Fed Govt Plans 2,000MW In 15 Months, Says Fashola

Babatunde Fashola Minister of Power, Works and Housing (Image source: The Guardian Nigeria)

•Lagos-Ibadan road, Second Niger Bridge priority projects 

•Toll gates to return •Massive construction of houses

The Federal Government plans to generate 2,000 megawatts within the next 15 months to boost electricity supply, it was announced yesterday. The Lagos-Ibadan Expressway and the Second Niger Bridge linking the West to the East will get priority attention in next year’s budget, which will allocate more cash to infrastructure provision.

But tolling will likely be reintroduced on federal roads to generate cash for maintenance.

These are part of the government’s plan, which Minister of Power, Works and Housing Babatunde Fashola unfolded yesterday.

The Nation report continues:

He spoke at his maiden news conference in Abuja where he unveiled his short term plans to address housing deficit, provide good roads and increase power generation.

Fashola, the immediate past Lagos State governor, said the highest amount allocated to road construction in recent years was in 2002 when ₦200 billion was budgeted.

He said the Works sector this year has 206 contractors handling 206 projects, covering 6,000 kilometres with a contract price of over ₦2 trillion. Yet, a little over ₦18 billion was budgeted.

The Minister said that work would soon begin on all roads that link the 36 states, adding that major roads which have been suspended due to lack of funds and are vital to boosting socio- economic activities would be quickly revisited.

Fashola spoke of plans to partner with the private sector and fully privatize the power sector for the country to witness genuine development like in the telecommunication sector.

Part of his plans is also to immediately restore the jobs of construction workers who were laid off by local and international companies.

“The records that have been made available from previous budgets show that the last time Nigeria budgeted over ₦200 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.

Poor Budgetting

“As far as status reports go, the federal government budgeted ₦18.132billion in 2015 and the Ministry of Works got ₦13 billion for all roads and highways in 2015, although it has contracts for 206 roads, covering over 6,000km with contract price of over ₦2 trillion.”

Fashola said the government’s ability to achieve connectivity of interstate roads would depend largely on capital spending in the 2016 budget. He said it became imperative to pay contractors and get them back to work as soon as possible.

“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.

“As at May 2015, many contractors have stopped work because of payment, and many fathers and wives employed by them have been laid off as a result.

“Some of the numbers from only four companies that were sampled, suggest that at least 5,150 workers have been laid off as at March 11, 2015; and if we realize that there are at least 200 contracts pending, on the basis of one company per contract,” he said.

Analyzing the situation, Fashola explained that, “If each contractor has only 100 employees at each of the 200 contract sites, it means at least 20,000 people who lost their jobs can return to work if the right budget is put in place and funded for contractors to get paid.

“The possibility to return those who have just lost their jobs back to work is the kind of change that we expect to see by this short term strategy.”

Govt to reclaim setback

“In order to make the roads safer, we intend to re-claim the full width and setback of all Federal roads, representing 16% 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,” Fashola added.

Toll gates to return

He added: “Maintenance would be our watchword. We are setting up a robust maintenance regime to keep our highways in good shape.

“This shows that tolling is necessary to support government funding. So, it will not be too much if we ask every road user to pay little to augment government funding for road maintenance.

“It is eminent commonsense for us to find that money. We will use technology; so if we don’t pay cash, you will pay by tokens or tickets and the money is accountable and it will go to the right place.

“We will manage that fund properly and we will hold those who we put there to account,” the minister said.

Tolling was scrapped by former President Olusegun Obasanjo after his administration imposed a fuel tax. Since then, attempts to restart the policy have failed.

On housing, Fashola said with adequate funding, the government was ready to spend ₦10 billion on affordable housing in each state and the Federal Capital Territory (FCT) annually.

He advocated increased budgetary funding for the housing sector from the ₦1.8 billion allocated in the 2015 budget to over ₦100 billion.

Housing projects

He spoke of plans to partner with governors to replicate the Lagos Homs model across the country, starting with the construction of 40 blocks of housing in each state. According to him, the concept will make available 12 flats per block and 480 flats per state to make 17, 760 homes for a start nationwide.

“We expect 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.

“This will mean at a minimum of four doors and two 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. These figures are only examples and not fixed in definition and they are subject first to budgetary approvals and availability of finance.

“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.

“Our experience in Lagos was that on every one hectare of land where it was possible to build 8-10 blocks of houses, at least 1000 people got employed,” the Minister added.

For the power sector, he spoke of a plan to liquidate verifiable and agreed debts that have been accumulated, and approve a market tariff through which it could make the electricity distribution companies more efficient and committed to a fair metering system.

Electricity tariff

He said the government had directed the Nigeria Electricity Regulatory Commission (NERC) to work out a fair market tariff and make it public upon conclusion.

According to him, the Federal Government will increase the current official electricity tariff for manufacturers to boost their power supply.

He asked the governors to 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 the government can use the existing legal framework to attract embedded power supply to these people who must be ready to pay for the power.

The minister said that “in such cases, the tariff may be higher than the current official tariff, but it will be many times a significant improvement on what they have and we will need the collaboration of the Discos to achieve this”.

On debt and tariff, he said: “What we expect to do is to liquidate verifiable and agreed debts that have accrued, approve a market tariff and hold the DISCOs to a more efficient and fair collection system based on the use of meters, so that consumers pay for only what they use.

“The Regulator, NERC, has been mandated to work out the fair market tariff and announce them when they are finalized.”

He said the government would boost the local meter production, sale, repair and maintenance industry to create jobs.

“We expect that this to aggressively energize the local meter production, sale, repair and maintenance industry and create spin off jobs for our people.

“We expect to see the growth of meter recharge small businesses like we saw in telecoms recharge cards and telephone hand set sales,” Fashola said.

The minister urged governments live by example by paying their electricity bills.

Fashola said that topmost in the government’s priority for the power sector was getting contractors to finish on-going transmission contracts to enable it to transport the power being generated to the DISCOs to distribute.

According to him, in 2015, the total budget for the power ministry was ₦9.606 billion. Out of this, he said, ₦4.476 billion was for recurrent expenditure to cover salaries and overheads, while ₦5.130 billion was for capital expenditure, supposedly for on-going projects.

Continuing, he said:  “This was a significant under-provision, even if it was to complete only 22 (twenty-two) of the 142 (one hundred and forty-two) transmission projects I mentioned earlier estimated at over ₦40 Billion.

“Apart from these, there is a 10MW wind energy project in Katsina nearing completion, a 215MW plant in Kaduna and the 3,050 MW plant in Manbilla Taraba State all of which need to be completed.”

On gas, he noted that there are some issues that beset the gas sector, such as the environmental issue and the availability of gas infrastructure, such as pipelines and the issue of pricing which are all the responsibilities of other ministries.

He disclosed that in view of the budgetary approvals and financing, there are indications that the Federal Ministry of Petroleum Resources can build critical pipelines to transport gas to the power plants to increase power by 2,000 megawatts (MW) in the next 12 to 15 months.

Fashola said: “Subject to budgetary approvals and financing, the Ministry of Petroleum indicates their ability to build certain critical pipelines to transport gas to the power plants that will add another 2,000 mw to our stock of power within 12-15 months.”

Low pricing, he said, is affecting the gas to power, stressing that gas vendors would naturally prefer the international corridor that offers US$4:00 per unit of gas to the local market of US$1.30 per unit.

According to him, now the amount of power that is available is slightly larger than the capacity which the transmission network can support.

The minister said: “We have identified a total of 142 (One Hundred and forty-two) projects of which 45 are at 50% level of completion and about 22 (twenty-two) can be completed within a year.

“The budget estimates are known and we intend 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.”