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Power Sector Reform @netotse And Beaf - Politics - Nairaland

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Power Sector Reform @netotse And Beaf by hercules07: 11:48am On Oct 20, 2010
I partially derailed the Jarus post on Ribadu's charisma or lack of by raising an issue on the Power roadmap, I have opened this new topic for those who have the facts to present them so we can have a fruitful discussion (netotse and Beaf I am looking at you here). I am of the opinion that what we need is an efficient government that can run public utilities properly and not to privatise everything under the sun, netotse please set the ball rolling.
Re: Power Sector Reform @netotse And Beaf by nduchucks: 1:30pm On Oct 20, 2010
hercules07:

I am of the opinion that what we need is an efficient government that can run public utilities properly and not to privatise everything under the sun, netotse please set the ball rolling.

hercules07, I believe you will not be able to name a single business entity, efficiently and successfully run by the Nigerian government. Why then would any sane person recommend that the government should run any business entity?

The role of the government should be to set the ground rules and protect national security when necessary. The transmission grid by nature could expose the country to terrorists, so I believe the government has a role in safeguarding the transmission system in a joint venture with private businesses who can run the system more efficiently.


The only thing the Nigerian government knows how to do very well, is waste our money and loot.
Re: Power Sector Reform @netotse And Beaf by hercules07: 2:49pm On Oct 20, 2010
I know our Government is inefficient, but, how many of our public utilities are we going to privatise? I believe the clamour should not be for privatization but for a more efficient Government, the money saved from privatizing these sectors will only be swallowed. At present, I pay about 5K a month for power supply, now, there is going to be an increase in the cost of power by march next year, that means I will pay close to 10K for about 6 hours of light per day, when it is privatised, I will be paying close to 15K just for power, that is some people's salary ( I am not a heavy user of the power sef). I see the Government abdicating its responsibilities, the clamour for stable power supply will only lead to a heavy burden on the people except we do things the right way.
Re: Power Sector Reform @netotse And Beaf by netotse(m): 2:52pm On Oct 20, 2010
when the government doesn't have enough money to fund the power drive what do you expect them to do?

and as per the price increase you mentioned, the government generates electricity at a cost of 10naira per kwh and presently it is sold at 6 naira per kwh, a loss of 4 naira for every kilowatt hour. Does that make sense?

PHCN earns close to 10billion everymonth but it's commitments are 17billion per month, so the shortfall of 7 billion comes from government. So in simple english, for PHCN to break even(we're not even talking about funding the needed infrastructure o) there has to be an increase in price.
Re: Power Sector Reform @netotse And Beaf by hercules07: 3:03pm On Oct 20, 2010
@netotse

How well run is PHCN, how well run is any utility company in Nigeria, there is a lot of waste in that organisation, I am sure that an efficient PHCN will not spend close to that amount for its operation. Prices have been going up, they just increased the prices recently, if it is 10 naira per kwh, let them sell it at that price or a little bit above it, let them look for creative ways of making money (I am sure there are other uses for their transmission lines than just carrying electricity), how are other countries able to do it? My fear with the privatization is not about availability, but the companies will charge as they like and our Government officials will look the other way. Beaf said something about Nigerians spending 13 billion dollars on power, that I am sure is heavily weighted towards the companies who can afford to pay about 60% less in the new dispensation, the common man will have to take the slack.
You say Government does not have enough money to fund the power drive? What do they use our money for? to pay Senators? is it not the same government giving customs exceptions to their friends, not collecting proper taxes from companies and chopping money anyhow? Our problem in Nigeria is that our Government officials love taking the easy way out, they are not ready to apply themselves to doing innovative things, let me ask, how much do you think the private companies will charge per Kwh?
Re: Power Sector Reform @netotse And Beaf by Nobody: 3:07pm On Oct 20, 2010
Hercules7 before you call on Government to run anything please does NNPC, NEPA (PHCN) ring a bell?
Re: Power Sector Reform @netotse And Beaf by hercules07: 3:12pm On Oct 20, 2010
@Mike

I know that those are corrupt organisations and there is a need to clean the augean stables there, what I am saying is that the privatization thing is a palliative, it is not the solution to our problems. Are we going to privatise NNPC, the Army, the Police and so on? I believe a Government that can fix the Police can also fix power without privatising it, what we need to do is vote in such a Government, I do concede that most of the people asking to lead us at this point in time do not have any idea of how to fix Nigeria, but, we need to look for people who will fix this country.
Re: Power Sector Reform @netotse And Beaf by netotse(m): 3:20pm On Oct 20, 2010
@hercules
the power sector is capital intensive and has long leadtimes, any government that aims to do all the spending that the power sector requires is confused. . .i repeat FG cannot fund the power sector alone and still carry out other activities, (their words not mine. . .)

as per the tariffs, do you want me to point you to a wordbank report as far back as the 80s where it is explicitly stated that one of the major problems with the power sector is the governments refusal to charge economic tariffs?

the FG lost out on 1billion dollars of world bank funds specifically for the power sector because they were playing politics with the power industry. . .now, the gap between our requirements what we have on ground is too large to be bridged without private investors.
Re: Power Sector Reform @netotse And Beaf by hercules07: 3:31pm On Oct 20, 2010
I do not trust the World Bank, their agenda is for everything under the sun to be privatised. I actually fail to see the activities that our Government is carrying out now, the Government can afford to fund the power sector if they will place more emphasis on other forms of revenue, we lose billions of dollars to bunkering, outright stealing, tax evasion, and have refused to mine other minerals we have because oil money is too sweet. Our Government is always ready to take the easy way out, we can not fund power oya privatize it, we can not fund police oya privatize it, education nko, we must privatize it, what the heck is the function of the Government when they are privatizing everything. The money sanusi used in bailing those useless banks out should have been spent on power.
Re: Power Sector Reform @netotse And Beaf by netotse(m): 3:40pm On Oct 20, 2010
this is a quote from the report. . .

With hindsight, given more than a decade of experience with FGN reluctance to approach tariff-setting on an economic basis, the Bank should have kept the clause to provide a safety net to help NEPA meet the project's financial objectives.

meaning, PHCN(then NEPA) wasn't the problem, the federal government was the problem, the federal government was setting tariffs while it was PHCN incurring the expenses.

and as per the trusting the worldbank. . .we really dont have a choice do we?

and i'm attaching one of my favourite pics for your viewing pleasure.

Re: Power Sector Reform @netotse And Beaf by SkyBlue1: 3:45pm On Oct 20, 2010
hercules07:

I do not trust the World Bank, their agenda is for everything under the sun to be privatised. I actually fail to see the activities that our Government is carrying out now, the Government can afford to fund the power sector if they will place more emphasis on other forms of revenue, we lose billions of dollars to bunkering, outright stealing, tax evasion, and have refused to mine other minerals we have because oil money is too sweet. Our Government is always ready to take the easy way out, we can not fund power oya privatize it, we can not fund police oya privatize it, education nko, we must privatize it, what the heck is the function of the Government when they are privatizing everything. The money sanusi used in bailing those useless banks out should have been spent on power.

Leave the world bank out of this and whatever you think about them for a second and think for yourself. Nigeria to the best of my knowledge does not generate up to 5000MW of power (correct me if I am wrong). Southafrica with less than a third of out population generates at least 40 000MW and are planning expansions. Roughly speaking, you can equate power investments to being 1billion dollars for 1000MW. What was Nigeria's last national budget in dollars? What percentage of that budget was for capital projects (as opposed to recurrent expenditure - paying salaries, etc)? Even if Nigeria spent all the money allocated to capital projects on power and ignored every other sector to rot away (including among others: education, health, infrastructure like roads, etc) do you think that would be enough to reach our lofty targets of generating enough power not just for domestic copnsumption, but for running of industries as well?
Re: Power Sector Reform @netotse And Beaf by hercules07: 3:57pm On Oct 20, 2010
@netotse

I am all for Government funding the power sector, poor funding will definitely kill any sector, I am sure funds were allocated but mysteriously got swallowed somewhere along the line.

@Sky Blue

Is our Government making as much as it can make? We depend solely on Oil for foreign exchange, we have other sources of income that have not been tapped, let the Government look at ways of augmenting its income, one quick way is to stop bailing out failed banks, stop paying senators crazy money, cut the cost of running government, we are not americans who can sell bonds to china at will.

@Sky Blue, I believe that the power is being sold right?, if Government can sell at just above cost price, it will have enough money from money generated to pump back into the sector, patapata it adds an extra 1 billion dollars.
Please guys do not get me wrong, I am for privatization in areas where the cost of privatization will be spread out evenly or the service is a luxury (Telecoms and so on).
Re: Power Sector Reform @netotse And Beaf by netotse(m): 4:03pm On Oct 20, 2010
if it sells at just above cost price, it will make enough to pay salaries and all maybe to maintain one or two power plants every year, but it wont make enough to build new infrastructure. . .

it's clear you haven't read the roadmap. You should try reading it.
Re: Power Sector Reform @netotse And Beaf by globalaid(m): 4:19pm On Oct 20, 2010
i think what the government need to do is break PHCN monopoly because they are the problem. I pay almost 5000 naira here in Ghana and we have light for 24 hours in a day. The wastage and the corruption in the system is just too much, i was in my brother house last few month and he has not pay for over 1 year, what they do is that they have bribe some PHCN official and so the bill does not come out.
Re: Power Sector Reform @netotse And Beaf by hercules07: 4:31pm On Oct 20, 2010
netotse

@20,000MW, the PHCN is expected to make about 500 billion naira ( assuming 33% utilization at a cost of 10naira per kwh), will they spend 500 billion naira on salaries and to maintain one or two power plants?

@globalaid

Is it impossible to reform our society? Is it impossible to turn all these public companies around? How then can we become a great country when all the difficult jobs become impossible to us?
Re: Power Sector Reform @netotse And Beaf by netotse(m): 5:01pm On Oct 20, 2010
before i answer your question, we're at 4000MW now, how do we intend to get to the 20, 000. it will take 16bn dollars to build gas stations totalling 16000 MW, and we aren't counting the gas pipelines, and transmission lines etc etc. . .where does the govt want to steal that money from?
Re: Power Sector Reform @netotse And Beaf by hercules07: 6:17pm On Oct 20, 2010
@netotse


We can get to 20,000MW by adding the megawatts small small, say you target adding about 1000 to 2000 in the next couple of years, then add small again, I am not asking the government to add 16,000 MW at a go, that will be impossible. I can bet you that if the government delivers 4000MW today, most households will have power for about 12 hours a day.

On the transmission, we are not serious, my solution to transmission is very simple, imagine having a power plant that can supply 4000MW in lagos, build the transmission to supply lagos with the 4000MW and push excess to the national grid.
The transmission should supply local needs first before pushing it to the national grid, that way we save on transmission cost.
Re: Power Sector Reform @netotse And Beaf by netotse(m): 10:09pm On Oct 20, 2010
hercules07:

@netotse


We can get to 20,000MW by adding the megawatts small small, say you target adding about 1000 to 2000 in the next couple of years, then add small again, I am not asking the government to add 16,000 MW at a go, that will be impossible. I can bet you that if the government delivers 4000MW today, most households will have power for about 12 hours a day.

On the transmission, we are not serious, my solution to transmission is very simple, imagine having a power plant that can supply 4000MW in lagos, build the transmission to supply lagos with the 4000MW and push excess to the national grid.
The transmission should supply local needs first before pushing it to the national grid, that way we save on transmission cost.
you really need to read the roadmap, all these things have been addressed there. how long do you want nigerians to wait before the get electricity? you're thinking with a view to avoiding private money not with a view to providing electricity for the people, there's no way you can supply electricity without making use of OPM(other people's money) name the countries in the world that supply all their peoples' power needs by themselves without any help.

Do you know what it means when people say power is capital intensive? it means that you'll spend 1billion dollars to build a 1000MW plant, which will take at least 30months to complete and then it'll take you 10 years to break even(we're not talking profit yet). . .how many governments do you think can afford to be tying money down like that when there are other sectors that the money can be used in?

your idea of regionalized generation is to be implemented in the roadmap but you still need a grid to increase the efficiency and also for redundancy.

if we weren't so behind your idea might have been more plausible but a situation where on average we spend more than double whatever the private sector might want to charge on private generation simple rubbishes your idea, cos if you dont pay the money to PHCN, you will sure as hell pay it to the diesel importers.
Re: Power Sector Reform @netotse And Beaf by marvix(m): 11:00pm On Oct 20, 2010
Hercules have a point, must we privatise everything before they can work. Remember that there was a time things were run by private companies before govt started running them.

The normal way systems are run is for individuals and private entities to start up a task and at a point when expansion seems to be overwhelming govt takes over.

If privatisation is the best solution pls can we kindly privatise the govt, allow people and foreign investors take charge of Nigeria, then the NNPC, universities and everything will be ok.

netotse:

you really need to read the roadmap, all these things have been addressed there. how long do you want nigerians to wait before the get electricity? you're thinking with a view to avoiding private money not with a view to providing electricity for the people, there's no way you can supply electricity without making use of OPM(other people's money) name the countries in the world that supply all their peoples' power needs by themselves without any help.

[b]Do you know what it means when people say power is capital intensive? it means that you'll spend 1billion dollars to build a 1000MW plant, which will take at least 30months to complete and then it'll take you 10 years to break even(we're not talking profit yet). . .how many governments do you think can afford to be tying money down like that when there are other sectors that the money can be used in?[/b]your idea of regionalized generation is to be implemented in the roadmap but you still need a grid to increase the efficiency and also for redundancy.

if we weren't so behind your idea might have been more plausible but a situation where on average we spend more than double whatever the private sector might want to charge on private generation simple rubbishes your idea, cos if you dont pay the money to PHCN, you will sure as hell pay it to the diesel importers.


Netoste is it the roads or education or health facilities that are not capital intensive, or do u have any idea how long it will take to reconstruct all the major highways in d country, or build a railway and how long it wld take to recover the said funds.

This would bring us back to the 7point agenda, yaradua understood the problems beyond having light to power tvs and industries but solving the problem wholistically.

The reason people especially d obj govt could make a waste of monies spent in the power sector was because of lack of legal framework for the funds to be used.
secondly u can not just build power stations in a community or area that is not accessible by road, you need qualified personnel to build this projects what about the security of the individuals and infrastrucyure.

The roadmap of the power sector has to be taken into consideration with the 7 point agenda, can you solve power without peace in the Ndelta, can u move heavy equipments from ports to the locations they are needed on bad roads.

Power is not our biggest challenge unemployment is.
Re: Power Sector Reform @netotse And Beaf by netotse(m): 12:04am On Oct 21, 2010
when there's no power to drive industry where do you want the jobs to come from?
Re: Power Sector Reform @netotse And Beaf by asha80(m): 9:16am On Oct 21, 2010
marvix:

Hercules have a point, must we privatise everything before they can work. Remember that there was a time things were run by private companies before govt started running them.

The normal way systems are run is for individuals and private entities to start up a task and at a point when expansion seems to be overwhelming govt takes over.

If privatisation is the best solution pls can we kindly privatise the govt, allow people and foreign investors take charge of Nigeria, then the NNPC, universities and everything will be ok.


Netoste is it the roads or education or health facilities that are not capital intensive, or do u have any idea how long it will take to reconstruct all the major highways in d country, or build a railway and how long it wld take to recover the said funds.

This would bring us back to the 7point agenda, yaradua understood the problems beyond having light to power tvs and industries but solving the problem wholistically.

The reason people especially d obj govt could make a waste of monies spent in the power sector was because of lack of legal framework for the funds to be used.
secondly u can not just build power stations in a community or area that is not accessible by road, you need qualified personnel to build this projects what about the security of the individuals and infrastrucyure.

The roadmap of the power sector has to be taken into consideration with the 7 point agenda, can you solve power without peace in the Ndelta, can u move heavy equipments from ports to the locations they are needed on bad roads.

Power is not our biggest challenge unemployment is.


Please tell me how you effectively tackle unemployment without power?
Re: Power Sector Reform @netotse And Beaf by hercules07: 9:29am On Oct 21, 2010
@netotse

Nigerians have waited long enough for power, they can wait a little bit more if they know and trust that the government in power is committed to providing power at a rate they can afford (your private guys are not going to pump the money in immediately as well), if OBJ and Yar'Adua had budgeted 2 billion dollars per annum for power, we would have had 8,000MW added to what we had in 1999 (assuming 30 months completion as you alluded to).
My fears with privatisation is that the cost per unit for the average household will be too high for them to bear, the figure of $13billion dollars is heavily weighted towards the big companies not necessarily home users, when privatisation comes, the cost borne by companies to power their plants will reduce while those borne by households and SMEs will most likely double, please do not forget that petroleum subsidy too is about to be removed, they just nefa get the liver yet. Will there be a rise in the income of people when power is privatised? Will the cost of living reduce due to better power supply? Our Government is looking at solving the power problem without going deeper into the effects of the route they are taking. Can you please post a link to the roadmap so I can have a read?
Re: Power Sector Reform @netotse And Beaf by netotse(m): 9:47am On Oct 21, 2010
http://www.nigeriapowerreform.org/downloads/

the longer we wait, the more expensive it becomes, read the roadmap, there's something they calculated called 'cost of unserved energy'. The private people will bring the money in immediately, it's not one company, it's many companies, all with their individual financial arrangements. The problem with electricity in nigeria is more FG than PHCN. . .

obj added(through NIPP) something around 4000+(i think it's more). . .you know something, you're mentioning sums, but you're not saying where they will come from, until you can say where the sums will come from all you're doing is arm chair economics. one more thing, you do know we have to spend on gas infrastructure as well right? that's a sector of it's own, where naija wan tiff the money from?

The quality of life will increase, productivity will increase, industrial activities will pick up, i think it's safe to say the cost of living will reduce. . .eventually

as per the tariffs being too much for the masses, it's going to be an inclined sliding block meaning, the more electricity you use, the higher your unit cost.
Re: Power Sector Reform @netotse And Beaf by otokx(m): 10:16am On Oct 21, 2010
For so long we have been hearing Power Sector reforms and nothing to show for it with all the money they have been stealing. The truth be told, Power generation, transmission and all should be bundled together and then decentralized and then sold to private hands. That is the only remedy, the earlier done the better.
Re: Power Sector Reform @netotse And Beaf by hercules07: 11:57am On Oct 21, 2010
@netotse

Thanks for the link, I have downloaded it and I will read it. If OBJ added 4000, how come what we have now is 4000, we should have close to 6000MW I believe. One area we could get money from is to tax people appropriately and to stop giving customs exceptions to people, we import almost everything so the government should be making a hell of a lot off duties. We should also stop bailing out banks and textile industries, we can divert the money to power.
I do not think having power will significantly increase the quality of life as I believe the industrialists will now stop complaining about power but will complain about taxes or roads or something else because it pays them to import the finished products anyway (Chinese products will always be cheaper). I will take your word for it now and pray that the full privatisation of the power sector will yield the desired results, it is to the benefit of all if the project succeeds.

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