertaining to economics become contentious. They choose to play to gallery by telling the “masses” what they prefer to be told instead of telling the truth which might be unpopular.

Electricity tariff increase is another example of how the masses and spineless leaders can induce governments to take decisions whose consequences later prove disastrous e.g tariff reversal. About three years after the Structural Adjustment Programme, SAP, which had helped the “Tiger” nations in Asia to achieve economic recovery, President Ibrahim Badamasi Babangida, IBB, was scratching his head in Nigeria and wondering “why the laws of economics, which work elsewhere, don’t work in Nigeria.” The answer given was direct to the point. “The principles of economics address themselves to reasonable people. Nigerians are nothing but reasonable – including most of the leaders.”

What we are reading in the papers these days prove the point conclusively. In a nation where seventy per cent of the people live on $2 [N600 at N300/US$1] per day, a “leader” distributed 23 exotic cars costing N310 million to people who already had more than a dozen cars each! Furthermore, some Nigerians still defend the giver and the takers of that demonstration of economic lunacy. While that was going on, the former Minister of Finance was preaching economic inclusiveness – while the government she served was excluding 170 million Nigerians from the dividends of democracy. The flight of economic reason from Nigeria cannot be more total.

It is once more being exhibited in the national debate regarding electricity tariff increase. Some of those opposed have made several suggestions which will be examined separately and the consequences of each will be pointed out to those who think their suggestions will solve the problem. But, before looking at the objections to tariff increase, we need to remind ourselves of certain facts which suggest that we might be blaming the victims – DISCOs – for the sins of commission and omission of governments from the time the Electricity Corporation of Nigeria, ECN, was established; until the Power Holding Company of Nigeria, PHCN, was liquidated.

Fact 1. The Distribution Companies, DISCOs, don’t generate electricity. That is the responsibility of another unit still under government control. DISCOs cannot supply power in excess of what the Federal Government makes available to them. Thus, when power supply is withheld (it happened here two minutes ago this Saturday February 27, 2016) Nigerians, presumed to be sane, let loose curses and maledictions on DISCOs and their staff. On one occasion, a DISCO van passing by was pelted with stones. Most Nigerians, including people who should be knowledgeable and responsible, fall into the blame trap and unleash expletives.

Why? It is obviously irrational; and partly insane. As the lawyers have always reminded us, “You can’t give what you don’t have”. So why are My Fellow Nigerians asking DISCOS to supply more power and more regularly than they receive? FACT 2. Power generation in Nigeria had remained stubbornly below 5,000MW for more than sixteen years despite the US$13-16 billion, Obasanjo’s government allegedly spent on it.    Meanwhile, the nation had been fed on several diets of lies by PDP Presidents and their Ministers of Power. Obasanjo/Lyel Imoke promised 10,000MW by 2007. That was the excuse for the raid of US$13-16 billion. They added less than 1000MW by the time they left office.

Nobody stones them. Jonathan/Professors Nnaji and Nebo promised 14,000MW by end of 2013. They left office with capacity less than 4500MW. Nobody directs curses and maledictions their way any time there is power failure. Yet, at the time privatization was being seriously embarked upon, the prospective DISCOs were deceived to believe that power supply would have reached at least 10,000MW by 2015. Had that promise been redeemed, the noisy city dwellers, constituting the nuisance to DISCOs, should be enjoying at least twelve to fifteen hours of power supply by now. Instead of directing their anger at those who were sharing our money rather than applying it to provide power, they vent their spleen on the first victims of the swindle perpetrated by the Jonathan administration. DISCOs were promised power supply; governments have failed to deliver. We should blame governments; not the DISCOs.

FACT 3. The Minister for Power, Fashola, was absolutely correct. You cannot divorce the price paid from the value received and by looking at the alternatives. DISCO power supply is still far cheaper than any other means of generating power – even with the new tariff. On the average, it is a mere 20 per cent of the closest alternative – petrol or diesel generators. A meticulous compilation of expenditure on electricity by different means has established that DISCOs are almost operating as a charity compared with gen-sets. So, why curse the benefactor for increasing the price when the new tariff is still akin to robbing the DISCOs? How many Nigerians, if given a DISCO free today will lower the tariff? Hypocrites!!

FACT 4. Scarcity always drives up prices/costs. Nigerians should count themselves fortunate that the power sector had not been totally privatized; a regulatory agency still regulates the tariff. Had the free market been allowed to operate in the power sector, most of us would not have been receiving power supply at all. Corporate entities, the wealthy and the rich would have bought the entire supply if it was made available to the highest bidder. The Chief Executive Officer of a multi-national disclosed that his company would save up to three billion a year using DISCO exclusively if the tariff is three times what it is now.

Most critics are actually cynical individuals. And as Oscar Wilde, 1854-1900, had observed, “A cynic is a person who knows the price of everything, but the value of nothing.” Most of them lack a sense of the economic value of mass produced power supply. Incidentally, how many of them, who have tenants, have retained the rent at the same level since 2010? Yet, their “services” to tenants have not improved (actually deteriorated as the buildings aged). Yet, they increase rent. Ask them why? And get ready to listen to the malarkey offered as explanation. The new tariff must stay; painful as it is, it is still in our interest.

To be continued…   



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