I have waited for 24 hrs to see if lies can mutate to truth. But lies remain lies. So, now I respond to lies and malice from someone who has a deserved reputation for treachery and megalomania. Here are the facts:
1. Falsehood No.1 Eyo Ekpo alleged that I have kept quiet for 4 years about what happened and started speaking now. TRUTH: I started speaking the first day I left office about what happened. I have explained every fact about it.
Of course, Eyo is a liar so he can easily alleged that I kept quiet till now. Of course, I don’t ever keep quiet. I am bold and honest. The day PMB came to power I argued controversially that he has right to change electricity policy. I was attacked.
FALSEHOOOD 2. Eyo claims he was not party of the tarrif review. TRUTH: He was. The process commenced before he went on leave. Commissioner for Government and Consumer Affair had brought a memo alleging that Eyo as Com.MCR decieved the commission to approve a tariff that has no bearing to realities in the Market.
In his Memo he showed clearly that collection losses we allow the discos were far more than the old PHCN companies. In Ghana collection losses was set at zero. This means that our tariff structure was inefficient. we were providing a disincentive for efficient operation. The memo was evidence based.
The commission considered the memo and voted to reduce the collection losses to zero so that each disco will produce proof of its collection losses. Eyo was away when this memo was approved. On his return he brought a memo for review. At the meeting the commissioners were not convinced but deferred to him as Commissioner for MCR and we retained the collection losses contrary to strong views of the Com. GCA. The approved tariff resulted in 180% increase for some customer class in discos like Enugu.
The association of steel workers in Nigeria filed official protest complain of bankrupting of the manufacturing sector. Section 60 of NERC’s Business Rules requires review at the instance of aggrieved persons. The petition was filed more than 2 weeks before the Presidential election. My mother died on January 1 and i returned to Abuja on January 2nd to meet the delegation from MAN. I promised them a review of the tariff after the burial. If we are minded on political outcome we would not have signed such a high tariff on January 1, when presidential election was a few weeks ago. What urgency could have forced us to do so? If we were concerned about politics we would have rushed and reviewed the tariff before the election. But we adjourned to March when presidential election would have been over.
No one knew election was going to be postponed as at January 2, 2015 until January 8. so we could not have adjourned to March in anticipation of the election which outcome would have been clear before march I buried my mum on February 1, and attended weeding on February 8 to hear about postponement of election to my mother’s burial and INEC adjourned the election to March. clearly followed our process but election was postponed and it coincided with out schedule.
6.FALSEHOOD: Eyo claims that we did not follow process in reversing collection losses and reducing the tariff. TRUTH: We followed due process. Eyo participated in some part of the process. first we advertised public hearing at Sheraton Hotel, attended by all CEOS of Discos, consumer groups including MAN. At the meeting staff of MCR made presentation, CEOs made presentations, consumers made presentations.
NERCNG met as Expanded Executive Committee and established a technical committee made up of four engineering fellows in the commission and two of Eyo’s MCR to review how similar jurisdictions like India, Chile and Ghana treat collection losses. The committee presented its report and clearly ask the commission to remove collection losses and require every disco to proof such losses. Eyo was in the meeting and express his contrary views on record. The proposal was presented at industry meetings of CEOS, BPE, MOPand NERC. Expectedly, the discos and BPE opposed the proposal. As required of regulators we took evidence and conveyed a commission meeting where commissioners voted to approve the removal
FALSEHOOD: Eyo misrepresents the process and outcome as ‘cavalierly reduction of tariff’. TRUTH: The process was removal of unjustified costs which affected tariff. There is a world of difference.
@NERCNG commits to allow all operators recover their costs but those costs must be PRUDENT and RELEVANCE. This is the fundamental principle of economic regulation. Watch my explanation of this process, Sam Amadi Addresses Electricity Tariff Disagreement what NERC asked for is proof that these collection losses are real. Eyo thinks we should pass all imprudent and irrelavant cost to consumers. Perhaps, Eyo does not remember the core principle of rate-making, that only prudent and proven costs should be passed to consumers. I stand by the decision because it simply asked discos to show which uncollected revenue cannot be collected.
FALSEHOOD: Eyo claims he was resigned from NERC because of the reduction of tariff. This is typical Eyo. Eyo is notorious for treachery. Com GCA petitioned that Eyo decieved the commission in approving a tariff that will bankrupt industries. Eyo wrote a memo promising to leave MCR and go to GCA. I took advantage of the crisis and reposted all commissioners expect Commissioner for Legal and Vice Chairman. Eyo felt bad and the conspiracy began. He allegedly co-authored a report that asked the incoming APC government to appoint a new Chairman of NERC and Chairman of BPE (his other enemy) within 3 months. On the day President took over (June1), Eyo wrote a letter of resignation and urged the President to dissolve the NERC board. This is how far treachery and ambition can lead. A man who watched the sector collapse when pioneer commissioners were falsely accused and removed, now calls on President Buhari to act illegally to sack his colleagues because of loss of prestige and to achieve his ambition of being NERC Chairman. Imagine how infuriated the commissioners were that they all signed a letter to the President disparaging Eyo. He did not become NERC chairman unfortunately. So, Eyo did not resign to protest the tariff review even though he opposed it. Eyo resigned to take advantage of the political ill-wind against the commission. Typical of his career in treachery.
CHIEF FALSEHOOD: that the removal of collection losses caused the lingering of failure in the power. TRUTH: The power sector was designed to fail. We failed to corporatise and commercialize before privatizing; we privatize senselessly without paying attention to context and corporate governance and regulatory regime; we sold to investors who lacked capacity, etc. Eyo should remember that we had conducted three tariff hike before december 2015. Did any of these hikes resulting in any significant improvement in revenue or service quality? No. Why because the problem of the sector is not mainly tariff. Cost reflective is important. but excessive tariff hike is problematic because it cannot be collected and in a country with poor supply the propensity to pay is low. Eyo ought to know that when
@NERCNG conducted “Fit and Proper’ test on all the preferred bidders, only one (or none) has the requiste financial and technical competence to effectively manage the network. I took the report to the VEEPEE to argue that none of these firms are fit. VEEPEE was alarmed and set up a committee with BPE, MOP and NERC. We later discovered that BPE amended the TOR to reduce the threshold or financial and technical capabilties. The World Bank doubted that we could sell the discos. We surprised the World Bank and we rejoiced but we did not know we sold to ‘straw-men’
Eyo will recall the meeting called against me by Minister and DG BPE that I was against privatization because at the villa i adviced the DG BPE that so much faith in haste privatization is not justified by theory and practice, I hate to say I have been proved right. Check my 2009 book: Privatization & Public Good: The Rule of Law Critique to see my consistent view that privatization only works where competitive pressures are better to incentive efficiency than bureaucratic control.
If there is no such competitive pressure then privatization may replace public corruption with private corruption. Effective regulation is a proxy for competition in a non-competitive market. for those who don’t understand why we had to ask discos to justify collection losses, think about an increase of 180% for manufactuers in a sector where cost of electricity takes about 40% of the entire cost of production. Such an increase is mindless stupidity and unjustified. It kills competitiveness of Nigerian manufactures, and in fact will force industry off the grid and hurts the finances of the discos.
Enugu disco CEO confirm that such tariff is inconcievable. Traditionally, a once-time rate increase of over 20-30% is a rate shock. Then, think of 180% increase for a particular customer class. Think that such increase is because of unproved collection losses.
Now, after protest and support by the new government, these removed losses were added to the discos. Their financial profile afterwards has been worse than during the removal. Why? There are fundamental crises in the sector beyond pricing. I have spoken about them before. end.