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Economy & Politics

Sam Amadi vs Eyo Ekpo twitter tirade explained

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The controversy pertaining to the sudden reduction in electricity tariffs few months to the 2015 elections, was resurrected recently when Eyo Ekpo, then a commissioner at the Nigerian Electricity Regulatory Commission (NERC) denied being part of the decision making the process. He also criticized the move, labelling it a patently bad decision”.

In what can be described as a tirade between ex-government officials of former president Goodluck Jonathan, the shenanigans that preceded the privatisation of the power sector and the ensuing tariff changes was laid bare by two of the most significant people in the Nigerian Electricity Regulatory Commission, NERC.

Two officials: Dr. Sam Amadi was the NERC Chairman during the Goodluck Jonathan era while Eyo Ekpo was the commissioner in charge of Market Competition and Rates. Both men played key roles in the sale of equity in distribution and generating companies in 2013 and more than anyone else know exactly what went down.

What led to this: Eyo Ekpo was apparently responding to a series of commentary rendered by Sam Amadi on the current state of the power sector, since privatisation in 2013. The power sector is under renewed scrutiny following the end of the first 5 year period during which government is expected to review the performance of the investors in the privatised assets.

Ekpo’s tirade: In his first thread, he blamed Sam Amadi for not listening to his advice for a more cost reflective tariff, which he believed would have led to a more market-oriented industry. Thread: Ekpo’s attack.

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  • Rather than allow for a full cost reflective tariff, Dr. Sam Amadi, reduced tariff by zeroing collection losses which discos typically charge back to the power sector consumers.
  • Collection losses are the balance of a disco’s electricity bills that never get paid by consumers.
  • Eyo believes, allowing the discos to recover these losses by spreading it across customers via tariff would have given them the required funding to put measures in place (such as metering) to recover the losses.
  • Therefore by reducing tariffs, instead of increasing them, discos fell into a deeper financial hole, leaving them unable to pay the market for power generated and thereby slowing down the entire power privatisation program.
  • According to Eyo “@SamAmadi’s inexplicable tariff-reduction decision kicked in and had the effect of totally destroying @NERCNG’s credibility and thus confidence in the market itself. Till now, the electricity sector (it is definitely no longer a market) is yet to recover.” 
  • He also alleged that the former NERC chairman took the decision to reduce tariff without the support of other NERC commissioners. “Dr. Sam Amadi cannot credibly say that the tariff reduction instigated by him in March/April 2015 was a good decision taken in accordance with regulatory due process. He also cannot say truthfully that all 7 Commissioners in NERC unanimously took that decision.”

As expected, Sam Amadi responded in fiery fashion accusing Ekpo of falsehood and licking his wounds for failing to take his position as Chairman of NERC. Thread: Amadi’s reply.

  • He claimed Ekpo was part of the decision making that led to the decrease in tariffs by eliminating the collection losses.
  • According to Amadi, the decision to reduce collection losses was collective and included Ekpo’s input but that he was on leave when they took the decision.
  • He claimed, before Eyo went on leave, his proposal for a tariff increase was not approved by the commissioners are they believed it would increase tariffs by 180%
  • He also claimed the decision was based on “evidence-based” citing neighbouring Ghana, were collection losses are zero as an example. 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. 
  • He claimed members of the Steel Industry had complained that tariff increases would cripple their industry and render them bankrupt.
  • He also accused Eyo of trying to take his job as NERC Chairman

Eyo replied again basically disparaging Amadi’s thread claiming he never wanted NERC leadership position and insisting that Amadi was to blame for not following through with the tariff plans they had for the industry. Thread: Eyo’s second reply.

Bottom Line: To see two ex-leaders in the power sector trade words over the privatisation of one of the most important sectors in the economy is a big shame.

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  • Both men are perhaps eyeing a bigger role in Nigerian Politics and trying hard to defend their roles in what many see as a poorly midwifed privatisation of the power sector.
  • As Twitter user @Flexdada summed it up, “All i can deduce from this buck-passing thread from @eyooekpo and @SamAmad is that most of the people piloting the affairs of this country are bunch of egocentric people that cannot co-exist without squabbles at the detriment of the people. You guys are a huge disappointment.
  • As the government considers what next to do to salvage the floundering power sector, it must ensure that the right set of leadership, with a clear understanding of how markets are designed to function, are appointed at the helm of affairs of power sector regulation and supervision.

Collection Losses explained: Assuming I sell 5,000kwh worth of power to you at N10, my revenue would be N50,000. Thus I expect that you pay me N50,000 without a loss. However, customers in Nigeria hardly pay the full electricity bill due to estimated billing. If my collection loss is 20% then it means I only get to account for 4000kwh of energy thus earning me just N40,000. This means discos are unable to pay for the full cost of power generated to them.

To mitigate this, the market charges back the losses to customers and holds discos accountable on a path to reducing those losses. To charge back and adjust the tariff it basically works from revenue to answer. It divides the 5,000kwh by the 80% (less the 20% loss) to arrive at 4000kwh. To derive the tariff it needs to charge customers so it can earn its N50,000 revenue for the 4,000kwh it can account for, it divides the revenue by the 4,000kw. N50,000/4000kwh= N12.5/kwh.

Thus tariff increases from N10kwh when the losses were zero, to N12.5kwh when the losses are 20%.

Editors note: The article has been updated to reflect new information.

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Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via [email protected]

4 Comments

4 Comments

  1. dam dam

    June 15, 2019 at 5:56 pm

    Whats the incentive to provide meter if the discos are just going to recover their loss- estimated billing- back to the customers? to recover their cost they should provide more meters

  2. Anonymous

    June 16, 2019 at 8:46 am

    The calculation is wrong. It should be N12.5KWH not 20 with the losses considered.

  3. Anakor, Sam

    June 17, 2019 at 11:46 am

    The two giants are only making noise.
    The consumers like me continue to bear the brunt of all the noise and inefficiencies.
    DO THEY PAY FOR POWER THEY CONSUME IN THEIR HOMES?
    The solution is for them to give every consumer a Pre-paid Meter and cancel all the accumulated Over bloated Estimated Billings.

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Economy & Politics

Bus fare paid by Nigerian commuters increased by 68.8% in October 2020

The average fare paid by Nigerian commuters for a bus journey intra-city spiked by 68.82% from N190.86 recorded in October 2019 to N322.22 in October 2020

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Mile 2 Road, Bus fare paid by Nigerian commuters increased by 68.8% in October 2020

The average fare paid by Nigerian commuters for bus journey within the city spiked by 68.82% year-on-year from N190.86 recorded in October 2019 to N322.22 in October 2020. This was contained in the transport fare watch report, released by the National Bureau of Statistics (NBS).

The Transport fare watch report for the month of October 2020 covered the following categories namely: bus journey within the city per drop constant route; bus journey intercity, state route, charge per person; air fare charge for specified routes single journey; journey by motorcycle (Okada) per drop; and waterway passenger transport.

READ: Nigeria’s inflation rate jumps to 14.23% in October 2020

According to the report, the average fare paid by Nigerians for a bus journey within a city also increased by 4.03% when compared to N309.73 recorded in September 2020. Meanwhile, States with the highest bus journey fare within the city were Zamfara (N585.34), Bauchi (N504.78), and Cross River (N431.04); while States with the lowest bus journey fare within the city were Abia (N192.11), Kebbi (N205.47), and Borno (N208.15).

READ: These 3 states are the most expensive to travel from in Nigeria

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Highlights

  • Average fare paid by commuters for bus journey intercity increased by 9.25% to N2,209.84 as against N2,022.7 recorded in September 2020, while it increased by 35% compared to N1,636.86 recorded in the corresponding month of 2019.
  • States with the highest bus journey fare intercity were Abuja FCT (N4,376.09), Lagos (N3,073.41), and Sokoto (N3,055.12); while States with the lowest bus journey fare intercity were Bayelsa (N1,473.67), Enugu (N1,560.00), and Bauchi (N1,560.49).
  • Average fare paid by commuters for journey by motorcycle per drop increased by 3.88% month-on-month and by 115.50% year-on-year to stand at N265.41 in October 2020 from N255.51 and N123.16 respectively.
  • States with the highest journey fare for motorcycle per drop were Niger (N1,476.40), Kogi (N372.45), and Rivers (N352.47); while states with the lowest journey fare for motorcycle per drop were Adamawa (N78.49), Katsina (N106.20), and Kebbi (N135.75).
  • In terms of air travel, the average fare paid by passengers for specified routes single journey decreased by -1.70% when compared to N36,884.59 recorded in September 2020. It however increased by 18.42% (year-on-year) to stand at N36,256.08 as against N30,615.43 recorded in October 2019.
  • States with the highest air fare were Anambra (N38,500.00), Cross River (N38,460.00), Jigawa (N38,250.00); while States with the lowest air fare were Akwa Ibom (N32,750.00), Sokoto (N33,250.00), and Gombe (N34,800.00).

What you should know

Nairametrics reported in October that the average fare paid by commuters for a journey by motorcycle per drop, more than doubled in September 2020 when compared to the corresponding month in 2019, increasing by 111.11% to stand at N255.51 in the month.

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READ: NBS discloses States with highest bus fares in Nigeria (Full List)

Bottom line

The persistent increase in the prices of transport fares across the country is a resultant effect of the Covid-19 pandemic, which necessitated drivers and transporters to reduce the number of commuters they carry at a time.

This is in line with the health measures implemented by the Federal government to help curb the spread of the corona virus in the country.

Explore Data on the Nairametrics Research Website

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Economy & Politics

PIB and Electoral Amendment Bill pass second reading in House of Reps

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Reps to investigate alleged illegal withdrawal of $1.05 billion from NLNG account, NDDC Probe: Reps give Akpabio 48 hours to publish name of lawmakers who got contracts, PIB and Electoral Amendment Bill pass second reading at House of Reps

The Petroleum Industry Bill (PIB) and the Electoral Act Amendment Bill has passed second reading in the House of Representatives.

This was disclosed by Channels TV on Tuesday after both bills were addressed by Lawmakers for the second time during plenary.

On the Petroleum Industry Bill

Rep leader, Alhassan Doguwa, said the PIB has been in the pipeline since the firth assembly and hopes the 9th Assembly would be able to pass the bill.

Chairman of the House Committee on  Upstream Petroleum, Musa Adar, stated that Nigeria needs the PIB, as it does not have the luxury to be irresponsible with resources. Citing the effects of the pandemic on the economy, he added that Nigeria’s needs a mature oil industry that will maximize productivity and compete with other crude oil and gas exporting nations in the continent.

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Minority Leader, Ndudi Elumelu, said the PIB is a necessity, as the world is going green and Nigeria needs to maximize its oil and gas sector, and also explore other options.

The world is looking to go green in less than 20 years and it makes it pertinent for Nigeria to gain maximally from the oil sector and look to explore other oil products before petroleum goes obsolete as a commodity,” he said.

(READ MORE: The new PIB may scrap DPR, PPRA, others)

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On the Electoral Act Amendment Bill

The purpose of the Bill is to regulate the Electoral process across Federal and Local government levels, in order to give it more transparency.

The bill was sponsored by Rep. Aishatu Dukku (APC-Gombe). She added that the bill is necessary to fix Nigeria’s flawed electoral system. 

“This amendment has become necessary because of the flaws observed in our electoral system. It’s no longer news that our electoral experiences since 1999 show a strong correlation between an efficient and effective electoral legal framework and the conduct of free, fair, and credible elections.

“In fact, amendments of our electoral laws were long identified as priority legislation by the National Assembly, because of the need to consolidate on the gains of our democratic achievements and to also address the lacuna identified in the electoral legal framework.

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“A typical example is the case of the Kogi Governorship election in 2016, where a leading candidate died after the commencement of polls, but before the declaration of results.

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“In addition to this are concerns that the legal framework on certain issues should be well settled ahead of the 2023 elections, such as the use of technological devices like the card reader and electronic voting system.

“Also, criteria for substitution of candidates, disclosure of the source of funds contributed to political parties, replacement of lost or destroyed permanent voters card, the penalty for the possession of fake voters’ card, dates for conducting primary elections, shall not be earlier than 150 days and not later than 120 days before the date of the election, etc.

“The bill, therefore, seeks to address many loopholes in our electoral system by way of amending over 300 clauses (including new provisions) of the Electoral Act 2010,” she said.

What you should know 

Nairametrics reported last week that the Minister of State for Petroleum Resources, Timipreye Sylva said the Petroleum Industry Bill (PIB) may be passed into law by the first quarter of 2021.

“There is no better way of diversifying the country’s economy than through a well-developed oil and gas industry, particularly with the huge gas resources in Nigeria. So, PIB will be the most credible attempt towards a holistic diversification of the Nigerian economy,” he added.

House of Representative Speaker, Femi Gbajabiamila, also disclosed that the House would ensure that it passes the Petroleum Industry Bill within the next six months or probably less.

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Economy & Politics

Budget proposal review of MDAs is a legislative right – Femi Gbajabiamila

Gbajabiamila has stated that the budget review on MDAs conducted by the House of Assembly is a right of the National Assembly.

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House of Reps determined to resolve ASUU issues and empower youths - Gbajabiamila , #EndSars: House of Reps to draft new Police legislation in 30 days, Speaker Gbajabiamila asks NLC to suspend strike, offers palliatives, #EndSARS: House of Representatives will do everything to deliver a policing system that works - Gbajabiamila

The Speaker of the House of Representatives, Femi Gbajabiamila, stated that the budget review on MDAs conducted by the House of Assembly is a right of the National Assembly. He added that the House of Assembly has the constitutional right to ask questions on MDA budgets.

The speaker disclosed this on Tuesday during the plenary session of the House in Abuja. The House spent most of last week grilling Ministers and Heads of MDAs over their budgets for the 2021 fiscal year.
The speaker said during the budget defence week, some MDAs Chief viewed the process as an “undue incursion”.
I have observed during the recent budget defence process that there are still some MDAs that consider the exercise of the legislative authority to review their budget proposals as an undue incursion into the management of their offices,” he said.
When the committees of the House of Representatives and the Senate convene to review the heads of expenditure contained in the Appropriation Bill, we do so in the exercise of clear and concise constitutional authority.”
He also added that budget review is an obligation of the House and that budgets need to be done on time.
It is in the best interest of our country that all parties concerned subject themselves to this process in good faith knowing that this too, is an obligation of service to our country. We will pass the budget, we will do it early and we will do it right,” he added.
The speaker revealed that the House has started process to review the Electoral Act in preparation for the 2023 elections.
“Perfecting the process through which we choose the people that will serve in government is an essential requirement for the continued development of our democracy.”

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