₦airaland Forum

ositadima1:
Privatization is ok, but the problem we have is that the privatized facilities are being owned indirectly by government officials or people who have links to the government.

This affects the policies and regulations made by the government towards these companies or sectors. E.g. why the government is yet to mandate prepaid meters beats me. Why are the majority of users still on estimated bills, why ?
How can a business provide efficient services when it is sure to collect charges whether they provide d service or not ?

I am telling you guys with confidence that if the government enforces prepaid meters all these discos will sit up and be on the same level as our telecom companies.

ultron12345:
Nigeria is a poor country and cannot afford electricity as a social service. Average capital cost of gas power plants is $1000 per KW. That is $1,000,000 per MW. South Africa with 45Million people generates 45,000MW. If we are to generate similar capacity, that would be $45Bn. Coal power plants have higher capital cost, but less operating costs. Renewable and nuclear power are just too expensive, with much much higher capital costs but less operating costs. I rather that money is put into education, healthcare, security etc

It will be prepaid and everyone will have to adjust to their pocket. Not this current system where even when you're away for a week, you'll leave your fridge and lights on. Fridge don block, but you'll still leave it on. If you're not watching television, you turn it off. If it is 5 days electricity you can afford in a month, you go for it. In the current system, how many people receive up to 5 days (120hrs) in a month.

And by the way, most of the DISCOs are currently running on losses. You can look up their financial reports. Ikeja Electric, BEDC etc

These social services mentality have drained us. Providing fuel as a social service has led to a situation where we now spend more on fuel subsidy than we spend on healthcare and education put together. And due to lack of funds, the two later have collapsed, even when they are more important than the former.

Laws and regulations can be put in place to handle the excesses of the private sector. For example, there can be maximum price caps like it is everywhere else in the world since utility companies are usually monopolies in the areas they serve. But these regulations should also consider the businesses and allow them make a healthy profit to meet their obligations, not to be forcing them to sell below cost price.

About AP-Moller Maersk and the Lagos ports, I believe the problem is that the Lagos ports are running above capacity. AP-Moller is a Danish multinational that manages ports efficiently all over the world, why is the case different only in Lagos. To solve this, Calabar port and more ports should be opened up. Once again, private sector can help here too.

We are not the only country where private sector manages roads, bridges, airports. Let's look at how other countries are managing their excesses and adopt the solutions to our perculiar situation.

ositadima1:
I am sorry to say this but it seems you have disconnect from what is currently happening on ground. Most people have been on estimated bills for years. Even when the power supply has been abysmal. Discos are just not effective and wasteful.

The best solution is to enforce prepaid meters to all consumers, you pay for what you use. Only then will these discos be incentivised to up their game.

ultron12345:
Nigeria is a poor country and cannot afford electricity as a social service. Average capital cost of gas power plants is $1000 per KW. That is $1,000,000 per MW. South Africa with 45Million people generates 45,000MW. If we are to g7enerate similar capacity (ignoring that if South Africa needs 45000MW, we would need about 180,000MW), that would be $45Bn. Coal power plants have higher capital cost, but less operating costs. Renewable and nuclear power are just too expensive, with much much higher capital costs but less operating costs. I rather that money is put into education, healthcare, security etc

It will be prepaid and everyone will have to adjust to their pocket. Not this current system where even when you're away for a week, you'll leave your fridge and lights on. Fridge don block, but you'll still leave it on. If you're not watching television, you turn it off. If it is 5 days electricity you can afford in a month, you go for it. In the current system, how many people receive up to 5 days (120hrs) in a month.

And by the way, most of the DISCOs are currently running on losses. You can look up their financial reports. Ikeja Electric, BEDC etc

These social services mentality have drained us. Providing fuel as a social service has led to a situation where we now spend more on fuel subsidy than we spend on healthcare and education put together. And due to lack of funds, the two later have collapsed, even when they are more important than the former.

Laws and regulations can be put in place to handle the excesses of the private sector. For example, there can be maximum price caps like it is everywhere else in the world since utility companies are usually monopolies in the areas they serve. But these regulations should also consider the businesses and allow them make a healthy profit to meet their obligations, not to be forcing them to sell below cost price.

About AP-Moller Maersk and the Lagos ports, I believe the problem is that the Lagos ports are running above capacity. AP-Moller is a Danish multinational that manages ports efficiently all over the world, why is the case different only in Lagos. To solve this, Calabar port and more ports should be opened up. Once again, private sector can help here too.

We are not the only country where private sector manages roads, bridges, airports. Let's look at how other countries are managing their excesses and adopt the solutions to our perculiar situation.

emmanuelewumi:
The DISCOs are not ready to solve any problem, they thought it was a tea party. They don't have the money and competence for the business.

emmanuelewumi:
The 2000km travel by road, could be made in a week or a month moving from one part of the country to another, to and fro.


Truck and Commercial bus drivers can even make 5000km or more in a month

ahiboilandgas:
A p.moller recently sack the Nigeria m.d and the global ceo had to come to Nigeria cos of Npa petition and threat of termination of contracts...he deploy more mordern equipments to togo .....we dont necessarily have to go the gas way .we can have energy mix .hyro is the cheapest the 3 goges dam in china generate 50000 mega watt , like wise the new Ethiopian dam can generate 5000 ....on country run exclusively on private enterprise....even america that promotes such have billion in dollars fpr agriculture, unemployements benefits,social security etc .....in a nation of 30000 minmum wage million of Nigerians will be off electricity at 60 naira per kilo watts leading to use of kerosene lamps ,firewood and massive deforestation,pollution,poverty and back wardness ...

ultron12345:
Apart from all these waste that need to go, we also need to increase our revenue. Our revenue is generally too small. We need to work on that, especially tax revenue. The majority of Nigerians pay little to no taxes. I don't agree with this narrative that once we do away with NASS 0.12T (out of personnel budget of 2.4T), the country will suddenly turn to London. A family of 10 people, earning a combined N5k per month, no matter how non-corrupt they are, they will still suffer from poverty. Yes, waste and corruption have to go, but revenue has to also go up.

We have one of the lowest tax-to-gdp ratios in the world att 4-5%. France is at 48%, Germany is 44.5%. Those countries are much richer so let's leave them and compare with our neighbors with similar or even worse socioeconomic demographics. Benin is at 15.4%, Cameroon is at 18.2%, Ghana is at 20%, Togo is 15.5%.

Our budget of about $26bn is too small for a $380bn economy with 180M people. And the most surprising part is we still have to take loans to fund this tiny budget.

South Africa has a budget of $120bn for a smaller economy with 50M. But they are of different socioeconomics with Nigeria, so let's use a similar country as example.

Ghana with similar socioeconomics with Nigeria has a budget of $14bn annually, for a population of 29M and a $60bn GDP. Meaning their spending $483 per person and spend 23% of their GDP.

Nigeria on the other hand, is spending just about $144 per person and just 3.68% of our GDP.

How can you expect similar level of development when Nigeria is spending far less due to far less revenue. For Nigeria to operate at the level of Ghana, we need to generate 20% of our GDP in taxes, that is $76bn in taxes. Then spend have a budget that's 23% of our GDP (the extra 3% can come from loans or other sources of income, not now where loans are used to finance almost 50% of the budget) at $87.5bn. At this level, per capita spending will be equivalent at $486.

I see it as a miracle that open our abysmal spending that is just about a third of Ghana's, in terms of development, the difference is not that much. And upon this low revenue, unlike Ghana, we are the ones who will still subsidize everything, from fuel to ceaserian section to electricity bills.

About the loans and debt, Nigeria has one of the lowest debt-to-gdp ratios in the world at just about 23%. Most of the developed countries have it at 80-130%. Japan is even at 223% (yes, more than twice of their GDP in debt). Ghana is at 73%, Benin at 54%, Chad at 52%, Gabon at 61%. Yet, these countries like Ghana with relatively high debt don't use up to half of their budgets to service those debts, because those budgets are large compared to the debts. We in Nigeria with a supposedly low debt profile are the ones using almost half of our budget to service debt because the budget is too small compared to our GDP. Imagine we had 73% debt like Ghana. It's means we'll use 100% of our budget to service debt and still borrow even more to complete the debt servicing. Our debt is not the problem. The problem is that we are making too little revenue to service a debt that we should have serviced very easily if we made enough.

Another advantage of taxes, is that is promotes accountability. If Nigerians we're paying taxes, I doubt we'd allow all this corruption go on. As at now, all the money being stolen is like free money from the ground, and no-one cares. That's why nigerians will destroy public property and politicians steal with impunity. If these were built with taxation which is the collective sweat, blood and tears of the population, I doubt you'd allow anyone damage streetlights that we're built with your money. Any politician that does anyhow will be voted out. No more selling and buying votes, because if income taxes are 20%, and I'm earning 30K, meaning I'm paying taxes of 6K monthly, 72k annually, and 288k for a 4yr tenure, do you think I would collect 2K bribe during election to vote for someone I know would squander my 288k for the next 4yrs.

Imagine, all Nigerians pay 6-7% of their income as a firm of health insurance premium, for free healthcare, similar to the UK's NHS. If we have 80M economically active Nigerians, who earn ON AVERAGE 45K monthly. That would be an annual healthcare fund of at least, 3T annually (current healthcare budget is just about 300B of which 90% is spent on salaries). Imagine how that would boost the life expectancy of Nigerians and even the economy. With that, we'll be able to build all the hospitals we need, buy all the fancy high-end equipment we want, and employ adequate numbers of all the doctors and healthcare staff we need. If we don't have enough, we can even start poaching staff from poorer African countries like Burundi, Ethiopia, even Ghana. If 30% (900B) of that money went to drugs, it would boost our pharmaceutical industry, create more jobs, bring in more investment since pharmaceuticals are sure of a large market etc. With the tiny revenues of listed pharma companies on NSE, I doubt if the entire drug market in Nigeria is even up to a third of that. If 10% of that went on healthcare research, who will challenge us in Africa. It'll create jobs for the many biomedical graduates in well funded research institutes. This is just an example. Similar miracles will happen if this principle is applied in other sectors.

ahiboilandgas:
A p.moller recently sack the Nigeria m.d and the global ceo had to come to Nigeria cos of Npa petition and threat of termination of contracts...he deploy more mordern equipments to togo .....we dont necessarily have to go the gas way .we can have energy mix .hyro is the cheapest the 3 goges dam in china generate 50000 mega watt , like wise the new Ethiopian dam can generate 5000 ....on country run exclusively on private enterprise....even america that promotes such have billion in dollars fpr agriculture, unemployements benefits,social security etc .....in a nation of 30000 minmum wage million of Nigerians will be off electricity at 60 naira per kilo watts leading to use of kerosene lamps ,firewood and massive deforestation,pollution,poverty and back wardness ...

Cyberknight:
Agreed.
But we cannot continue subsidising electricity until we get the generation and transmission issues right. Diversifying the energy mix also requires investment which we hope we can attract in this current climate so the government doesn't have to find the monies itself (read more ultimately unserviceable loans), while we continue to throw money into subsidies.

The Katsina wind farm is the only one we have so far, while I think several locations have been identified, but funding lacking. An MOU for a solar grid was signed, but no progress made so far.

The prepaid meters must be enforced and subsidies removed. Then we can put in place incentives such as those used in Kenya for example, where people who consume less each month pay lower rates. But blanket subsidies as a whole are unhelpful - they starve the whole system of funds.

Cyberknight:
Agreed.
But we cannot continue subsidising electricity until we get the generation and transmission issues right. Diversifying the energy mix also requires investment which we hope we can attract in this current climate so the government doesn't have to find the monies itself (read more ultimately unserviceable loans), while we continue to throw money into subsidies.

The Katsina wind farm is the only one we have so far, while I think several locations have been identified, but funding lacking. An MOU for a solar grid was signed, but no progress made so far.

The prepaid meters must be enforced and subsidies removed. Then we can put in place incentives such as those used in Kenya for example, where people who consume less each month pay lower rates. But blanket subsidies as a whole are unhelpful - they starve the whole system of funds.

ultron12345:
Three gorges dam generates 22,500MW, and cost $22.5bn for the dam itself and $37bn for the whole project including relocating millions of people.
Ethiopia's renaissance dam will generate 6000MW and cost $5bn.
It still costs a lot, depending on terrain and if you have appropriate water bodies. You might be mandated to supply electricity to other countries too like we do with power from Kainji dam.

If there is enough money, then the government can do everything. But now that there is not enough, I believe things like free basic education and healthcare are of higher priority for government spending than power. Since the private sector power will be constant and prepaid, those that can afford 24/7 for a whole month should do for 10 days or what they can afford. When businesses get access to constant power, they'll be able to produce goods and services at cheaper prices, and those people earning minimum wage will have more left to spend. After all, the people you're taking about are currently surviving without constant electricity. How many kerosene lamps do they use now without electricity? Some even run small tiger generators which are more expensive than private electricity.

Theflint1:
In all this you have failed to consider the rate of inflation and average wage. Most Nigerians don't earn enough to live on.

ahiboilandgas:
Example jigawa state earned earned over 1.2 trillion naira in 20 years with all human development index still in the red , instead the single must important project executed by the Govt is the 30 bn Naira duste airport that was never used and still not in use cos their is no commercial activities in the state...the gov a pantom progressive and man of the masses ..against building dams for irrigation and all year farming and value chain additions ....the former gov a syco started frog farming for export to thailand .....meanwhile their counter part in ekiti is also building a fly over and airports to attract imaginary investors to the state while the single must important project executed by the Phd gov of ekiti was building a New govt house and gov lodge abuja

emmanuelewumi:
The revenue collected are not documented, few gets to government.

An average Danfo bus will pay a minimum of N3000 to Agbero, LASTMA etc every day, with little or nothing coming to the coffers of government.

. According to LIRS, the total number of Lagosians which pay tax is less than 500,000 this is too poor for a state with a population of 20 million

ahiboilandgas:
subsidies removable is not the magical strategy to solve the power generations issue ....it hydra headed.....private firms seeking loans to build cost reflective power plant also factor the the consumer ability to pay ......with over 100m extremely poor people Ware house in Nigeria that dont have even 4k permonths to pay for electricty or any other service ....leave Lagos and Abuja move deep into northern state deep into zamfara ,maiduguri u will undererstand better
......the investement is be lost A LEVEL 8 Officer earn 38000 naira month's he is suppose to rent ,feed,pay tax ,transport,medical and pay premium of electricity and still not be corrupt......it impossible....the latter are in the majority....with the continues devaluation of naira even the middle class will soon be hit

emmanuelewumi:
Union is for exploitation in this part of the country. The big Agberos in Lagos go home everyday with between 700k to N1.2 million every day... They finance election of local government chairmen, states house of assembly, house of representative, Senate. They contribute towards election of state governors.

No wonder they are above the law. A medical doctor with about 30 years experience in the United States, had to receive the blessings of a popular Agbero before he could become a member of the house of representative.


Won't be surprised if the Agbero will contest to become a Senator or a governor.


Too bad

Cyberknight:
I agree subsidiy removal is not a magic bullet.
But its a first step. The monies spent thereon should be clawed back and put into something else in the power supply chain.
Secondly, speaking of said areas in Zamfara, Maiduguri, or my remote village in Igboland, why should they have electricity in the first place if they cannot pay for it?

Nigeria, out of its absurd politicisation of everything, extended its electrification all over the country (almost 90% so far), thus spreading meagre electricity distribution too thin. Why should there be grid electricity in villages when industrial estates in Lagos are running on generators, for instance?

Grid electricity should be spread gradually, you only extend distribution when you have something to distribute.

Donbrig:
It is not easy to open a business in Nigeria and have Nigerians work for you without theft being a big problem. I remembered how I was frustrated when I newly opened a bakery and a hotel in Benin, it was a very huge challenge. The issue of theft is a problem you cannot completely eradicate. If you want to be successful in your business, you must be on ground 24/7 and set up a strategy that would enable all your workers police each other, and you must try to compensate them from time to time, never be a greedy employer and ensure that your workers have a conducive working conditions.

There's a way out...

From experience, I have also observed that some tribes in Nigeria are more honest and loyal than some, like the Efiks ( Calabar) or Hausas, I can trust many from these ethnics than many other ethnics. If you can succeed as a business man in Nigeria, you can succeed in business in any part of the world.

emmanuelewumi:
Union is for exploitation in this part of the country. The big Agberos in Lagos go home everyday with between 700k to N1.2 million every day... They finance election of local government chairmen, states house of assembly, house of representative, Senate. They contribute towards election of state governors.

No wonder they are above the law. A medical doctor with about 30 years experience in the United States, had to receive the blessings of a popular Agbero before he could become a member of the house of representative.


Won't be surprised if the Agbero will contest to become a Senator or a governor.


Too bad

ultron12345:
In my view, the government shouldn't waste it's scarce resources on commercial enterprises. Let the government resources go for things like basic education, healthcare, defence etc

Government doesn't need to spend a kobo of scarce resources on power. Just create the right policies and private investors will generate all the power we need in the shortest time possible. Not the current situation where electricity companies are complaining of being forced by NERC to sell below their cost price. Investors will take loans, build power plants and transmission/distribution lines, generate power, sell that power, and make a healthy profit, from which they will pay back their loans. Same thing goes for railways, airlines, pipebourne water etc. Let the private sector handle it. All the government needs to do is tax the private sector to provide education, healthcare etc

The government needs to free up the economy. Regulations are too tight. Government just dey chook hand everywhere, spreading it's scarce resources thin. Look at NNPC refineries and how theyre wasting money. Was it not the Kaduna refinery that made 60B loss last year with zero revenue. Why should the government be running refineries in the first place. Deregulate and privatise these things PROPERLY and watch the private sector work wonders.

Even major inter-state roads can be given to private companies to construct and operate. In other countries, you'll see so so road is owned 35% by this company, 25% by that company, 15% by that equity fund etc In other countries, when traveling by road, you always budget for tolls. But in Nigeria, it's all free. I rather drive on good, smooth, safe roads and pay tolls than to drive on death traps where container can fall on head for free.

ositadima1:
If the telecoms are doing ok without subsidies and yet everyone, both the wealthy and the poor, patronize them daily why can't other sectors (like electricity, gas and petrol providers) do same?

ultron12345:
Even major inter-state roads can be given to private companies to construct and operate. In other countries, you'll see so so road is owned 35% by this company, 25% by that company, 15% by that equity fund etc In other countries, when traveling by road, you always budget for tolls. But in Nigeria, it's all free. I rather drive on good, smooth, safe roads and pay tolls than to drive on death traps where container can fall on head for free.

ositadima1:
If the telecoms are doing ok without subsidies and yet everyone, both the wealthy and the poor, patronize them daily why can't other sectors (like electricity, gas and petrol providers) do same?

ahiboilandgas:
very true ,but villages need electricty too but might not be on grid that why we have the rural electrification project and agency ....small.gas power plants or small windfarm are serve villlages ......if u dont power the villages too the urban rural migration will spike and the urban area will be overwhelmed.......the 20 mw plant in Lagos island can be used to power rural area and economies ....the food security and raw materials for the factories are gotten from those rural area .........i served in agwu in enugu the village has do not have electricty for 20 years but some wealthy investors had several 1000 kva powering the town from 6pm to 6am (paid for )very reailable ....

ositadima1:
I am sorry to say this but it seems you have disconnect from what is currently happening on ground. Most people have been on estimated bills for years. Even when the power supply has been abysmal. Discos are just not effective and wasteful.

The best solution is to enforce prepaid meters to all consumers, you pay for what you use. Only then will these discos be incentivised to up their game.