Nigeria Content Online

Unease over the
outlook for the country after the April general election is due to a
variety of reasons. One source of worry is the fact that the political
class is not acting differently – albeit it was always something of a
stretch to have imagined that without incentives to the contrary, they
would have gone through a damascene experience.

The elections’
arbiter – the Independent National Electoral Commission (INEC) – after
having raised so much hope in the possibility of free and fair
elections, through its single-minded commitment to using direct data
capture machines for the voter registration exercise, is no less
confused. Indeed, if the differing announcements on the composition of
party slates offer any clue, INEC itself may be part of the general
confusion.

However, more
worrying have been the party platforms themselves. In spite of the
common grounds that these cover, they do not offer a roadmap to
anywhere. Where the right questions are asked, there’s much agreement
on the cheerless state of the domestic economy. Agriculture alone
contributes close to half of the 7% output growth that the economy has
notched up in the last three years. A fifth part of annual output
growth is again the result of hydrocarbon exploration.

So all you need to
grow this economy faster than the current global norm is for the rains
and the rigs to hold steady. Is it surprising, therefore, that this
“stellar growth” has produced few jobs? Still, on the evidence of
stronger currents in the rural-urban drift, there are those who would
challenge the putative performance of the agric sector, and hence of
its contribution to domestic output growth.

Recovery in other
sectors of the economy is therefore necessary, if growth is to generate
the employment levels needed to absorb most school leavers. Efficient
investment in infrastructure is essential to this task. This is as much
about roads, rails, and power from the mains, as it is about social
infrastructure.

Our schools must
work, not because students go through them, but because the competences
learnt in those hallowed places have use in the real economy.
Similarly, the healthcare system must conduce to a healthy population,
not because we then site a hospital in every neighbourhood, but because
every healthcare facility offers cost-effective interventions.

These latter points
are missed by all the party policy documents that I have seen so far.
In all, there is a premium on government provision of everything,
especially in the health and education sectors. Now, in our present
circumstance, this is an understandable reaction. An unconscionable
governance failure over the years has led to massive underinvestment in
these sectors; and there is thus a crying need if we must correct the
lapses of the past for an increase in public investment in these
sectors.

Still, going
forward, it would be a sin worse than the under-investment in the past
to ignore the extent of private sector provision in these sectors
today. In most cases, including crime prevention, private sector
operatives have stepped into the breach created by governance failure.

Instead, then, of
seeking to restore the public sector’s old role as prime provider in
these sectors, appropriations for the sectors should aim to develop the
public sector as regulator, rather than as service provider. Standards
development, monitoring, and enforcement then become the critical
competences that the civil service should grow.

Although the
regulatory function places a premium on the allocative efficiency of
competitive markets, it requires in addition that a competent regulator
should look out for collusive, price-fixing amongst private sector
service providers.

There would, of
course, be plenty of people who would not be able to afford the prices
in a market for social services. This is where the appropriations for
these sectors come into their own: as means-tested augmentation for
families who cannot afford to send their children/wards to these
schools, and/or use the private health facilities.

On this reasoning,
it is hard to contemplate the use of government’s spend to set up
publicly-funded facilities in direct competition with private service
providers.

The Federation
Accounts Allocation Committee yesterday expressed worry that the
controversy over the N450billion debt of the Nigerian National Petroleum
Corporation is still lingering, more than a year since the initial
ultimatum was issued. At its meeting in December 2009, the committee had
asked the past group managing director of the corporation, Mohammed
Barkindo, to furnish it with the repayment schedule by January 12, 2010.

Since then, two new
chief executives, who have since succeeded Mr. Barkindo (Shehu Ladan and
the incumbent, Austen Oniwon), have received similar ultimatums without
any positive result.

Last December, the
committee resolved to, again, write the NNPC’s management to remind it
of its demand for a schedule for the repayment of the debt.

Last ultimatum

But at the end of
its meeting yesterday in Abuja, the chairman, Comissioners of Finance
Forum and Taraba State Commissioner for Finance, Rebo Usman, told
reporters that members of FAAC are becoming increasingly concerned that
the issue has remained unresolved.

“We have resolved to
extend our last ultimatum by another one month for NNPC to come up with
a repayment schedule. After that, the whole nation will hear from us,
because it is an issue we cannot just sweep under the carpet.

“Very soon, the
Petroleum Industry Bill (PIB) will be passed into law. When that
happens, it will become more difficult for FAAC to track that money. We
are very serious about it, and we believe this extension is going to be
the last,” he declared.

Though Mr. Usman did
not say what options are open to FAAC should NNPC fail to meet the
deadline, he said the latest ultimatum is final, as it was issued by
states of the federation as well as other FAAC member, including the
federal government, who have warned that they would rise against the
NNPC if nothing happens.

Unresolved differences

The reconciled
industry audit of NNPC operations covering 2006 and 2008 published
recently by the Nigerian Extractive Industries Transparency Initiative
(NEITI) showed that the sum of $932.2million was captured as the total
unresolved differences for petroleum profit tax (PPT), royalties and
signature bonuses, apart from a total oil and gas income of $344.686
million for the period. According to the report, the NNPC was unable to
explain the differences of about 3,092,304 barrels between the volume of
total oil allocated by the corporation and the volume actually lifted
by companies for the period. However, Minister of State for Finance
Yawaba Lawan-Wabi assured that the forensic audit ordered by the
presidency on NNPC accounts was nearing completion, as the report of the
audit is currently being analyzed by the appropriate authorities,
pending a formal publication. The minister did disclose when to expect
the audit report.

January revenue allocation

On the revenue
allocation for the month of January, Mrs. Lawan-Wabi, said though
N610.801billion was gross revenue for the month, total distributable
revenue stood at about N414.305billion, including value added tax (VAT)
of N48.763billion and statutory allocation of N354.237billion, which was
higher by N5.071billion, or 1.45 percent compared to the allocation for
last December.

The gross revenue,
she said, is higher than N581.561billion from the previous month by
N29.240billion as a result of higher prices of crude oil in the
international market above the $60 per barrel benchmark in the 2010
budget.

The minister said
the sum of N11.305billion was proposed as augmentation to the allocation
as a result of the shortfall in the N354.237billion revenue from the
official ceiling of N369billion pegged last year as monthly
distributable allocation for the three tiers of government.

More
private companies have expressed their interest in the electricity
companies being offered for sale by the federal government ahead of the
February 18 deadline for receipt of applications.

In December last
year, the government, through the Bureau for Public Enterprises, called
for interested buyers for 51 per cent stake in 11 electricity
distribution companies, while concessionaires are sought for four
thermal power stations and two hydro power stations.

Efforts to get the
actual number of firms that have indicated interest were not successful
as Chukwuma Nwoko, BPE spokesperson, refused to divulge the figure.

However, Global
Utilities Management Company (GUMCO), a subsidiary of Vigeo Group, last
week, officially indicated its interest in the bid.

The chairman of the
Vigeo Group, Victor Osibodu, said the company is partnering with two
Indian companies to achieve its goals, and compete favourably with other
companies who have shown interest. Nigeria’s power sector has been
plagued by several problems that have prevented it from operating at
optimum level. In a bid to address the difficulty of inadequate electric
power supply, President Goodluck Jonathan last August presented a
Roadmap on the Power Sector Reform.

A major thrust of
the Roadmap, which foundation was laid in 2005 by former president,
Olusegun Obasanjo, was the privatisation and concession of the
distribution segment of the market while concessioning the generation
and transmission outlay.

Mr. Nwoko said in
addition to the offer of a minimum of 51 per cent of the companies,
bidders will be expected to submit proposals that reflect information on
their strategy for meeting the efficiency targets that will be
specified in the Request for Proposals.

“Care will be taken,
by working closely with NERC, to ensure that a monopoly or oligopoly of
market power in the generation sector is not acquired through these
divestitures. The competitive bulk procurement of electricity by the
Bulk Trader; and the bilateral contracting of electricity between
generating and distributing companies – all overseen by a
fully-empowered independent sector regulator through the Multi Year
Tariff Order (MYTO) mechanism – are the key guarantors that electricity
will be generated into the grid on a competitive, commercial and
consumer-oriented basis,” he said.

However, the
National Union of Electricity Employees (NUEE) has vowed to resist any
attempt to sell off the firms. The NUEE secretary general, Joe Ajaero,
said the workers are against the planned sale when labour issues have
not been addressed.

“Have they sold
them? Let them submit their letters of interest and let them take over.
We insist that nothing can take place there. All those noise they are
making just ends at the pages of newspapers. You cannot transfer
ownership when you have not addressed the pending issues of those
working there,” Mr. Ajaero said.

Positive Outlook

Vetiva Capital
Management Limited, a finance firm, says the success of the process
would be closely linked to consistency in policy implementation and
political continuity.

“The Roadmap broadly
outlines a programme schedule, which if properly implemented and
timelines are adhered to, will be expected to bolster power generation,
transmission, and consumption in Nigeria significantly.”

The firm identified
the delay in the outcome of the reforms to the stalled funding of the
National Integrated Power Project (NIPP), for more than two years amidst
allegations of corruption.

“Consequently, a key
risk to its success would be changes in the present proponents of the
Power Roadmap, especially as we approach the elections. If this risk
element crystallizes and a change is effected, we are likely to see the
process being altered or suspended completely again, as the new leaders
at the helm of affairs would come in with their own strategies,” it
says.

Sunday Salako, a
member of the National Economic Management Team (NEMT), however, said
people are tired of roadmaps and visions.

“People want to see
things happen. Last week, I was in Ghana for a whole week and there was
no power outage. The truth is staring us in the eye and we should
actually be challenged. How did they do it? I think that is what we need
to do now,” Mr. Salako said.