The mirage of independent power production— A look at the Magodo situation

Permit me if the title sounds and looks academic. Well, there is nothing flowery about the situation we have found ourselves in this nation when we come to the issue of power. We have heard that past governments have spent about $16b on the problem without giving us any solution. The present administration threw Fashola at the problem and all we have seen are more gray hairs on his head. So, today, we are still mired with the wahala that is ‘no power anywhere’ on the back of neighboring countries celebrating an oversupply of same. This is Nigeria.

The situation impacts very negatively on national output, throwing up the ‘easy to do business’ in the waste bin and impacting also very negatively on the quality of life. Power in a modern economy is very critical. It is the lifeline of everything affecting disparaging units from cost of raw materials, transportation amongst others. On the domestic level, increasing cost of living phenomenally with its attendant deadly effect on health by its contributions to the stress level, taking more than its fair share in the dwindling domestic budget as you seek to create alternative power supply and in some cases leading to the disintegration of the family unit.

It is under this shadow that some Nigerians working very closely with some discos have begun to seek alternative power sources. This has become very imperative on the back of the very expensive cost of powering mega generating sets with the deregulation of diesel prices. Solar and gas which are just making inroads are still far and in between even though they will form the crux of power supply in the very near future.

We have seen Nigerians in their bid to replace government in the social contract build clusters in the name of high brow estates. They cordon of these estates in a failed bid to separate themselves from a decaying society. They try so very much to provide the ‘luxuries’ you will not find in the outside world in these enclaves usually at a price that are mostly prohibitive.

Furthermore, they set up parallel governments to run the affairs under the guise of an ‘Exco’ who draw legitimacy from the ‘Constitution’. These has led to newer challenges, with the arbitrariness that comes with such unguarded power within a cordoned community. All of these in a bid to provide sanity for their dwellers – security, infrastructure, amenities etc all paid for by residents very voluntarily and willingly. Or, is it better to go back to the craziness of the outside world. The question this throws up but will not be discussed in this essay is “does the Commune Constitution subsume the Constitution of the Federal Republic where there is a clash?” I pray we do not see a case of treason in one of these enclaves the way some of these Excos run their regimes.

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This is not an indictment on the Magodo Exco. From experience, this Exco has been very compassionate, convivial and struggling within its limited capacity to ensure total and full ‘carry along’ in all decisions affecting the community. This I must commend them and enjoin them to continue. Well done.

However, the issue of independent power procurement for not only the Magodo Estate but all such communes all over the federation has come to the fore. So, as stated, in a bid to build an oasis of sanity from the madness that is Nigeria, some of these Excos have gone into an alliance with these discos to procure power at a premium for its residents. On the face value of this, one would say commendable because it takes away the alternative forms of power, which are sometimes inefficient and drains pocket spend and replaces it with a full provision of power.

For the Magodo case, it comes at 20hours full power delivery but at an upped pricing of N47 per kw. Now, if you consider the fact that status quo was at N20 per kw you begin to see the down side. To be very fair to the Exco of the Estate, they tried very well in arriving at a general consensus by providing platforms for debates on the matter. From my investigations, the decision was not reached in a hasty matter as it took over two years of deliberations and discussions with sometimes complicated and convoluted negotiations with the power provider to reach this point.

In reaching this point, a comparative analysis of other such communes like VGC, 1004, Nicon Town and others were taken into consideration before reaching this decision which in their fairness was the best for the greater good. So, today, Magodo like other such enclaves of the elites now have an almost seamless access to power even though it comes at the price of a camel.

And, here lies the folly. The hypocrisy of it all. As the elites continue to fail the country, they begin to attempt to hide themselves away from the theming masses. Giving themselves opportunities and platforms that are not generally accessible by all as a result of their predominant stature in society in policy formulation and execution. They build these bastions of elitist comfort with the sprawling ghettos of the mass impoverished surrounding them and live in constant fear of an invasion. So, Magodo is surrounded by the slums of ketu and Mile 12, VGC is surrounded by the slum that is Ajah and the LNG paradise that is in Bonny is surrounded by the ‘dump’ that is Bony town.

The impoverished mass come in as domestic helps, tax drivers and all. Seeing what their taxes can do to their lives, they continue to breed in utter frustration and hatred waiting for the day the real revolution would come.

Secondly, directly on the matter at hand, we begin to see the limitations of infrastructural capacity and its unwanted effect on the simple economic ethos of demand and supply.

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The other Saturday, I convened the Afang Summit and we had Mr. Wale Oluwo the immediate past Commissioner for Energy resources in Lagos state. He spoke very eloquently on ‘cost appropriate’ power supply. This was a fancy word to describe what is happening in Magodo and other enclaves where power is being procured at a premium in excess of the government controlled pricing. Mr. Oluwo’s submission was that we should allow for a free float in the pricing of power because of the high leveraged cost of inputs. Brilliant and I support.

But wait, in Lagos with over 20million people, if we built infrastructure and increased capacity why wont cost come down. So if the disco can give Magodo 20 hours of power at N47 why not build capacity and give the whole 22m Lagosians the same 20 hours power and see how demand and supply would crash pricing and drive up revenues.

I am totally ignorant of the technicalities in this industry and when I attend the meetings I switch off because they all seem to want to out beat themselves in the ownership of technical jargons without really making sense. The power industry is a tower of babel and all you get is a confused array of talking heads who are not even making sense to themselves.

From the tariff regiment, to the manufacture, transmission and distribution is a cacophony of ghoulish ‘stupidity’ of all involved, leading the ‘right thinking excos’ in these communes to begin to think outside the box to provide the essential commodity to their people at whatever cost.

The madness will continue as long as we have ‘mad’ technocrats and dubious businessmen in the discos’ continue to find solutions to a national emergency. From where I am sitting, I am asking myself one simple question? Where is the problem. Is it in the generation of power or transmission or the distribution. Is it in infrastructure or is it in policy. Whatever the answer is, the solution can never be power at N47 per kw.

This is me not pushing for continuous regulation in the pricing especially with private capital streaming in and this is me certainly not supporting the latest sounds of re-acquisition of the discos by government, this is me falling on the very simple logic of base economics. Let total demand and supply determine the equilibrium price only after credible investments have been done on the capacity building end of the industry. Grow the capacity to generate, transmit and distribute to the whole nation and see how demand would crash costs and drive equilibrium pricing acceptable by all instead of what we are seeing in the communes today.

We cannot seek a short cut as a nation by providing this essential amenity to only those that can afford it and think that we are on the right way to national integration? Na wa!

By Joseph Edgar…

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