FEATURE ARTICLE

Alfred AisedionlenFriday, August 31, 2012
[email protected]
London, UK

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FOR ADEQUATE ELECTRICITY AND LANDLINE TELEPHONE IN NIGERIA

t is only of recent the Federal Government appears to approach the issue of electricity problem in our country, Nigeria, with apparent seriousness. Before, the Government never thought about execution of any required expansion and modernisation. We do not need to remind anybody that electricity and landline telephone are essential need in the country for which we ought to have a continuous plan and action. Such plan should embody the amount of electricity we need at a given level of population, development and the economy.


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Although it is the responsibility of the Federal Government through the Power Holding Company of Nigeria (PHCN), it is of national interest for the Federal Office of Statistics to collect information as to the rate of our electricity usage. This should be projected into different phases of population growth and development in the country.

In a country where elections are not rigged; there is right leadership and right people in the Government; the ruling class is not corrupt and willing to execute honestly; were there the right plan and action as to the amount of electricity and landline telephone we need at each point in time; today we would only be implementing in advance the plan of the next phase as we approach it in order to meet the need at the given time, which would have been minimal.

Today, earning from natural resources is said to represent 80% of the country�s total revenue. With full capacity electricity and landline telephone, with the huge population, as many Nigerians are generally hardworking and entrepreneurial; earnings from natural resources would only form about 30% of the country�s total revenue. That is, as earning from natural resources is maintained at the present level, the country�s total revenue will be 2.67 times what it is now. Earning from natural resources would not form the critical and dependable fund.

We have different types of mineral in our soil. If these are extracted adequately and efficiently PHCN should be able to maintain adequate and cheap electricity supply by using them as raw materials. We do not need to embark on sophisticated and dangerous methods such as nuclear energy project in order to generate adequate electricity in the country. In as much as we need adequate electricity we must also take measure to safeguard our health, environment and future of the country. We may have leant by now that no nation can be built or advance economically and technologically without adequate and reliable electricity supply and landline telephone, on which the facilities that facilitate productivity today depend, more than ever before.

In the event we are unable to generate enough electricity in the country to meet our need, we should make provision to buy in the shortfall elsewhere from already generated electricity. With this, the country will never be short of electricity supply. Today many European countries that were using this in small scale to obtain generated electricity from thousands of miles outside their shores have now embarked on it in large scale. This is in anticipation of meeting their projected future need of, cheaper, electricity.

The measure was also informed by their desire to gradually phase out the use of coal and nuclear plants. They have discovered that adequate electricity can now be tapped successfully from underground rocks, volcanic activity, coal and gas. This is without the normal mining and extraction activities. These are the new technologies that are coming upstream. As the Federal Government has dragged the execution of its National Integration Power Project (NIPP) for more than ten years now without completion, it may soon become an old technology even before completion, where spare parts for its maintenance are costly and difficult to obtain. The Federal Government made things difficulty for itself in the process of the provision of adequate electricity and landline telephone. Before the Government embarked on the current new NIPP that is today apparently stagnant and which trillions of Naira is being sunk yearly, it ought to have left the existing plants intact. The Government ought to have fully maintained the plants while the new project is being executed and to be switched to only on its completion. But the Government and its PHCN neglected the plants. The new machines and equipment that were bought for their maintenance were left to rot while electricity supply in the country deteriorates.

Different parts of the country require different amount of electricity usage. The NIPP, which is geared towards sufficient electricity, ought to have first been established on zonal basis. The project ought to have first been completed in the areas that need and use electricity most in the country rather than to have taken on the whole country simultaneously. For example, the new plant would have been first installed in Lagos State, Niger Delta and Abuja, the most economic hotchpotch of the country, while the rest of the country depends on the existing plants. But it is only on completion that the network should be connected on a national grid, perhaps, to feed one another where the other is short of generated electricity.

For us to maintain full capacity electricity, we need to have at each designated zone a large generation plant with capacity to supply the area. This should be supported by the existing smaller plants in the zone as substations. Where the main generation plant is not in operation, the substations generation plants would assume temporary or relief supply. In this respect, Lagos State, Abuja, South West, South East, Mid West, Niger Delta, Middle Belt West, Middle Belt East, North West and North East should each be a designated generation zone. In times of shortfall in a zone, it can obtain electricity supply through the national grid network.

Both PHCN and NITEL (Nigeria Telecommunication) corporations are monopolies in the country. They ought not to have any serious problems, financial and otherwise. The problems in these Corporations centre on poor management, maintenance, organisation, revenue collection and corruption. It is not as such lack of fund for investments in the corporations. The ability to manage successfully is there in the country but the tendency to manage honestly is not there. To be in senior and strategic post in our public corporations, you have to come from the privilege class. It is not that these people do not necessarily have the requisite educational qualification but they lack the requisite training, experience and ability to manage. They are untouchable especially when they do not perform or when fund are not accounted.

How can a plant work if the component part that is due to be replaced is not or replaced with a substandard spare part? How can a plant work if when it is due to be serviced it is not? How can the corporations that are monopolies in the country and supposed to have abundant fund but cannot generate fund? All these are because of poor management, bad debts, poor collection and misuse of the collected fund. With more than the sufficient revenue the monopoly corporations generate, they should be self financing. But majority of their major customers do not pay their bills. These are generally the Federal Ministries, Departments and Agencies, National Assembly, State and Local Governments. The private sector debts of the corporations are minimal.

The inability of PHCN to give sufficient electricity to the country or NITEL to provide adequate and efficient landline telephone is not as a result of the public ownership but a management problem. The two corporations were and are short of the right management and proper Federal Government supervision. The other problem of PHCN is not as such the generation and transmission of electricity. The problem of NITEL is not the cable system for telephone lines. Their main and other problems are distribution and collection of bills.

Here it will be better for the country if the Government handles the generation and transmission aspects of PHCN and the cable system aspects of NITEL than the private sector. This is because the two are capital intensive. As at today and the way the private sector still is in the country only the Federal Government can sufficiently and cheaply provide their fund. They do not require frequent major investments but necessary maintenance, high level staff and management. The private sector would better handle the distribution aspect of both PHCN and NITEL which is less capital intensive, requires retail management and generally low level staff.

Therefore, in our quest to restructure the two public corporations, the electricity generation and transmission aspects of PHCN and the cable system aspect of NITEL should be 100% public owned. But the distribution aspects of both corporations should be100% private owned. This is where the public owned generation and transmission aspects of PHCN sell the generated electricity at wholesale price to the private distributors. The public owned cable system of NITEL would lease or rent the related telephone landlines to the private telephone companies. These private concerns would then distribute to the final consumers and collect their bills. That is only the distribution aspects should be privatised.

We live in a tropical climate that carries heavy storms, rainfalls, thunder and lightning. We should now use this opportunity to lay the electric and telephone cables together with their distribution wires under the ground. These should be done especially in the built up areas, cities, towns and villages. Some of the valid reasons for this are that electric cable carries heavy load of magnetic field and this is more exposed when it is connected over head. It is not only very dangerous but also a health hazard to those who live very close to the line. Overhead cable magnetic field is capable of attracting thunder/lightning that can cause fire and thereby disrupt the flow of electricity. It is liable to be damaged by heavy storms. We have already experienced a number of casualties from electric poles fell accidentally by heavy rain and storm. This must not be allowed to repeat by retaining overhead electric cables and wires. Moreover, underground electric cable layout makes the environment tidy.

However, the public owned PHCN generation and transmission and NITEL cable system would be responsible for underground layout of their main cables throughout the country. This is a function you carryout once in many years of the life of the transmission cables, other than sporadic repairs when necessary. The private distribution companies would be responsible for the underground layout of their individual supply cable lines to their individual customers.

To privatise only the distribution aspects of both PHCN and NITEL corporations, each should be broken into say about six different private distribution companies. Each of the companies should have ability to operate in many parts of the country. They should be capable of being quoted at the Nigeria Stock Exchange. The shares of the distribution companies should be sold to the general public. They are public owned. The public has the first and foremost rights to buy the shares of the privatised distribution aspects of the corporations. There is no need for all these biddings that would end up in one or few do nothing hands. The realistic price or market value of each of the distribution aspect of the corporations should normally be the nominal price plus premium, which the general public would subscribe.

In the process, individuals should buy equal and a limited number of shares. This should be about 25,000 shares per person. The buyer can only sell the shares after a determinable period. The individual private subscribers for the shares of the distribution aspects should come equally from each of the six geo-political zones in the country. With these types of arrangement, the Government would get the right fund from the privatised distribution aspects of the corporations. There will not be any controversy about the price, sales and ownerships.

For example, if the realistic value of each of the distribution aspects is say N300bn or $2bn and the nominal share price is N1 each, the total shares will be 300bn. At 25,000 shares per person, you will get 12million subscribers. If the shares are sold at nominal price plus premium say N2 each, you would raise N50,000 per subscriber. The total sales revenue would be N600bn or $4bn. (300bn shares x N2 = N600bn), (N600bn/N150 = $4bn). Is it not better to privatise the distribution aspect of PHCN and NITEL in this manner? The actual amount of fund needed for the two corporations would be realised. Compare this with the very much lesser amount which each of the whole PHCN and NITEL are about to be given away by the Government.

The number of shareholders for each distribution industry could be reduced from12million to the number the Government desires. If the shares per subscriber are:

  • 25,000 shares at N2 each = N50,000 then you will have 12million shareholders.
  • 50,000 shares at N2 each = N100,000 then you will have 6million shareholders.
  • 100,000 shares at N2 each = N200,000 then you will have 3million shareholders.

With any of these the Government would still obtain the N600bn or $4bn price tag above.

However, with the fund that is already at the disposal of the Federal Government and this method of shares issue, the necessary fund needed to fully finance each of the corporations� projects to give us full capacity electricity and landline telephone that are actually needed now could be met. Many Nigerians would find it easy and cheaper to buy shares this way. They will be proud to own shares in these companies with assured market, revenue and whose shares value would not be at a loss anytime at the Nigeria Stock Exchange. Those Nigerians abroad who understand share ownership and the related trade quite well would rush to buy through their families and relations that may not afford to buy.

Were the previous privatisations in the country carried out in this manner through public share issue, we would have been able to raise the right and huge amount from them. The general public shareholders would have been able to appoint the right management for the companies. They would have been able to supervise and monitor the companies for continued success. How many of the previously privatised public establishments at give away prices to selected few and privileged individuals are today still in the same business? They have stripped the assets of the companies, disappeared and left an army of jobless and empty treasury for the country.

As I always say the means to do what we need to do are at home with us. Whatever the situation today, Nigeria can still boast of a sizeable relatively economically active populace. Even if the Government does not have the cash in hand now to execute the full capacity new projects of electricity and landline telephone, it could borrow from the foreign reserve fund and replace the money as soon as subscriptions for shares are collected. With these means, we do not need to wait for the year 2020 before we have full capacity electricity and landline telephone if at all. But on what would the country, her development and economic growth depend till then? Without adequate electricity and landline telephone we are going nowhere economically and technologically.

Alfred Aisedionlen. London, UK. ([email protected]). First published here at nigeriaworld.com on 23rd May 2012.

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