‘Poor power supply will linger till value chain operations, local content Act are addressed’
Kola Balogun, is one of the founding members of the Electricity Meter Manufacturers Association of Nigeria (EMMAN). In this interview with FEMI ADEKOYA, he talks about the hydra-headed challenges confronting the power industry and how they can be addressed.
There are so many issues in the power sector that have not made the sector to perform optimally. What exactly are the lingering challenges?
The power sector is faced with lots of various challenges, that have to do with lack of ownership of the entire power sector value chain. In taking ownership, somebody must define a proper roadmap. So, what are the goals of the power sector reform? It is to ensure that power is made available to the general populace of Nigeria at a reasonable tariff, but today what we have is inter-agency rivalry and arrogance among the sectors’ stakeholders. One sector would want to make itself over others and it is important that the supervising ministry takes ownership of the entire power value chain.
The problems with the power sector are more than class-room exercise; they are meant for the people who are on ground and who know where the shoe pitches. We are promoting a technology that does not belong to us, we are supposed to promote a technology that is created in the country to address homegrown problem. Every nation encourages its peculiarities and then domesticate the technology capability.
Thank God that the Federal Government, recently, increased the tariff on imported meters, I am telling you today that none of the Meter Assets Providers (MAPs) has ever contacted operators for the 30 per cent local content meter manufacturing involvement, they go ahead to pay Chinese companies 70 per cent of meter importation order, but to pay for local company to supply meter is a problem. How would you encourage employment in the country and also address the deficiencies in the sector? How are we going to develop our technology capability?
Today, we need to enhance our infrastructure on the distribution value chain. Power generation is increasing tremendously as the Federal government is trying to spend more money on transmission. The distribution network needs to be improved and we are providing a way forward to be able to improve distribution infrastructures. We are doing so by ensuring that all the substations and all technical and commercial losses are reduced significantly to barest minimum in order to deliver power to the consumers. If you have meters in all customers’ premises and the network/ infrastructures cannot support to deliver power to them, it is a wasteful investment.
What is happening in the metering sector?
We are promoting a technology that does not belong to us, whereas we have our own developed technology, purely designed and made in Nigeria and can solve all our problems but they don’t listen. There are some ideological frameworks being imposed on us that is not supposed to be so. They are supposed to listen to us all and know our technical capability. They should promote local content in order to pass the message. The ministry needs to do more by calling all the stakeholders to define new roadmaps in optimizing the delivery of stable electricity to consumers at a fairly minimum tariff.
I am not against tariff review but then the power must be available to consumers and the meters must also be available. If you install one per cent of smart meters in a substation that has 90 per cent, you can’t do energy reconciliation with them. What we are saying under MAPs is that we want to install smart meters while the rest are not smart, how do you do energy reconciliation? That is why we are saying that the most important value chain in the distribution sector, is to do infrastructural and substations enhancement so that our substations will be stable and be devoid of technical and commercial losses and also to ensure that power can be made available to consumers’ premises.
We cannot solve the problem of Nigeria’s power sector by academic exercise, it is important that all the stakeholders have one mindset that our power sector must work. There is need for government to jail somebody for contravening the Local Content Act. People need to be punished for contriving the Act. If people contravene the Executive Order 5 of the local content, such should be punished because until some people are punished, everyone will not sit up and embrace the Act.
There is need for us to create an employment and the opportunity in the power sector can take jobless people off the street because there are some many items coming into the country that can be produced locally. It is in the collaboration of agencies and ministries that challenges in the power sector can be addressed. Enough of deceit in the sector.
The MAPs that was launched since May this year is suffering from slow implementation. It was also alleged that some power equipment imported into the country are still at the port due to high custom tariff. What is your position on this?
I am of the opinion that meter imported in to the country is a total contravention of the Local Content Act. If the regulation says you must patronize 30 per cent local content, you did not fulfil it but fulfilling 70 per cent foreign importation of meters. What do you call that? I am confirming to you that none of the MAP licensees has approached me to buy meter of 30 per cent provided by regulation despite singing an MOU. So, the 35 per cent level by Federal Government is a welcome development to increase local capability, however, it is a contravention of local content for them to even import meter without fulfilling the 30 per cent initial order from the local factory, and I’m telling you that local manufactured meters have passed all the tests required, validated and confirmed for consumption by all agencies responsible for the testing. That is mandated by metering code, they should pay for their negligence for importing meter without patronizing local operators, the local content act must be respected.
I don’t have problem with importing component and raw materials on which I still pay five per cent. Why would someone go and import meters without patronizing 30 per cent local mandatory specification by government? I can table my capacity if I’m encouraged and same goes to other local meter manufacturers. So, we need to sit down and find out on how to address the anomalies in the system. We need to develop our technological capability to address our power problem. Everybody should come and manufacture in Nigeria, we have what it takes in Nigeria to produce locally.
The regulation says that when you are to import 1,000 meters into the country, 300 must be purchased locally while 700 be imported only on the condition that local factories cannot meet up the 300 meters. Fortunately, we have the supply. Then, you must keep patronizing local company but our MAPs licensee would rather prefer to send money to China and neglect the local manufacturers. Meanwhile, if they want to deal with local company, they will be asking for credit. I have never seen this kind of people in my life. I have never seen where people will disrespect your local company at the expense of foreign companies, it is absurd.
How do you think government can enhance the local content in power sector just as it has been done in the oil and gas industry?
That is the responsibility of all the power sector agencies and the ministry of power should endeavour to call all the agencies including the manufacturers, Discos and sound it emphatically the importance of local content. The ministry also needs to chart a new road map in the sector on what we need to achieve on a timely basis.
How do you ensure that each Disco has a feeder for cost reflective, uninterrupted power supply and also ensure that feeder by feeder keeps improving themselves? That should be the new target.
There must be a centralized data-based system by the regulators to know the exact volume of consumers we have. It’s not by request but as one stock point where they can see all consumers of power sector, not just what the Disco gives. They should have supervisory council that will supervise the entire discos and of course, which we have the technology to do. The world is a global community that is growing significantly in technology and this means we should trend with them because we have all the intellectual that can do it.
We need one single spot data base to monitor the entire discos effectively with their performance and it should be pluggable and done locally because we have the strength and manpower.
The ministry should champion new road map of where to go, the road map should be target driven, this what will change the power sector. Defaulters should be punished and local content should be respected and target to all the discos’ performance should be defined.
Meter manufacturers are lamenting of low patronage, which negates the agenda of government in setting up MAP. How would you assess the patronage level?
It’s part of my earlier submission that our people do not respect local content, that is why the emphasis on defaulters of local content should be made to face the wrath of the law, they should not allow anybody who contravenes the Executive 4 Order 5 of the local content to go scot free.
Often time, people contravene the law without facing the consequences and that affects the implementation but such should not be encouraged. We need to define the slogan, that anybody who contravenes Local Content Act should be punished because if all the MAP licensees respected the Act, the factories will be busy and perhaps there will be more expansion. Now that there are levies towards imported meters, that can force any other Chinese companies to come and set up their factory. If these kinds of levies are imposed in virtually all houses and equipment, we would have built up other factories that produce television, decoder and others in Nigeria. If we don’t address the failure of the past, we cannot sustain the tomorrow we want to build. It is very important that we address what makes the oil factories fail and be able to manage and maintain the new one we plan to build.
We need to ensure local content remains and to improve on the power sector, everybody should respect local content. Everything produce in Nigeria must be consumed herein and anybody who defaults must be punished. Until somebody is jailed for contravening local content, nobody will see Nigeria as serious.
Do local meter manufacturers have the capacity to meet the market demand?
The same question was what some foreign investors who wanted to set up factories in Nigeria asked me. They say that the few factories set up in Nigeria have not been optimized to full capacity. First and foremost, we must prove that these people are not fulfilling the local requirements. Let me tell you the procedure of ordering a meter, if you want to order a meter from China today, you will be asked to pay 30 per cent, before the shipments, you will be asked to make the balance of 70 per cent and that period will take minimum of three months but if they want to buy from the local companies, they will not give notice. What you have is that they want to pay money and collect immediately, as we speak, I have over 20, 000 meters manufactured in my factory.
To borrow N5 billion from bank was not easy, I cannot continue to produce when I am not sure of patronage or noting from the Map licensees, these are the issues we need to address. We must ensure everybody respects the sanctity of local content because we have the capacity to produce more than what we have presently and we can grow it but the capacity has not been stated.
The ministry of power needs to investigate if truly we cannot meet the target just as they are doing to foreign factory. We are under-utilized, we need the intervention of all the agencies in ensuring they drive local content because that is the only way to solve the problem of power sector. The solutions are here, we need to be given the opportunity to implement it