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Tekedia Mini-MBA Edition

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Good People, join the last edition of this year, take action immediately here – www.tekedia.com/programs

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The Buhari’s New Playbook on the Nigerian Electricity Supply Industry

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Finally….the market system is coming. President Buhari has approved New Electricity Tariff in Nigeria. Yes, the current cost of electricity in Nigeria is hopeless for anyone to expect light. That cost has produced darkness for years. Now that the cost has improved, I am very confident that investors will come with the good greed in capitalism.

Like the new generation banks taught us, Nigerians are open to pay for better services. Yes, banks those days introduced COT (commission on turnover) and still attracted customers because it was better to lose N3k per N1,000 than waste 4 hours in a bank to collect your money. Mr. President, you need to now deal with the generator mafia and ensure we do not have more excuses in our NESI – Nigerian Electricity Supply Industry. Any sabotage should be all the way to Kirikiri! Orange is the new black…

Indeed, the new playbook is very promising: “President Buhari on Tuesday approved the increment of electricity tariff for selected consumers. The decision is in line with the proposed cost-reflective electricity tariff for the Nigerian Electricity Supply Industry (NESI).” And by adding mass metering in the equation, there could be a way out of our electricity inadequacy paralysis.  But give this to the World Bank which had requested for one thing: your electricity pricing is out of phase and if you do not change it, no investor will come. The government had requested $1.5 billion for the sector, but the World Bank made it clear – either you increase tariff or you pray for that money to come, as no investor will likely come. But with this Buhari’s playbook, expect more actions in NESI.

President Muhammadu Buhari on Tuesday approved the increment of electricity tariff for selected consumers. The decision is in line with the proposed cost-reflective electricity tariff for the Nigerian Electricity Supply Industry (NESI).

Under the NESI tariff, residential areas classified as poor will not be affected by the new tariff, as it is aimed at industrial areas.

Tariff increment has been a bone of contention between electricity suppliers and consumers, with Distribution Companies (DisCos) attempting repeatedly to implement proposed upward review of billing. But the government’s intervention has restrained the planned tariff review for months now.

Electricity meters
Electricity meters

This is a good move by the government as I noted in the past on the need to price products well in Nigeria.

Do not think too far – the tariff for potable water in a state in South South geopolitical region in Nigeria was last reviewed in 1987. Yet, the state is looking for investors to provide potable water in the state! I saw the document and wrote to the project manager, and asked him if he could get the state to update the water rates. The response was typical – “The government cannot increase rate because it will be politically sensitive”. Of course, nothing happened, and no investor thought there was anything there.

Our leaders must find a way to engage Nigerians honestly on open conversations to move the nation forward. From electricity to potable water to healthcare services, unless there is decent revenue factor in the equation, it will be hard to move from the miry clay on the provision of basic services.

And the legal institutions need help and only the National Assembly can help them by updating the laws  to avoid confusions in markets. Yes, the updates will help to engineer reflective costs that will make services become available as investors are attracted by the opportunities therein to participate. This does not mean that Nigerians should be priced out. Yet, Nigeria cannot also afford to price investors out. A win-win is needed on these services on cost.

As we examine this new tariff, consider another big one in which the central bank took over revenue collection from DISCOs and handed it over to banks. It makes real sense: if Nigeria has to take loans to help “private companies like Discos” fix themselves, Nigeria needs to play a role to see what is coming in as revenue. The Discos put themselves in this position. Yes, if they had executed well, the government would  not have come with its big sticks.

Now, let there be light in Nigeria.

Buhari Approves New Electricity Tariff, Orders Mass Metering

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President Muhammadu Buhari on Tuesday approved the increment of electricity tariff for selected consumers. The decision is in line with the proposed cost-reflective electricity tariff for the Nigerian Electricity Supply Industry (NESI).

Under the NESI tariff, residential areas classified as poor will not be affected by the new tariff, as it is aimed at industrial areas.

Tariff increment has been a bone of contention between electricity suppliers and consumers, with Distribution Companies (DisCos) attempting repeatedly to implement proposed upward review of billing. But the government’s intervention has restrained the planned tariff review for months now.

In January, the Nigerian Electricity Regulatory Commission (NERC) announced there would a new tariff regime starting from April 1. But the House of Representatives intervened, and asked the regulator to shove the idea to curtail the strains of COVID-19.

Apart from COVID-19, metering is another issue that keeps instigating the intervention of the lawmakers. The national assembly has insisted that consumers be metered before any tariff plan would come into effect. Therefore, an attempt by the Minister of Power Sale Mamman to shift the proposed increment to July 1 was opposed by the leadership of the national assembly.

The Senate President Ahmed Lawan said then that consumers must be properly metered before any plan to hike tariff would be condoned, and given the economic impact of the pandemic on Nigerians, the timing for the tariff increment was wrong.

“The joint leadership of the National Assembly sat with DisCos and Nigerian Electricity Regulatory Commission. We believe that this is not the right time to increase the tariff in the electricity sector. Nigerians have a lot of challenges today because of the COVID-19 pandemic and the situation requires that we do everything possible to make life easy for our citizens.

“Of course, the government is doing a lot in this respect but we believe that DisCos should meet with consumers, find better cost-effective tariffs. But before then, there must be some steps to ensure that the consumers are properly metered, otherwise, you will still go back to guessing what consumers are consuming. That is to say, that to let the billing be scientifically based, it has to be based on what you actually consumed,” he said.

Consumers have been groaning under the weight of estimated billing as a result of insufficient metering. The situation has been attributed to the 35% levy imposed on imported items, which forced DisCos to abandon meters at the ports. The development has thus stalled the implementation of the Meter Asset Providers (MAP) scheme.

To close the metering gap, Buhari approved a one-year waiver of 35% import tax on prepared meters. The Cable reported that the decision came after the Minister of Finance; Zainab Ahmed made a plea for speedy deployment of meters to fast-track the MAP scheme.

The special adviser to the Minister on media and communications, Yunusa Abdullahi acknowledged in a statement that the 35% tax is stymieing the implementation of MAPs.

“The 35 per cent levy was imposed on the recommendation of the Federal Ministry of Industry, Trade and Investment, to encourage local production, as well as protect investments in the local assembly of electricity meters.

“An important feature of the MAP regulation is a gradual up scaling of the patronage of local manufacturers of electricity meters with an initial minimum local content of 30 percent with the potential of significant job creation in the area of meter assembly, installation and maintenance.

“Even though the 35 percent was in existence since 2015, the MAP regulations by NERC in 2018 to bridge current electricity metering gap did not factor the 35 percent levy in arriving at the regulated cost of electricity meters to end-users.

“This is to immediately bridge that gap between the demand for electricity meters and local supply. It is also envisaged that this will provide protection for local electricity meter manufacturers and the opportunity to ramp local capacity in the production of meters,” Abdullahi said.

The new tariff will be reviewed quarterly upon kickoff from September 1. The federal government has been seeking a $1.5 billion loan from the World Bank, for the power sector. The World Bank had given tariff increment as a criterion for the approval of the loan, saying it’s the only way investors can come into Nigeria’s power sector.

Buhari therefore ordered mass metering to end arbitrary charges emanating from estimated billing.

Enabling Environment Key to Food Production and Security in Nigeria – An Interview with Mojoyinola Adeyemi, UI trained Communicator turned Foodpreneur

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Mojoyinola Adeyemi

Like other countries in the developing world, Nigerian farmers and entrepreneurs in food processing and production are facing a number of challenges. These range from deforestation to overgrazing and drought to erosion and flooding, for the farmers. Over the years, entrepreneurs, processing agricultural raw materials into finished products are experiencing a lot of challenges due to unstable micro and macro economic indices or policies. 

On several occasions, concerned stakeholders have been urged and still being advised to work out appropriate modalities to resolve the challenges towards ensuring sustainable food production and security. In this piece, Mojoyinola Adeyemi, a graduate of the Department of Communication and Language Arts, University of Ibadan, speaks with Tekedia on the need for the governments to provide an enabling environment for the agriculture sector and entrepreneurs. 

Excerpts:

Tekedia: One of the needs human beings must have for surviving on earth is food. What are your views about food production in Nigeria?

Mojoyiola Adeyemi: Food production in Nigeria is on the average, we are not producing at a full capacity and this is because the enabling environment is not encouraging enough for farmers and agriculturists. I believe that with the right policies in place, we can become the largest food producers in West Africa. It’s rather unfortunate that as a country we are still importing foods that we can conveniently produce locally.

Tekedia: Is Nigeria producing what it needs sufficiently?

Mojoyinola Adeyemi: I don’t think so. But I know we have the potential to be the largest Food producers in West Africa. However, I hope the government of the day can lend 100% support to the agriculture sector, especially the processing segment. We have exportable foods like Cocoa, Sorghum, Rice,Palm Oil,Cotton,Garlic,Ginger, Groundnut and so on. The land is green. Our lands are arable. Our youths are able. When the needed support is given to the sector,  there won’t be any need to import food into the country.

Tekedia: By 2030, Nigeria and other countries are expected to attain responsible food production and consumption goals of the global goals. How would you describe the country’s readiness?

Mojoyinola Adeyemi: The country’s readiness at this point based on my observation is 10%. Our Government has not come to terms of investing heavily in Agriculture, which I believe will go in a long way in boosting the economy. We still largely dependent on oil, which I am afraid might not hold us up for too long considering the dwindling oil price and the fluctuating dollar exchange rate.However,it’s not too late to key in and take advantage of the opportunity as it still presents itself, I believe with that we can slightly meet up but not on a 100%.

Tekedia: Recently, you started a food production business, how does your brand resonate with responsible production and consumption goals?

Mojoyinola Adeyemi: I  started a pizzeria with my Husband 5 years ago, in which we produce flour based foods like pizza,shawarma,bread, chops among others. We cannot dispute the fact that flour is a major food component because it is made out of wheat and from wheat, we get bread, cakes, pizza and so on. I can proudly say that everything locally produced goes a long way in boosting food production, the economy and aids healthy consumption for the populace.

Tekedia: What do you think stakeholders need to do for the realization of the goals?

Mojoyinola Adeyemi: The stakeholders need to work together in unison to make sure that Nigeria attains global food production. It is doable. We have what it takes, but of course, this is only attainable if the government can pull their full weight and give the agricultural sector the needed support. Without this in place, it will be an exercise in futility.

Tekedia: How do you see your business in the next three years?

Mojoyinola Adeyemi: In three years time I hope to become a household name and to be able to align with the sustainable development goals (SDGs) in food consumption and production.