12th December, 2015
Following intensive on-going ministerial briefings, meetings with parastatals and agencies as well as critical concerns in the sectors under the purview of the new Ministry of Power, Works and Housing, Mr. Babatunde Fashola, along with the Minister of State, Mustapha Baba Shehuri on Tuesday set an agenda and outlined strategies for achieving short, medium and long term goals in the three critical sectors of the economy under the ministry.
In his inaugural media briefing at the Ministry of Power, Works and Housing, with the theme,“Setting Agenda for Delivering Change”, Fashola picked his bearing from the huge expectations of the Nigerian public who voted for the All Progressives Congress (APC) message of Change and elected President Muhammadu Buhari to office.
Having promised to address the challenges of security, corruption and dwindling economic fortunes of the country, Fashola noted that the cooperation of Nigerians was needed in order to achieve the expectation with the Ministry playing its expected role in the process.
In analyzing the current situation, the Minister blamed the economic downturn that has led to massive loss of jobs in the country, to the anomaly in budgetary expenditures over the years, and said in order to achieve the needed change in the economy of the country the ratio of Capital Expenditure to Recurrent Expenditure must change in the 2016 Budget, adding that this had been the bane of budget implementations in the past.
“The first thing that must change is the Capital to Recurrent ratio of the budget, and our colleagues in the Ministries of Finance and Budget and Planning are working on this and they will address you at their own time on the changes they have made and what citizens must do to enable them achieve that plan. As I have had cause to say before, the budget is the article of faith of every serious nation and government and our resolve to do more capital spending with less resources must be indicative of our seriousness to reflate this economy,” the Minister said.
“The records that have been made available from previous budgets show that the last time Nigeria budgeted over N200 billion in a year’s budget for roads was in 2002. It seems that as our income from oil prices increased over the last decade, our spending on roads decreased,” the minister, said noting that the Federal Government budgeted N18.132 billion in 2015 and the Ministry of Works got N13 billion for all roads and highways in 2015, although it has contracts for 206 roads, covering over 6,000km with contract price of over N2 trillion.
Fashola who expressed regrets that jobs have been lost in the road construction industry which affected the Gross Domestic Product (GDP) results, promised that contractors handling road projects across the country would be paid the arrears owed them to enable them recall sacked workers, pointing out that the anomaly was created “simply because we did not budget enough for Capital expenditure and contractors were not paid”.
In order to reverse the trend which had incapacitated many Nigerians, the Federal Government would take some short term measures, including the payment of contractors handling various projects across the country to enable them recall their workers back to work.
“By paying these contractors we will restore the lost jobs as an economic intervention of our promise of change,” Fashola said, adding that the intervention would start from the contractors handling the Lagos-Ibadan expressway and work across Nigeria gradually.
Giving insight into the problem created by the anomaly in budgeting, the Minister recalled that as at March 2015 the sample of job losses from only five out of thousands of construction companies showed that in Company 1, the number of junior staff fell from 1800 to 1250 while Senior Staff strength fell 550 to 300 and expatriates from 500 to 250.
According to him, in Company 2, local staff strength was reduced from 3000 to 1500 and expatriates strength fell from 100 to 50 while in Company 3, staff strength fell from 2500 to 1100 with more likely to go and in Company 4 local staff number fell from 4500 to 3000 while number of Foreign workers fell from 250 to 100. “By the end of September when budgets had been fully exhausted these numbers worsened,” he said.
Recalling that a particular company had laid off 4,000 workers because Government was owing N3 Billion, Fashola declared, “Our short term strategy will be to start with roads that have made some progress and can be quickly completed to facilitate connectivity. We will prioritize within this strategy by choosing first the roads that connect states together and from that grouping start with those that bear the heaviest traffic”.
The Minister, however, regretted that because of the budget and financing structure in 2015 and with only 17 days to Christmas, his Ministry could not honestly promise those travelling for the festivities shorter journey times this December adding, “But we are optimistic that with works hopefully resuming next year, things should improve over the next few months and progress”.
He said the successful implementation of his Ministry’s plan to remove human and vehicular obstructions and impediments from our highways would signpost the early signs of benefits of journey time improvements that commuters should expect, adding, however, that this would be as much the responsibility of citizens as that of government. “The removal of settlements under federal bridges, along federal highways needs the buy-in of all governors and the leadership of the Federal Government,” he said.
In the Power Sector, Fashola said his Ministry’s first priority would be to get contractors to finish on-going transmission contracts to enable the Ministry transport the power being generated to the Discos to distribute, adding that the second priority would be to ask the Governors to identify and enumerate their most populous industrial and commercial clusters where manufacturing, fabrication, welding and related productive work is going on.
“Our second priority is to ask the Governors to help us identify and enumerate their most populous industrial and commercial clusters where manufacturing, fabrication, welding and related productive work is going on, especially by small businesses and to see how we can use the existing Legal framework to attract embedded power supply to these people who must be ready to pay for the power,” he said.
The Minister, who disclosed that in 2015, out of the N9.606 billion budgeted for Power, N4.476 billion was for recurrent expenditure to cover salaries and overheads, while N5.130 billion was for capital expenditure, supposedly for on-going projects, noted that this was not enough to complete only 22 of the 142 existing transmission projects estimated at over N40 billion.
“Apart from these there is a 10MegaWatt wind energy project in Katsina nearing completion, a 215 MW plant in Kaduna and the 3,050 MW plant in Mambilla Taraba State all of which need to be completed,” Fashola said, adding that in such cases, the tariff may be higher than the current official tariff, but it would be “many times a significant improvement on what they have and we will need the collaboration of the Discos to achieve this.”
The Minister said the Discos could move them from self generation which, according to him, does not deliver all round electricity, to a place where they would get over 90 percent predictable and reliable power to run their businesses.
“We have success stories and experience to work with from some successful small independent power projects in places like Lagos, in Isolo industrial estate, Lekki Free Trade Zone and Aba to mention a few, and we can expand on these,” Fashola said, adding that owners of the Discos would be expected to co-operate “through flexibility and innovative disposition for emergency interventions while they plan and develop their wholesale roll out plan.”
Fashola, who noted that the Federal Government is now a regulator through the National Electricity Regulatory Commission (NERC), declared government’s intention to strengthen this part of its responsibility “so that we can hold the Gencos and Discos to their contracts with citizens,” adding, “But before we do that, we must play our own role of providing gas and expanding the Transmission Network.”
He further pledged that as a government and consumer of power through the ministries departments and agencies, governments must show example at federal, state and local levels by paying up backlogs of power bills and ensuring from there that they pay for what they use.
“Our ministry intends to champion this at the Federal Level and I hope that the State Governors, heads of parastatals, National and Sate Assemblies, the various State and Federal Courts, Local Governments, Military, police, and other related security agencies will find this a worthy undertaking to join and ensure payment of all their electricity bills,” the Minister said.
Pointing out that the nation’s economy could not wait indefinitely and suffer job losses, the Minister declared, “If we succeed, we can get a lot of workers back to work in cottage and small industries which are the critical driving forces of our economy,” adding that the foregoing represented the highlights of the Ministry’s roadmap to delivering the change Nigerians voted for in the short term.
He disclosed that his ministry would expand and enlarge transmission lines, which according to him, “are what we locally call ‘High Tension Wires’ which run on high towers across our country over land and over water” transporting power across the country. “We will do what any serious passenger operator must do. Get additional buses to carry the waiting passengers and plan to buy bigger buses for the additional passengers that are on the way, that is the extra power that is coming. That is what TCN has to do,” he said.
In the Housing sector, Fashola said the priority would be to complete on-going projects, adding that the Ministry would then get land from the Governors in all states and the FCT to start the housing development across the country using the LagosHoms model, starting with 40 Blocks of Housing in each state and the FCT.
“We expect State Governors to play a critical role here, by providing land of between 5-10 hectares for a start, with title documents, and access roads or in lieu of access roads, a commitment that they will build the access roads by the time the houses are completed. We see this leading to potential delivery of 12 flats (Homes) per block and 480 Flats (Homes) per state, and 17,760 Flats (Homes) nationwide, for a start”, the Minister said.
According to him, “this will translate into a minimum of 4 doors and 2 windows very conservatively per home; a demand for 71,040 Doors and 35,520 Windows nationwide in year one, which we will encourage to be made in Nigeria. The demand for those who will make and fix the doors and window, the hinges, the wood polish and the paint and tiles suggest the onset of jobs and change for our artisans and workers who are the real builders of every economy.”
The Minister said in order to make the roads safer, his Ministry intends to reclaim the full width and set back of all Federal roads, representing 16 percent and about 36,000km of Nigeria’s road network “by immediately now asking all those who are infringing on our highways, whether by parking, trading, or erection of any inappropriate structure to immediately remove, relocate or dismantle such things voluntarily. This will be the biggest contribution that citizens can offer our country as proof that we all want things to change for the better.”
Concerning the Power sector, Fashola, who recalled that until around November 2013 the Government was the owner of all power assets in Nigeria except a few independent power plants, added that private companies today have the responsibility for generation, pointing out that all the generation on the National Grid is produced by six of the companies which were previously Government owned, two international oil companies ( Shell and Agip), and a company owned by the Federal, State and Local Governments (The Niger Delta Power Holding Company, NDPHC), whose generation assets are in the process of being sold to private investors.
Describing the change in Power policy as a welcome development, the Minister, however, added that THE CHANGE comes with its own challenges including human resistance, suspicion, vested interests, learning new things and so on, adding that all of these were quite normal when things change and “our responsibility to navigate and overcome these challenges”.
“If it is any comfort, countries like Brazil, South Africa, India and Mexico, to mention a few, have passed this same road before and they are clearly better for it. It is now our turn to do so, and we must resolve to make a success of it. We can do that by relying on our own recent experience,” the Minister said.
According to him, “Today, we are at a point when government spending on all aspects of power has been significantly reduced on distribution and generation, except for some projects started under the National Integrated Power Project (NIPP).The spending of government is now largely focused on transmission network and gas supply while Gencos and Discos focus on producing power and distributing it.
“Government is now a regulator through the National Electricity Regulatory Commission (NERC) which is like the National Communications Commission (NCC) which regulates Telcos. We intend to strengthen this part of our responsibility so that we can hold the Gencos and Discos to their contracts with citizens. But before we do that, we must play our own role of providing gas and expanding the Transmission Network”, he said.
On Gas, the Minister, who listed environmental issue and the availability of gas infrastructure such as pipelines and the issue of pricing as some of the challenges besetting the sector, added that subject to budgetary approvals and financing, the Ministry of Petroleum would build certain critical pipelines to transport gas to the power plants that would add another 2,000 mw to the nation’s stock of power within 12-15 months.
He said the Ministry has identified a total of 142 projects of which 45 are at 50 percent level of completion and about 22 could be completed within a year, adding that the budget estimates are known and the ministry intends to aggressively pursue completion to increase the carrying capacity from the Gencos to the Discos. “From there, we must expand the carrying capacity to run ahead of the generating capacity so that in future there will always be capacity to carry whatever power is generated,” he said.
On tariff, Fashola who described it as the most complex challenge, however, said the role of Government was to set the tariff and in doing so, be committed to what is called a Multi-Year Tariff Order, adding “The tariff is the price of producing power. It covers cost of generation, gas purchase, transportation, transformers, staff costs and so on, disaggregated and charged per kilowatt/hour to make the business of power profitable. What Government did was to spread it over a number of years so that the impact is not felt at once but over a periodic incremental process.”
He expressed appreciation to the President for appointing a Permanent Secretary from the private sector to the Power Ministry in the person of Mr. Louis Edozien, who, according to him, has been acknowledged by experts in the sector as capable. “I am happy to say that of all the people I have spoken to over the last few days who claim to know him, nobody has a bad word to say about him,” he said.
Fashola also acknowledged the work that the Vice President and his Power Advisory team have done in advance “to bring increased transparency to this sector by the daily report of the performance of power installations nationwide which I have found most helpful in getting information about what is happening and where,” adding, “This is also Change in the way things are done.”
On the Housing sector, the Minister noted that it presents an enormous opportunity for positively impacting the economy to promote not only growth but inclusion, adding that his Ministry intends to appraise a number of the National Housing Policies especially the most current ones with the intention of making necessary changes.
He said the nation could spend N10 billion in each state and the FCT on housing alone every year “subject to the capacity to raise the money and the capacity to utilize the funds having regards to our current construction methods and the time it takes to complete construction, which our ministry intends to change by research and industrialization of housing,” the nation would attain sufficiency in housing.
Expressing gratitude to directors and assistant directors as well as officers, for their cooperation while he was engaged in assessing the status of works done in all Ministries, meeting with some parastatals and corporations, Fashola added, “ Since our inauguration we have spent the last few days, getting to know ourselves and (which is still on-ongoing) and generally trying to understand where things stand, where the problems are, what can be solved, what cannot be solved, what must continue and what must be altered.”
At the well attended inaugural media briefing which had the Permanent Secretaries of Works and Housing, Engineer Abubakar Magaji and his Power counterpart as well as top management staff of the three hitherto distinct Ministries merged into one, Fashola took several questions from the media men covering the various sectors now under the supervision of the Ministry.