Home FEATURES CORRUPTION IN THE NIGERIAN POWER SECTOR

CORRUPTION IN THE NIGERIAN POWER SECTOR

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By: Ebi Dressman

The Nigerian power sector has been faced with several challenges leading to reform initiatives. In spite of the provisions of the Electric Power Sector Reform Act of 2005, the reform is yet to yield desired or anticipated result, largely owing to corruption and impunity of perpetrators, regulatory lapses and policy inconsistencies.

The country has also lost more megawatts in the post-privatisation era due to corruption, impunity, vandalisation of gas pipelines, among others.

A report titled: “From Darkness to Darkness”, published by Socio-Economic Rights and Accountability Project (SERAP), estimated total financial loss to Nigeria from corruption in the electricity sector, starting from the return to democracy in 1999 to date, as being over N11 trillion of public funds. It also estimated that it may be over N20trillion in the next decade in view of the rate of government’s investment and funding in the power sector, amidst the dwindling fortune and recurrent revenue shortfalls.

The 64-page report by SERAP traced how corruption has been institutionalised in the power sector. The organisation revealed how Nigerians are being made to pay for electricity not consumed as a result of high level of corruption that has pervaded the sector. It further revealed the fact that lack of knowledge and recognition of socio-economic rights have continued to rob Nigerians of major requirement that is key to socio-economic development.

Aside from the Executive Summary on various corruption cases and recommendations laid out in 16 pages of the report, there are eight chapters, which addressed topical issues bordering on corruption. Each chapter is very thorough in its approach to corruption that has become endemic in the power sector over the last 18 years.

Although SERAP made concerted effort to establish the nature of corruption in the power sector, not all the cases listed could be established due to lack of documents to back them up.

Part one of the report showcased the fact that Nigerian power sector has been faced with several reform initiatives due to the nature of the Nigerian state, which is characterised by a confluence of factors. It noted that economic interests, political forces, capitalists’ entities and other bureaucratic institutions determined and influenced the nature of the power sector in Nigeria. It said these absurdities manifest vividly in crippling the much-hyped electricity sector reforms in the country. This, it said, was the reason the power sector reforms in the country under the Electric Power Sector Reform Act of 2005 is yet to yield desired or the anticipated results, owing largely to corruption, regulatory lapses and policy inconsistencies.

Even though almost any form of energy, from tides, flowing water, wind, waves, steam, and water rising from geysers and sunlight, among others, occurring in nature, can be converted into electricity, it is a settled matter that the importance of energy to the country led to the ineluctable need for the reform.

The organisation’s preliminary, general findings and the nature of corruption in the power sector are contained in part two of the report. The report identified the power sector in Nigeria as standing next to oil and gas in proximity to corruption , in view of the overwhelming evidence of institutional improprieties in the sector and more for the fact that electricity is the most widely used form of energy in the country.

According to the report, the structural arrangement under the current electricity regime makes for the perpetration of institutionalised corruption due to over-centralised governance arrangement. This further justifies the arguments for decentralised electricity governance systems.

According to SERAP, corruption in the sector manifested through fraud, moral turpitude, misappropriation of funds, acquisition of illegal wealth and offering, giving, soliciting or acceptance of an inducement or reward that may influence the actions taken by any authority, its members or officers.

Its findings also revealed that the power sector has a history of corporate fraud and financial malfeasance ranging from theft, false accounting, bribery and corruption, deception, collusion, and taking advantage of deficiencies in the regulatory system.

The group further identified other types of corruption in the sector, which includes power or electricity theft by end-users, who consume power and circumvent billing or tap into electricity from a Disco illegally without paying bills for such electricity consumption.

This form of corruption is rampant among low-income electricity consumers in Nigeria.

According to the report, more than one-tenth of Nigerian households and companies pay one form of bribes or another for electricity services. Theft of electricity, it noted, thrives with the support of utility staff, consumers labour union leaders, political leaders, bureaucrats, and high-level utility officials.

Almost every operation in the Nigeria electricity sector is vulnerable to theft, be it generation, transmission, or distribution,”the report said.

It also noted that it happened because the DISCOs have been unable to adequately bill or collect minimum amount of revenue required for their operations for varied reasons, and have resorted to difference means of survival, ranging from borrowing, taking advantage of government subsidies, deferring payments, over-billing paying customers, reluctance to install pre-paid meters and other corrupt means.

The report also revealed that members of staff functions fell prey to corruption due to politicians’ interference in routine personnel decisions such as recruitment, transfer, promotion, and disciplinary action. The group also found out that petty corruption in the electricity sector has become a recurring phenomenon and it has eroded the work culture of the utility sector through extortion or harassment of consumers among other illegal dealings. Although SERAP was not able to back its findings with reliable data, it contended that rough estimates by industry experts showed that the amount involved in the so-called petty corruption was significant.

Part three of SERAP’s report revealed how corruption thrived under the various Power Ministers between 1999 and 2015.

The report revealed that policy inconsistencies had fueled corruption and ineptitude in the power sector. Except for the late Chief Bola Ige and Rilwan Lanre Babalola, whose tenure were not accused of corruption. The tenure of other four ministers, according to the report, were alleged to have been involved in monumental corruption, running into billions of naira and several millions of dollars. While the research was unable to locate any documents, reports or any official or unofficial document alleging corruption on the part of the late Chief Ige and Babalola while they served as the Minister of Power and Steel, the same cannot be said of other ministers.

SERAP’s report also looked at the dispositions, achievements and failures on the part of past Ministers of Power from 1999 to 2015 with a view to ascertaining whether the problems are the sector itself in terms of its nature or complexities or inherent greed, incompetence and corruption attitudinal dispositions of the Nigerian political class/actors.

In the second part of the report were reported but outstanding cases of corruption in the power sector under the period covered either by Commissioners of the Nigerian Electricity Regulatory Commission (NERC) or officials of the Ministry of Power and Steel. In all, a total of eleven cases of corruption were reported by SERAP with the most outstanding of them being the outrageous salaries received by some members of the Abuja DISCO.

According to SERAP’s findings, a major labour crisis had unfolded at the Abuja Electricity Disco over an alleged fraudulent allocation of outrageous salaries and perks to a few officials while a privileged few drew as high as N36 million a month from the public liability company that is operating on deficit, majority of equally qualified and even more critical members of staff absorbed from the previous government-owned Power Holding Company of Nigeria, PHCN, allegedly received peanuts.

After PHCN’s privatisation, the government retained substantial stakes in the distribution companies, including the Abuja DISCO, which means the government is entitled to part of the profit. But this must happen only after the operation cost of the company, comprising overhead and personnel cost, are deducted.

Surprisingly, for about four years, the company recorded only losses instead while at the same time paid outrageous salaries to a select few.

The research, in respect of this particular case, revealed a situation where the highest paid director takes home N36 million a month, while a staff with Ordinary National Diploma (OND), takes home as high as N1.9 million monthly.

The selected few earn jumbo perks, majority of the key staff retained from PHCN are paid between N50, 000 to N150, 000.

Further findings by the organisation revealed for instance, that apart from discriminatory salaries paid to about 3,658 workers on the company’s payroll in 2013, the partly-publicly owned AEDC was also allegedly engaged in consulting house of fraud and corruption.

According to the report:

“research reveals monumental fraud and corruption in the company’s payroll traceable to an agency, TBS Consulting, hired to handle staff recruitment in 2014. TBS consulting was hired by the Executive Director, Human Resources and Corporate Affairs, Tolulope Mark-Ojie. Ms. Mark-Ojie hired Yusuf Mosunmola, one of the directors and a key member of the TBS consulting management team, as Head, Organisational Development & Learning for AEDC, and then allowed her to continue to function simultaneously in both positions.

According to SERAP:

“A director revealed in a document that all the contract staff recruited by TBS Consulting for AEDC had “special arrangements” with Ms. Mark-Ojie on how the salary penned against their names would be split.

Quoting:

“Not all the salary actually gets into their (contract staff’s) pockets,” Mr. Okaisabor explained.

“The contracting firm has some personal arrangement to get part of the money paid to them as salaries by the company. The practice is that the contracting firm gets the money from the company and pays the staff. Most of the names found on the company’s payroll are either non-existent or belong to persons who work directly for Madam’s (Ms. Mark-Ojie) other companies”.

“The staff said the special arrangement must have been in connection with allegations that at least 60 per cent of the salaries credited to most of the high earners on the company’s payroll every month goes to Ms. Mark-Ojie.
“Some of the names on the AEDC payroll, which raised eyebrows were those of two contract staff hired in 2014 and posted to the Lokoja District office. They include Akanku Olusegun, a National Diploma holder in Electrical, and Higher National Diploma (HND) (in view), who is paid N823,764 per month.“

Adesulu Adebayo, another National Diploma holder in Electrical in the same office, who takes home N764,097.60 salary every month.
Curiously, several of their colleagues in various district offices with either similar qualifications or superior university degrees of many years’ standing, are paid a paltry N50,000.

“Ms. Mosunmola brought in from TBS Consulting, remains one of the highest paid officials, who pockets a whopping N1.84 million pay every month. This is in addition to the N27million and another N10 million paid to her as furniture allowance and accommodation respectively, aside from the obvious challenge of conflict of interests by working for AEDC and TBS Consulting simultaneously,” the report alleged.

Another segment investigated was the attempt of the NERC, being the regulators, to increase electricity tariff while a suit seeking to refrain the act was pending at the Federal High Court.
According to findings, a consumer right activist, Toluwani Yemi Adebiyi had sued the NERC on its decision that it wanted to increase the electricity tariff. The suit instituted against them for the intended act at the Federal High Court sitting in Lagos, presided over by Justice M. B Idris. But while the action was pending in Court and a subsisting restraining order was obtained against them. Despite the pendency of the suit, NERC still went ahead and increased the electricity tariff.

In his judgment, Justice Mohammed Idris had annulled the increment in electricity tarrif by NERC and DISCOs.

The Judge described NERC’s action as procedurally ultra vires, irrational, irregular and illegal. Justice Idris, while relying on Sections 31, 32 and 76 of the Electricity Power Sector Reform Act (EPSRA) 2005, held that, “NERC acted outside the powers conferred on it by the Act and failed to follow the prescribed procedure.

Justice Idris had also held that the tariff increase from July 1, 2015 was done in breach of the status quo order. The Judge also declared that the NERC’s action was clearly hasty, reckless and irresponsible. “This country is in a democracy where the rule of law shall prevail over impunity or whimsical desires. Anything to the contrary will be an invitation to anarchy. It is the law that what is done officially must be done in accordance to the law,”he said.

The judge declared that “the increment in electricity tariff, which took effect after the institution of this action and while a restraining order is subsisting is hereby declared illegal and same is hereby set aside”.

He also directed the NERC to reverse to the
status quo while restraining it from further increasing electricity tariff.

Similarly, following SERAP’s intervention, two United Nation’s special rapporteurs had ruled in November 2013 against the increase in electricity tarrif in a joint letter of concern sent to the government of former President Goodluck Jonathan and to the effect that “access to electricity is a significant problem in Nigeria”, and raised eight questions for the government to answer within 60 days.”
But in spite of these landmark judgments of the court and the decision of the rapporteurs, neither the Federal Government, the NERC nor the DISCOs had taken steps to reverse the tariff.

There were other celebrated cases of corruption in the power sector, including that of the diversion of public fund for the purchase of 47 SUVs allegedly bought by a former Permanent Secretary of the Power and Steel Ministry for the campaign organisation of former President Goodluck Jonathan, the alleged misappropriation of money meant for Rural Electrification Agency (REA) by a former Senate Committee chairman on power and his House of Representative counterpart, among other undocumented corruption in the sector.
The report identified other problems of the sector to include low power generation, increased tariff without corresponding increase in power supply, a distorted electricity market, poor gas supply and vandalism of gas pipelines.

There were also challenges in the creation of new electricity markets, lack of proper regulation of Gencos and Discos, lack of competition, lack of capacity building and insufficient technical experts in the industry”, among others.

Based on its findings, SERAP no doubt, has provided grounds why Nigerians should not be made to pay the price for corruption in the electricity sector and the major reason for the darkness in which the nation has been plunged. To ensure this, the organisation devoted the last four chapters of the report to providing appropriate and well thought-out recommendations and what needed to be done by the government, Attorney-General of the Federation (AGF) and Minister of Justice and different anti-corruption organisations to reverse the situation and makes the power sector work for us in Nigeria; where possible, with detailed documents to back its allegation of corruption against certain individuals and organizations.

SERAP also provided the government and other related partners with a workable report, detailing the rot in the electricity sector, but most importantly, made useful recommendations to the office of the AGF, the Federal Ministry of Justice and appropriate agencies such as the EFCC, the ICPC on what cases should be revisited and investigated to ensure that those who stole from the sector does not escape justice.

The report also contained recommendations to state governments, citing items 13 and 14 of the Second Schedule, Part II, Concurrent Legislative List, on what they should do to ensure that residents of their states enjoyed uninterrupted power supply.

But all these recommendations and initiatives of SERAP to government, the AGF and anti-corruption agencies, will come to nought unless the government and all relevant agencies, the DISCOs and Gencos play their respective roles to ensure that sanity is restored to the power sector and that those who put the nation into darkness through corrupt activities do not escape justice.

To say the least, the report is well-researched, well-documented and well-written, thus making it easy for the government and anti-corruption agencies to know what to follow and should be done to save the electricity sector and the economy.

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