DISCOS And The Case For An Encore For Fashola
By Segun Odunuyi
Way back in the 60’s and 70’s in Lagos, Discos – short for Discotheques – were the places to be on Friday nights when the weekend spell of fun and entertainment took off in earnest. At the Disco parties and clubs, you really let off steam, gyrating wildly to the heavy bass and percussive beats of recorded pop music.
Fast forward to here and now in Lagos. The word “Discos”, to the average Lagos resident, now evokes anything but fun. Rather, it evokes the terrifying image of the bogeyman from the Power Distribution Companies (DisCos), who arrives at your homes monthly with his package of “double jeopardy” in the forms of electricity bills for energy you have most probably not used – called estimated billing – and an unending reluctance or incapacity to provide you with meters -or “pre-paid meters” in popular parlance- which, at least, enables consumers to pay for the quantum of energy consumed.
Clearly, drawing from the drift of the national conversation on the performance of the power sector, the Discos have been and remain the weakest link in the power value chain. In a recent interview, Usman Mohammed, the Managing Director/Chief Executive of Transmission Company of Nigeria (TCN) declared that “we cannot have a stable grid (electricity) unless we have an adequate investment on the distribution side and that is why TCN has been calling on the Discos to be recapitalized.” The TCN, like the Discos, is a creation of the unbundling of the former Power Holding Company of Nigeria (PHCN) in 2011 under the 2005 Electric Sector Power Reform Act, which privatized the nation’s power assets.
When he emerged on the power scene in November 2015 as the Minister of the three-in-one Ministry of Power, Works and Housing, which constituted about 80 percent of the basic physical infrastructure on which hopes for the revival of the then comatose economy rested, Mr Babatunde Raji Fashola was still basking in the public adulation of his exceptional performance as Executive Governor of Lagos State. His appointment by President Muhammadu Buhari to oversee such a “super-portfolio” elicited vehement protests from some quarters but Mr President knew that he had hit on the man to oversee the revival of physical infrastructure to drive the resuscitation of the economy..
From the 2005 Act and the subsequent unbundling also emerged entities like the National Electricity Regulatory Commission (NERC), the all-powerful regulator and licensor, and the Power Generation Companies (Gencos) who buys gas from the gas companies to produce power and sells to the Discos who rely on the TCN to get the power to their substations and distribute to homes and factories in their allocated distribution areas.
The “sin” of the Discos, then and now, is that they have never been able to fully evacuate the power load generated by the Gencos. The result is that there is a perpetual gap between power demand and supply and hence the power outages. The irony is that, contrary to popular impression in the media and among energy consumers, Fashola does not supervise the Discos. They were not licensed by his ministry but by the NERC which does not report to the Minister. So, Fashola, cannot, for example, withdraw the licence of a non-performing Disco or alter the terms or scope of operations of such licensee. That apparent absurdity in supervision was a product of privatization. Still, the minister had to navigate his way around such limitations and others to deliver on his agenda for profound and enduring change in the sector.
And, going by the incredible strides and achievements he has demonstrably notched up in just there and a half years to fast-track infrastructural development in Nigeria, Fashola’s performance has been top-drawer. But as he has stated often, the journey he had patriotically and passionately embarked upon was a “marathon and not a sprint”. Clearly, there is still a lot to do and accomplish if the Buhari government must equal or even surpass the spirited and enduring physical infrastructure development feats of the General Yakubu Gowon regime in the late 60s and 70s. Fashola undoubtedly deserves an encore on the second term Cabinet of the Buhari Administration, to reach a greater distance in the “marathon” especially in the power and works sectors.
It had not been easy, though, for the man once dubbed “the Actualizer” when he was at the helm of affairs in Lagos State. Indeed, Fashola must have been jolted by what he inherited in the power, works and housing sectors: structural rigidities, convoluted supervisory arrangements and crippling underfunding amidst huge liabilities to contractors, amongst the many unenviable legacies of the long and mindless neglect of the country’s primary and secondary infrastructures. But he also had a free hand from Mr President as well as his own his vision and rare capacity to understand, dissect and proffer solutions to knotty issues; his legendary fervor for long and hard work and, of course, a number of able lieutenants. He was not about to fail on his set deliverables.
Take the power sector. Fashola knew he had to, literarily, “crack the DNA” of the seemingly intractable power sector, which is the livewire of industry, by introducing fresh ideas. He did not take long to arrive at his eureka moment, and he set out to deliver to the following goals: increasing power generation from the 4,000 MW the administration met at inception, to a peak of 7,000 mw, in order to achieve “Incremental Power” -as the first visible and practical results of new initiatives; ending the mind-budgetary under-provisioning in order to get abandoned projects back on track and to execute new power projects , and improved interface with power stakeholders and consumers to secure the critical buy-in for the ministry’s road map . After three and half years in office, Fashola and his ministry have delivered satisfactorily on all these power sector goals.
Under Fashola’s watch, the initiatives which have driven the “Incremental Power” phase of his ministry’s road map include the promotion of off-grid connections and licensing of private Meter Asset Providers (MAP). The result is that, nine universities in the country will have 24-hour supply by the end of the year while major markets across the country, including Ariaria, Sabon Gari, Sura, Iponri and a couple of others in Ondo and Ibadan now have reliable power supply from the off-grid model. Twelve private meter providers have also been licensed to roll out from May 1, 2019 nationwide in a move that will help assuage vociferous and unending consumer protests against the present regime of estimated billing by the Discos.
Budgetary allocations from 2015 till date have also reflected the administration’s success in breaking from the mold of the past, when promises to bridge the nation’s gaping infrastructure deficits were mere political statements totally unmatched by financial provisions and commitments. In 2015 the total budget for the Power ministry was a N9.06 billion with about 50 percent or N4.47 billion earmarked for salaries and other recurrent expenses, leaving a paltry N5.13 billion left for capital expenditure. That sum could barely fund 22 out of the 142 outstanding transmission projects valued at N40 billion which Fashola met on ground.
Such budget under-provisioning was, indeed, the fate of the ministries saddled with infrastructure development, a recipe for abandoned projects and worsening of the infrastructure deficit. The Muhammadu Buhari administration halted the trend. From its very first budget in 2016, the government raised the pathetic N93.66 billion for Power, Works, Aviation, Transport and the Federal Capital Territory in 2015 to a healthy N433.4 billion the next year for Fashola’s Works Power and Housing ministry alone. Indeed, by 2018, the government, even in the face of other pressing obligations and dwindling earnings, had spent a whopping N2.7 trillion on infrastructure in three years, an unprecedented record.
And, unlike the past when the nation has had little to show for the billions of naira expended on infrastructure, demonstrable and visible results have emerged under Fasola’s watch. Yes, power outages still subsist, no thanks to the Discos who lack the capacity to evacuate power load generated by the Gencos. The difference now, however, is that today with Fashola’s “Incremental Power”, the consumer knows he does not need to wait endlessly for power to be restored. Now, unless there is a major transmission fault in his locality, power is back soon for the consumer’s use after an outage. So, consumers now run generators for shorter periods and spend less money on fuel to power their generators. This is a far cry from the situation up till 2015. Under Fashola’s watch, power generation has increased from 4,000 MW to 7,000 MW and distribution from 2690 MW to 5222 MW as at November 2018.
Meanwhile Fashola has initiated and led a bold effort to help out the problematic Discos by proposing and securing a N72 billion funding from the federal government, which owns 40 percent states in the Discos, for the distribution companies to invest in their equipment and operations in order to evacuate excess power. With this, the gains from the “Incremental Power” phase of the ministry’s road map will improve significantly since power outages should be fewer.
On the works front, Fashola got contractors back on site at hundreds of abandoned road projects. Indeed, by the beginning of 2017, work was going on simultaneously on at least two roads in each of the 36 states of the federation. The roads, including the seemingly jinxed Lagos-Ibadan Expressway, were mainly strategic arterial roads connecting states and major cities, with significant socio-economic benefits in the nation’s six geo-political zones. Construction and rehabilitation of roads involving 565 contracts are currently on-going across the nation under Fashola’s watch.
The minister’s strategy on housing growth strategy was hinged on the pilot of a National Housing Programme in 34 of the 36 states and FCT that had provided land for the scheme. Ongoing construction of different models of houses across the nation with at least 1,000 people – artisans, vendors, craftsmen and suppliers – engaged in each of the sites. Characteristically, Fashola has also sought the buy-in of the private sector by creating a better enabling environment for their participation in housing construction and development. Equity contributions for prospective home owners seeking mortgage loans from the Federal Mortgage Bank of Nigeria (FMBN) and the Federal Housing Authority (FHA) have been slashed drastically to provide easier access to housing. The institutions, which are parastatals under Fashola’s ministry now require zero percent (from 5 percent) contribution from those seeking mortgage loans up to N5 million and 10 percent (down from 15 percent) from those who want loans of over N5 million.
Even with the prodigious achievements he has notched up in the first term of the President Muhammadu Buhari’s administration, Mr Babatunde Fashola , the Honourable Minister of Power, Works and Housing, still has quite some distance to cover to reach the finish line of the “marathon“ which his ministry’s infrastructure road map has been. An encore for him on the next Federal Cabinet is what the nation deserves. Never mind the Discos.
Segun Odunuyi is a Lagos-based public commentator.