Wednesday, December 8

Developing gas infrastructure will help create employment and expand the economy – Senator Gabriel Suswam


A former governor of Benue State and serving Senator of the 9th assembly of the Federal Republic of Nigeria, Senator Gabriel Suswam has disclosed that the federal government is actively involved in developing renewable energy sources in terms of solar and wind energy (which is still on trial in Katsina) to plug the deficit in the nation’s power sector.

Senator Suswam disclosed this in an exclusive interview with Nairametrics.

Suswam, who is the Chairman of the Senate Committee on Power, also stated that the Mambilla power project, which has been on the drawing table for the past 40 years is still on hold as the new Chinese financiers have refused to proceed with the contract until pending court cases are resolved.

Excerpts of the interview

  • The new Minister of Power, Mr Abubakar Aliyu appeared before your committee to defend the budget for the Ministry. Tell us a little more about that.

Abubakar Aliyu has just been moved to the Ministry less than one month ago, and the budget was put in place before he assumed office as the new Minister and I don’t think he had received a complete briefing before the president submitted the budget to the National Assembly.

Having said that, the monies in question are actually loans, multilateral and bilateral loans that are tied to some projects outside of Zungeru which had about N42 billion, there are other monies totalling N219 billion.

Now we’ve written a letter to them for them to explain to us those projects, it’s a lot of money and they put these monies almost every year, we don’t know these projects, whether they’re ongoing or whether they exist at all. So we need to know the details

  • Your committee is supposed to perform oversight duties over the Ministry, don’t you get regular updates about projects done?

That is the crux of the matter. Outside of Zungeru, but the other ones, they just say multilateral tied projects going on in the country, no specifics. So we’ve written to them if we are collecting huge sums of monies as loans, we must know the projects.

  • Let’s talk about Zungeru, in the 2021 budget, it was there for N25 billion, now they’re asking for N42 billion. Is that justifiable?

The money spent on Zungeru is justified, it’s 90% completed. The Minister wants it commissioned by December but I cautioned that because of the insecurity, we should wait till early next year. The monies in the budget are to pay back those loans.

  • Let’s talk about the loans. The executive always ties them to different projects, when you look at it especially the power sector, would you say they have been justified so far?

First, I am not a supporter of taking loans now and then, when you take loans and the projects are not coming, it becomes a challenge. I know that it takes time to bring out any infrastructure but then for so many years, loans have been taken and there’s very little that is commensurate with what has been taken.

  • You undertook a probe on the power sector last year. Can we talk about some things revealed specifically by the Mambilla power project probe?

The Mambilla story is a sad one. For the past 40yrs the project has been on the drawing table; Government in, Government out. Nothing concrete on the ground.

This administration went on to sign a contract with three Chinese companies. The Chinese companies were supposed to bring in the bulk of the money; over $5 billion. Nigeria was supposed to bring about 15%. Once that contract was signed, an issue came up. There was a previous contract signed by another company. That company went to the court of arbitration in Paris where a sum of $200 million was awarded against Nigeria.

The Chinese with the new contract said if there’s a court case on this project, they will not commence the project until that is settled so that project is on hold. There are efforts the new minister says are being put in place but for now, it’s on hold.

  • What about all the monies that have been spent on the power sector since it was privatized? The country still does not have power.

In 2005, former president Obasanjo brought a bill before the national assembly which was passed to enable the Government to privatize the power sector. The generation part of it was privatized 100%, the distribution was privatized 60% leaving 40% in the hands of the government. It was concluded in the Jonathan administration.

The essence of privatization was to promote efficiency. Unfortunately, it was given to people, most of whom had no capacity to invest heavily in it to improve efficiency in the sector. The privatization did not achieve the initial intention.

The generation part of it doesn’t have as many problems, though they were supposed to ramp up generation. We have about 12,000 megawatts of electricity that are supposed to be generated but transmission is unable to evacuate even 5,000 megawatts. That is where the Siemens deal came in when the president met with the German chancellor.

Siemens should intervene in the area of transmission and distribution to improve the infrastructure deficit. That also has become a story because we don’t know where we stand on that. It hasn’t kicked off but it’s still on paper.

  • Let’s talk about the rural electrification project, did you get to perform your oversight function on that?

Rural electrification is across the country but there are a lot of challenges with that. Electricity network to rural areas is a herculean task because of the network infrastructure.

The Government has introduced renewable energy in terms of solar. They are doing solar home systems that each household can operate independently of any network. If they deploy that, in the next year, you can have 80% of Nigerians with access to electricity.

Katsina is trying a windmill, it’s not yet popular but solar can be used by anyone. There are pilot schemes that have been tried in some parts of the country and people are paying. As long as people are certain of electricity, they will pay.

  • Do you know some places where these schemes are on?

A market in Ibadan, a market in Kano. I have also just completed two solar mini-grids in Benue, they’ll be commissioned soon.

  • You once complained about Nigeria not having proper data. Do you think this is still the problem?

It is a huge problem. There’s nowhere in the world proper planning takes place without quality data. What we do here is extrapolation. For example, it is assumed 6 million people are without meters, that is an assumption that is predicated on nothing. Out of 200 million Nigerians, you say 4 million have meters and 6 million are without meters. Does it mean only 10 million Nigerians are connected to the electricity network?

  • You have been talking about renewables like solar but one resource Nigeria has in abundance is gas. Are we tapping into that enough?

It’s expensive, to build a gas plant, it’s hundreds of millions of dollars. To build a solar mini-grid is about a N40 million which anyone can do. President Obasanjo built ten thermal plants that are all situated in the south close to the source of the gas.

They are still functioning. Four of them are up for sale, and by early next year, they would be put in private hands. Developing gas infrastructure is not just about power plants, it will help create employment and expand the economy. There’s a gas infrastructure plan that was jettisoned a long time ago, it’s just for us to develop it.

  • Can you talk about the new electricity bill you sponsored, it is supposed to repeal the electricity reform act of 2005. What does the bill address and when should we expect it to come to fruition?

If not for the budget currently before the national assembly, we would have had the public hearing. Nigeria does not have an electricity act, what we have is an electricity reform act that was put in place to enable the government to privatize the sector. About 24 provisions in that act have become invalid since the decoupling.

If we have an electricity bill, it will give investors confidence. Anyone who wants to invest in the power sector knows he has legal backing that can protect his investment. After the budget, we will have a three-day public hearing early next year.

  • Oversight of agencies in the power sector like NERC is also under your purview. NERC has decided that tariffs need to go up and it has been agreed that we do not pay enough for power. The Senate has intervened a few times, doesn’t that negate NERC as an independent agency?

When you say NERC is independent, it does not mean they can operate arbitrarily. They’re under checks and balances. NERC operates a tariff system called MITO, a multi-year tariff order that gives them the power to, within a year, adjust tariffs from time to time. The increase is necessary but in doing that, they need to be mindful that people are already heavily burdened, with covid, people out of jobs, inflation, then you add the increase in tariffs in an arbitrary manner, that would be a problem.

That is why we intervened. Not that we say they shouldn’t increase tariff, we are still talking to them. There is a basic problem though, for example, the people operating thermal power plants, buy gas at the international market price, it is priced in dollars and dollar rates fluctuate. We are mindful of the fact that this is also a business.

  • Let’s talk about metering. The Federal Government talked about distributing meters. Estimated billing is a problem, is that something your committee is looking into?

Yes, we intervened in that space. The FG decided to step in. N59 billion was set aside, Discos were invited and given these monies to get meters into the country. We insisted people on the electric network must be metered as they were exploiting people, this way the Discos recoup their money and people are not shortchanged.

The metering program has not gone as well as expected, we hope that by the 1st quarter next year, they would have done quite a bit. There’s a phase one where the Federal Government said you can, import meters, but phase two of it is that it must be bought locally. The Discos are mandated to buy only from local manufacturers.

  • The president presented the 2022 budget, there’s a deficit of about N6 trillion, the president has talked about borrowing more next year. Do you think we are in a debt crisis?

We are deep in it. The problem with deficit is that if we had a budget deficit, with well-defined financing items, that gives some comfort. But the financing items in most of our budgets are speculative. What you see as N6 trillion of deficit is far more than that.

Budget proposals are usually assumptions but when you have speculative financing items in a budget, it’s cause for concern. Our deficit at all times far exceeds the ‘fiscal responsibility threshold’ which is a law we put in place that if we borrow, our deficit cannot go beyond a certain threshold and we’ve gone beyond it.

It is not sustainable, how can you borrow money every year to finance the budget? That is what is happening now. We are already in a crisis.

  • Why does the senate keep approving these loans?

You see the politics of it is that you bring a budget and then you say you don’t have money and you have to borrow money to implement it. If we don’t approve it, Nigerians will say we are the ones who don’t want the budget financed. When we insist on not approving, they don’t present any other options because the economy is not being run properly.

The deficit of last year was over N4 trillion, I said it on the floor that the way we are going, it is going to increase and now it is more than the N6 trillion stated. We are in a quagmire!



nairametrics.com

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