Daily Trust (Abuja)

28 May 2010

Nigeria: Winding Up Rural Electrification

analysis

THE Rural Electrification Agency, REA, was set up in 2005 to: promote rural electrification in Nigeria; set up and manage the Rural Electrification Fund as well as to coordinate rural electrification activities in the country.

In September last year, the federal government ordered that the Agency be wound up. No official reason was given but it was generally perceived that the failure of the Agency to live up to its mandate, coupled with alleged corrupt practices that emanated from award of contracts may have informed the presidential decision to shut the place.

On June 10, 2009, the late President Umaru Musa Yar'adua sent to the National Assembly a bill for an act to amend the Electric Power Sector Reform Act 2005 to repeal the Rural Electrification Agency. In a letter addressed to House Speaker Dimeji Bankole, the late President had stated: "I forward herewith for your kind consideration and passage into law, the attached draft Bill for an act to amend the Electric Power Sector Reform Act 2005 to repeal the Rural Electrification Agency..." The bill seeks to repeal the Rural Electrification Agency (REA) and to transfer its functions and liabilities to the power ministry.

But even as the draft bill seeking to repeal the REA, and transfer its functions to the Minister of Power has barely gone through the first reading at the Senate, the Ministry of Power last year shut down the gates to the Agency, thus raising public concerns. According to a directive from the ministry, the agency ceased to exist on its own with effect from September 15, 2009.

Section 88 (1) of the Electric Power Sector Reform Act of 2005 established the REA which started operation on March 16, 2006. It was set up as an independent public company with capacity to mobilize capital for sustained private-sector driven investment in rural electricity development in Nigeria for improved living conditions in the rural areas through enhanced agricultural, commercial, industrial and domestic activities.

A major goal of the agency was to increase rural and semi-urban access to electricity from its current estimate initially put at 35 per cent level to 75 per cent by the year 2020. Current statistics show that less than 50 per cent of Nigerians are connected to the national grid. Specifically, the REA was set up to provide access to reliable and affordable electricity supply for rural dwellers irrespective of where they live and what they do, in a way that would allow for reasonable return on investment through economically responsive tariff on investment, which is supportive of the average rural customer.

Although public perception over the performance of the Agency seems unfavourable, many have questioned the hasty manner in which the Power Ministry has handled the winding up process of the disbanded Agency.

Responding to inquiries on why his ministry issued a memo asking the REA to wind-up, the Minister of State for Power, Mr. Nuhu Wya said: "The memo to the REA is an internal administrative process of the ministry. There are a number of internal problems which we have noticed and which we are addressing. The fact that there is a bill at the National Assembly does not stop us from taking administrative measures.

While accusing the media of blowing the development at the REA out of proportion, the minister said:"Indeed, we have a bill at the National Assembly to repeal the REA Act, but what we are doing is an administrative work which is routine."

The ministry's memo addressed to the Interim Administrator of REA, signed by the Permanent Secretary, I. B. Sali, indicates that the Agency was scrapped with effect from September15, 2009. It read: "Further to the meeting held with the Honourable Minister of State for Power on Thursday, September 10, 2009, on the above subject, I wish to draw your attention to the following decisions for your information and immediate implementation where applicable: that the REA is hereby closed; and that all outstanding rents due for payment should be compiled and forwarded to the ministry and that no further tenancy agreement is to be renewed on any rented property; among others."

The memo further directed that all signposts of the defunct Agency be removed wherever they existed while also requesting that all correspondences to the Agency be addressed to the Power ministry.

About ten months after the memo, activities at the Agency have virtually come to a standstill. A visit to the Zone 4 headquarters of the REA confirms that government has shut down the place, even while the bill is pending at the National Assembly Some of the Agency's staff are said to have left in frustration to look for work elsewhere while those available were seeing idling away and discussing their plight.

This development has drawn reactions from analysts and observers who are wondering why government is hasty about the winding up of the REA.

One of the casualties of the REA's closure is the Association of Rural Electrification Contractors, AREC. In the wake of the closure, the contractors had dragged the power ministry and the REA to court over unsettled contractual debts amounting to N11.5billion. The case was later withdrawn due to a proposed out-of court settlement agreement between the aggrieved contractors and the Power Ministry.

But the ministry allegedly failed to sign the memorandum of understanding [MoU] that would have sealed the out of court settlement, a development that prompted the AREC to resume their court action.

Engineer Noel Keyen, Secretary of the Association said: "We have been waiting patiently for the Power Ministry to sign the MOU but until date that has not been done. Therefore we are in doubts about the sincerity of the out-of-court settlement, hence the resumption of our court case."

The REA has also had a regime of controversies bordering on alleged shoddy deals. For instance, the Chairman, Senate Committee on Power, Nicholas Ugbade, his House of Representatives counterpart, Ndudi Elumelu, and eight others were last year arraigned at a Federal Capital Territory (FCT) High Court sitting in Gudu, Abuja, over alleged fraud in the rural electrification contracts. They were alleged to have withdrawn N5.2 billion from the Central Bank of Nigeria (CBN) in December 2008 in respect of alleged phony contracts.

Others accused of the same allegation were Muhammed Jibo; Chairman, House Committee on Rural Development, Paulinus Igwe; the Managing Director of the REA, Samuel Ibi Gekpe; Permanent Secretary in the Ministry of Power and Steel, Dr. Aliyu Abdullahi; Simon Kirdi Nanle; Lawrence Kayode Orekoya; Abdulsamad Garba Jahun; and Kayode Oyedeji. All of them are facing a 156-count charge.

The Economic and Financial Crimes Commission (EFCC), which preferred the charges against them, said the accused as public servants breached public trust and conspired among them to defraud the country and thereby committed a criminal offence.

Reactions have trailed the decision to shut down the REA. An official of the Agency who wouldn't want to be named said: "The reasons advanced for scrapping REA are flimsy. The concept for setting up the REA was borrowed from America. The Minister is ignorant of our main mandates. Grid expansion, which he is talking about, is only one of our three core mandates."

The source further said:"Let me tell you that the whole issue started because some people felt that they were not carried along in the much-talked about 2008 contracts. Out of anger and vendetta, they took the matter to President Yar'adua, blowing it out of proportion."

The Electricity Workers' Union said it was wrong for the Minister of State to have taken over direct control of the agency for over one year, rendering the place inactive. An official of the Union said:"For the past one year, the Agency has been applying to the minister to even buy stationery. Has the minister become an accounting officer for an Agency?"

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