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Why FG Can’t Reverse Power Sector Privatization -Sen Suswam

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Former governor of Benue State and Chairman, Senate Committee on Power, Senator Gabriel Suswam has said that despite calls from certain quarters to reverse the privatization of the nation’s power sector, it would not be possible for the Federal Government to cancel the already privatized sector.


This is even as the senator disclosed that the full implementation of the reviewed 2020 budget Act may not be feasible saying that over 60 percent of the budget  was deficit.


The senate Committee Chairman on Power, also faulted the Federal Government for privatizing all segments of the electricity company at the same time arguing that no country in the whole world has ever done such.


Speaking in an exclusive interview with a team of DAILY ASSET  Editors at the weekend in Abuja, he said that “there were a lot of things needed to be done before the privatization, which were not done.”

Suswam said that any attempt to reverse the privatization of the power sector would be “like operating in the jungle..”


 “You know, this sector has been privatized since 2013, and then in 2020, you say we should review it because there are problems. These are teething problems that anywhere in developing economies where sectors have been privatized, they have encountered these issues.
“So there is nothing peculiar about what is happening to us here. It is just for us to focus. Like I said, if we properly allign ourselves, these problems will go eventually.


“But everywhere in developing economies; if you go to India, they had a worse crisis than what we are experiencing when they decided to privatize.

“If you go to Mexico, to mention but a few. The only place where performance was a bit better is South Africa. Otherwise, most developing economies have experienced this kind of  problem.

“The reason being that, there are three theories of privatization. There is the Big Bang Theory, which is that you privatize Everything, generation, transmission, distribution, at the same time.

“The second one, is privatize only Generation. The third one; privatize only distribution. Unfortunately for us here, why our problems seem compounded, is that we chose the first theory, which is the Big Bang Theory, of privatizing the whole thing.

“No country has done that and gotten away with it. And so, that is why our problems are compounded. Now, if we have done that, we will now have to contend with the problems that have arisen from it, and that is what we are facing now.

“What we need to do now is to align ourselves; both the private sector who have these entities, and the ones in the hands of Government need to sit down and align themselves. That is what we have discovered. Misalignment in the power sector is a major problem.

“You will agree with me that over the years, successive governments have expended a lot of money on the power Sector. The reason being that they want to ensure the delivery of power to Nigerians. President Obasanjo was the one who thickened that efficiency in the power sector, privatizing it.

His reason was that, since power being the public sector has not yielded the desired results to Nigerians. So there was a need for the power sector to be in private hands. So people who operate it as a business would be able to execute more efficiently.

“Unfortunately, the manner of the privatization has become a problem. There were a lot of things needing to be done before the privatization which were not done. Rules were not really put in place, and so the people who bought it bought based on false parameters put in place by Government then.

“So the assumptions used in purchase of these entities, were assumptions that were faulty. That is the beginning of the problem.

“Instead of enhanced delivery, problems have arisen that have compounded the situation in the power sector.

“When this administration came into power, they promised they would change the entire perspective in the power sector Without knowing what was on ground. So when they came into the power sector, they started putting in money, believing that just putting money can solve the problem.

“It has been proven that it has not, because there are fundamentals that have not been touched. And what are these fundamentals? First, when they privatized the entities, some of the calculations, especially with the aggregate technical and collection and commercial losses, were faulty. Those losses at the time, were about 40% but the Government put about 20-22%. Which means that if I’m buying an entity that has losses of about 40%, and I’m  told it’s only 20%, there is a problem. And those problems have subsisted, making it possible for the private owners of these entities to break through or break even. 


“That is one. The people who are on the network of the power Sector; there is no quality data or statistics to show that; these are the number of people connected, these are the number of people metered. Lack of that data makes it impossible for the new owners to determine whether they can make profit or not.

“They didn’t know this; they rushed into it because they were promised Eldorado – that this would make them a lot of money.

“They should have been intelligent enough to weigh their options and determine all of these. So, they bought it and are confronted with these problems. How many Nigerians are metered? How many Nigerians are actually registered on these networks? That is not known to anybody.

“It’s all in the basis of speculations. Even If you go to the regulator, which is NERC, they only will speculate that about 10 million Nigerians are registered, and out of these 10 million, only 4 million are metered.

“For you to efficiently collect, you must meter People and know the amount you’ve metered, for you to even be able to make projections in terms of revenue.

“Unfortunately, none of the DisCOs has that kind of data with them, neither do NERC. So, it is difficult to plan. Now, that is one.

“If you go back to transmission, transmission is like a pipe between GENCOs and DISCOs. So transmission picks power, from generators and transmits to distributors.

“Unfortunately, the capacity of that transmission is lacking. They have no capacity to perform. And transmission performs the most important function in the entire value chain of the power sector. Unfortunately they don’t have that kind of capacity.

“Now you go to GenCos – the Power generators, at the time of privatization, in the power purchase agreement, it was indicated that they (GENCOs), when they buy, will ramp up power to certain levels. Most of them have not been able to do that. Some have done very well, but most of them have been unable to do that.

“So, there is a whole lot of complications when you come to the issue of tariff itself. Now, for you to be successful in the power sector, you must charge the cost reflective tariff.

“That is, Tariff that is consonance with the cost of producing that power. Unfortunately, the Government said, okay, the cost that will cover you is N50, but you can only charge N30. Which means there is a N20 naira difference. And who pays that? That is the money that Government have been expending; more like a subsidy. And so, people hear that so much money, amounting to trillions has been expended in the power sector, and they are expecting efficiency. No. That money is power already consumed.

“It’s not money put in to enhance Power. Government is only putting in subsidy, otherwise, people would have been paying much higher.

On the total amount the government has expended on the sector since the privatization, said “it is yearly. For instance, 701 Billion was the initial amount that was given to address that gap, that 20 naira gap that I talked about.

“Since privatization, N600 billion was also given. Like I said, all this money is just to subsidize that difference in Tariff. So even if we keep paying it, it’s not money that is going to address any problems in the power sector. It’s just like when Government was paying subsidy for PMS (Premium Motor Spirit). So much money was said to have been expended on subsidy; that is the problem. That is why a lot of people had issues with it.

“They’re spending so much money and you’re not seeing it. But it is subsidy. When you pay money to subsidize a product, that money cannot achieve anything because it’s like paying debt. So it’s not money that is going to enhance the infrastructural deficit in the power Sector.

“Those monies have been expended and nothing is coming. So we decided, in the Senate, that let us look at the issues in the power Sector, and so we can put them on the table and focus on them; to know what the issue is. Why so much money being expended and nothing is happening. And so we had that investigative public hearing.

“All the issues I’ve mentioned here were put on the table. All the stakeholders agreed that yes, there is a problem. And if the power sector, the entire power sector, sit down together– that is, sitting down with the executive, with the private owners, and of course the National Assembly– all of us agree that yes, there is a need to increase tariff to make the sector liquid.

“There is also the need for us to have quality data, enumerate all that are on the network, and meter at least 80% of those people, there must be alignment between what the generators are given; what is being transmitted and what is being delivered to the customers. That alignment is also not there.

“All of us agree that there is a misalignment in the value chain of the power sector, and so if we put all of this together, there would be enhancement in the delivery of power to Nigerians.

“I have just mentioned a few on what we discovered and what we came up with, and we’re going to present a report before the tenure ends, and I believe that report will be taken to the president for him to take some actions.

“You see sale of assets as a financing item, the processes have not started, so how achieve that objective, it only show that it is not realistic because once you don’t realize the profits from the sale of those assets, it adds to the deficit. So we are in a deep problem. So for me this year is going to be difficult and what we should do is to manage what we can manage because things are standing on their heads. Look at the price of oil, that was the first problem, and then look at commercial activities, that too is down and so people no longer have the means to pay what they should pay in term of tax, and so to get enough money to finance the budget is not practicable. So I think that government should do whatever they can just to see the year through and then plan ourselves in 2021, otherwise what is on ground now is not sustainable.

On what the National Assembly has done to cushion the effect of the COVID -19 pandemic on Nigerians, he said, “when the body saddled with regulating the power Sector intended to increase tariff – what the consumers are paying–  the National Assembly intervened on behalf of Nigerians, especially giving the circumstances of the COVID -19 virus that it should be shifted until the first quarter of next year, when hopefully the economy would have recovered, and there would be money in the hands of people, giving them the power to pay.”

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FG Invests $617m in Creative Enterprise Fund

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By Laide Akinboade, Abuja

Federal Government has invested $617million in Digital Economy and Creative Enterprises as initiative to foster entrepreneurship and innovation in the digital economy and creative industries.

The Special Assistant to the President on Arts, Culture and Creative Economy, Ayo Adeagbo who disclosed this during his address at the African Fashion and Arts Award Business and Mentorship Summit held in Abuja yesterday said the initiative tagged the iDICE fund offered access to start-up capital and resources for the nurturing of talent in Nigeria.

While describing the formation of the Ministry of Arts, Culture and the Creative Economy by the president as a “remarkable investment”, Adeagbo added that the Minister of Arts, Culture and the Creative Economy, Hanatu Musawa should ensure the building of greater pathways for young talent to reach their global potential

“After the inauguration of Mr President, one of the remarkable investments he made into the country was the creation of a ministry to handle the affairs of art, culture and creative economy.

“The ministry, ably led by Hon. Hannatu Musawa has achieved significant strides in less than a year for the benefit of our creatives and the nation as a whole.

“Some pivotal actions taken include the significant $617 million investment in Digital Economy and Creative Enterprises (iDICE), known as the iDICE Fund – an initiative that aims to foster entrepreneurship and innovation in digital technology and creative industries.”

While unveiling the enterprise, the minister made it known that the fund offers access to start-up capital and resources essential for nurturing talent in Nigeria.

The Acting Director of the FCT Department of Arts and Culture, Kayode Aiyegbusi, who also represented the Minister of State for the FCT, Dr Mariya Mahmoud noted the importance of a synergy between the private sector and the government to grow the creative economy, adding that while the government would continue to create the enabling environment, to allow the industry to thrive.

Similarly, the convener of the AFAA, Kingsley Amako, described the creative industry as “the next oil boom”, and encouraged youths to develop their skills, build capacity and learn to produce and market their products, noting that the AFAA provided a platform for their recognition.

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Reps Query OAGF Over N15bn Payment  to Remita

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By Ubong Ukpong, Abuja

Public Accounts Committee (PAC) of the House of Representatives yesterday queried the payment of N15 billion to Remita, a payment platform from the Office of the Accountant General for the Federation (OAGF).

The committee accused the Central Bank of Nigeria (CBN) and Commercial Banks of complicity in the sharing of the N150 billion remittance.

Rep.

Bamidele Salam, Chairman PAC made the allegation at the resumed investigative hearing on revenue leakages in Abuja.

Salam said that the payment of N15 billion to Remita from the OAGF from 2016 to 2018 was questionable, adding that the OAGF paid the money without agreement or contract.

He described the payment as illegal. “The money is an illegal payment. There was no budget provision, so where did they source the money from?” the chairman queried.

He said, “The CBN also shared in the money. The money is an illegal payment. There was no budget provision so where did they source the money from?

 “Ordinarily, that whole sum of VAT ought to go to the Federal Inland Revenue Service (FIRS) but what they are doing in this transaction is that they will now add that VAT to the N150.

“They will add it up, and take it to the CBN,” he alleged.

He said, “System Spec and Remita, both collect revenue for the federal government, will share 50 percent, while the banks and the CBN will also have their share.”

He said that by the time the committee finishes its reconciliation, “I am very sure that hundreds of billions of naira will be the VAT component that was not remitted to FIRS.”

According to him, each bank ought to take the money and directly remit it to FIRS.

“Now Remita is saying that those collecting should calculate the money that has been shared. How do we track this kind of money?” he asked.

The PAC chairman warned the Chairman, Federal Inland Revenue (FIRS), Mr Zacch Adedeji against disregard for the committee, stressing that Adedeji’s actions amounted to contempt of parliament.

Salam said that for four times the committee invited the FIRS chairman but he failed to show up.

According to him, “In addition to writing him officially, we have also made sure that such letters were delivered personally to his mail box and his WhatsApp number.

“And we condemn and describe it as irresponsible and arrogant, and we tell him that there will be consequences if he continues this contempt of parliament.”

He said that several letters had been written him without responses, adding that the Value Added Tax (VAT) that the federal government should be collecting on Remitta had not been collected by FIRS.

The Director of Banking Services of the CBN, Mr Ahmed Abdullahi said they deemed it fit to source for an alternative way of remitting revenue and Remita and System Spec were selected because they had been rendering similar services to banks.

According to him, Remita was engaged in 2011 and operations commenced in 2012 with system module names. The CBN only finalised the transaction

He said that the fees charged under the TSA were in line with the structure of banking. The volume of revenue collection that passed through Remita was N86 million.

Mr. Oyewole Adewale, Chief Accountant, TSA Department, representing the Accountant General for the Federation, accused the CBN of not honoring its letters to reconcile the revenue accrued to the country through TSA.

He said the OAGF had developed a system where all revenue generated by the Ministries of Departments and Agencies of Government (MDAs) could now be monitored without any interference.

Mr Aderemi Atanda, the Director of Remita Payment Services Ltd., while reading the summary of the TSA collection record, said that 10, 20, and 50 percent were shared among CBN, commercial banks, and Remitta.

He said that collections are not static, they vary.

“From 2015 to 2016, it was N4.2 million, and the fee paid was N8.5 billion; in 2016, N1.3 billion was paid.”

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Tinubu Makes Numerous Promises at Slain Soldiers Burial

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President Bola Tinubu has directed the military to within the next 90 days ensure that all the benefits of the 17 officers and men of the army killed in Okuama on March 14 be paid to their families.

Tinubu said that government would provide a house in any part of the country to each of the families of the four officers and 13 soldiers.

He said that all the children of the deceased would enjoy a Federal Government scholarship up to University level.

He described the officers and soldiers as patriotic, brave and gallant Nigerians.

The president said that the deceased gave their lives to defend and protect the Nation against internal and external threats.

At the burial ceremony of the officers and soldiers on Wednesday in Abuja, Tinubu said that their death serves as a rallying point for Nigerians to condemn crime and criminality.

“They went as peacemakers and peacekeepers, seeking to bring an end to the hostilities between the two communities.“They didn’t go with tanks, machine guns and other weapons. They were on a mission of peace.“The officers and soldiers who lost their lives that day were patriots, brave and noble men who gave their lives to defend and protect our nation against internal and external threats,” he said.The 17 military personnel killed included Lt.-Col. Ali, Maj. D.E Obi, Maj. S.D. Ashafa, Capt. U. Zakari, Staff Sgt. Yahaya Saidu, Corporal Danbaba Yahaya, Corporal Kabir Bashir, Lance Corporal Abdullahi Ibrahim, Lance Corporal Bulus Haruna, Lance Corporal Sole Opeyemi, and Lance Corporal Bello Anas.The rest were Private Alhaji Isah, Private Clement Francis, Private Abubakar Ali, Private Adamu Ibrahim, Private Hamman Peter, and Private Ibrahim Adamu.Tinubu said that the deceased have all been awarded posthumous national honours.“The four gallant Officers have been awarded Member of the Order of Niger (MON). And the 13 courageous soldiers who also lost their lives have been Awarded Officer of the Federal Republic Medals.“As Commander-In-Chief, I do not take the contributions of members of our Armed Forces for granted. I recognise your valour and bravery.

“I honour your unflinching commitment to making our country safe from criminals, bandits, kidnappers and insurrectionists.”The President urged the officers and men of the military not to be deterred by these setbacks and be prepared to continue to work for peace and harmony.Tinubu also called on Nigerians to rededicate themselves to rebuilding communities and making them places where love, tolerance and harmony reigns.“Leaders at all levels, especially community leaders and traditional rulers, must work to strengthen the bonds that unite us. We must end the cycle of violence and bloodletting.“I want to make it clear, once more, that those who committed this heinous crime will not go unpunished. We will find them and our departed heroes will get justice.“The elders and chiefs of Okuoma also have a duty to help the military in fishing out the gunmen who committed the barbaric crime against our men.”The president commended the Armed Forces for their restraint in choosing not to carry out any reprisal attacks in Okuoma or its neighbouring communities.“We must all ensure that the innocent people of Okuoma are not made to bear the punishment of the guilty and wicked among them.”

On his part, the Chief of Army Staff (COAS), Lt.-Gen. Taoreed Lagbaja, said the officers and soldiers of the Nigerian Army who were gruesomely murdered in Okuama Community in Delta on March 14, left behind 10 widows three of whom are pregnant and 21 orphans.Lagbaja made this known at the burial of the 17 personnel comprising one Lieutenant Colonel, two Majors, one Captain and 13 soldiers, on Wednesday at the National Cemetery in Abuja.According to him, the Okuama killing has added to the care of the Nigerian army and, by extension, the Nigeria state, 10 widows, three of whom are four, five, and eight months pregnant, 21 orphans, and many other dependents, including parents.“While commiserating with the families of these gallant soldiers, I assure them that the Nigerian army and the good people of this country will not leave them in the cold.“We shall do all within our power to provide succour to them and preserve the memories of their departed loved ones,” he said.Lagbaja said he considered his toughest job to be putting fine men and women in harm’s way, sometimes knowing that they might not return to their families and loved ones.He added that his men, correspondingly and intriguingly, know that in spite of the equipment, training, and other forms of preparations, sometimes some may not make it back alive, while some may return handicapped.According to him, “when soldiers die in the hands of the enemies of the State, we take it as dying for what the nation has considered a just cause; we celebrate them as gallant heroes.“But when they are gruesomely murdered by the very people they are trained, equipped, and took an oath to protect, it is highly demoralizing.“It is no longer news that 17 of the Nigerian Army’s finest men, whom we have come to bury, were murdered in a reprehensible manner on March 14 in the Okuama community of Delta State while they went on a legitimate peace-making mission.

“It grieves my heart that it took our search and recovery effort over 72 hours to recover some vital organs of the decapitated and disembowell bodies of my men that were scattered all over the Okuama community by the community youths and their friends.“I consider it the most barbaric act any citizen or community can commit against the authority of the state, and I must place on record that a lot of restraints have been exercised so far in our search and recovery efforts for missing arms, ammunition, other equipment, and body parts.“I assure the President and all Nigerians that the Nigerian Army remains committed to its constitutional responsibilities and will not be deterred by setbacks such as witnessed in the Okuama community.“As tasked by the President and Commander-In-Chief of our Armed Forces, the Nigerian Army, with the assistance of its sister services and other security agencies, is committed to bringing the perpetrators of the Okuama murder to book and recover all service and personal belongings taken from the murdered troops.“The Nigerian Army will continue to seek the cooperation of all well-meaning Nigerians, particularly in the affected area, towards swift and successful conduct of our search and recovery operations,” he said.The Chief of Defence Staff (CDS), Gen. Christopher Musa, said the fallen heroes exemplified the very best of service to nation and love for country.Musa said they were the vanguards of peace, the guardians of freedom, and the sentinels of security, adding that their selflessness and unwavering dedication to duty would forever be etched in their hearts and memories.He assured the families of the deceased officers of the support of the nation and the armed forces in every way possible, urging them to find solace in the knowledge that their loved ones made an indelible mark on the nation’s history.The defence chief said the military would honour their memory by continuing the fight against those who sought to undermine the peace and security of the nation.

“We will remain steadfast in our resolve to build a nation worthy of your sacrifice.“The loss we feel today is immeasurable, but we must not allow it to dim the light of hope within us.“Instead, let us use this moment as a rallying cry to come together as a nation, to support our armed forces, and to work tirelessly towards a Nigeria free from the grip of violence and insecurity.“We owe it to these fallen heroes to honour their memory by redoubling our efforts to create a safer and more prosperous nation for all.“Let us build a nation where every citizen can live without fear, where communities can thrive, and where our children can grow up knowing the true meaning of security and stability.“To the men and women who continue to serve in the armed forces, I want to express my deepest gratitude for your dedication to duty.“Your commitment to defending our nation, even in the face of great peril, is truly commendable,” he said.Speaker, House of Representatives, Tajudeen Abbas, Deputy Senate President, Jibrin Barau, Secretary to the Government of the Federation, George Akume, and governors of Delta, Bayelsa, Kano, Kogi and Imo states amongst others attended the burial ceremony.

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