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How to halt N1t electricity subsidy, CBN’s N1.5t interventions

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Electricity stakeholders in the country, yesterday, insisted that removal of subsidy in the power sector was feasible if the Federal Government and the Central Bank of Nigeria (CBN) could streamline interventions in the sector to mitigate the negative impact on the masses.

Last week, the Federal Government alerted that the gap between the Cost Reflective Tariff (CRT), and Allowable Tariff (AT) peaking at N28 per unit of electricity supplied to consumers, this year stands at about N1t.

Coming at a time that it is also considering subsidy removal on Premium Motor Spirit (PMS), the Special Adviser to President Muhammadu Buhari on Infrastructure, Ahmad Zakari, had disclosed at the 12th edition of PwC Nigeria’s Annual Power and Utilities Roundtable, that the nation needs to optimise the potential in the power sector through a cost-reflective tariff regime.

Since the sector was privatised in 2013, perpetual interventions through the CBN have served as lifelines to the sector. They include Power and Aviation Intervention Fund (PAIF), hovering at about N300b, Nigerian Electricity Market Stabilisation Facility (NEMSF), which is about N213b, an N140b Solar Connection Intervention Facility, an over N600b tariff shortfall intervention, as well as a recent N120b intervention designed for mass metering among others.

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In March 2017, the Federal Executive Council (FEC) approved an N701b CBN facility as Power Assurance Guarantee, just as the Federal Government, in 2019, also signed the release of another N600b to bridge the shortfall in the payment of monthly invoices by key stakeholders in the sector.

Fueled by tariff shortfall, receivable collection, technical, commercial and collection losses, financial liquidity in the power sector hovers around N4t as the apex bank, alongside the Federal Government has continued to initiate a series of interventions to douse tension and avert a collapse of the 2013 electricity privatisation exercise.

In about eight years, the CBN would have spent over N1.5t to keep the nation’s power sector afloat although the sector was privatised to survive by itself.

Although most stakeholders insisted that the interventions remained critical, especially in easing the liquidity crisis and attracting further interventions, they maintained that tweaking the interventions in manners that would ease further the masses’ burden and halt arbitrary billing of consumers was very important.

Renowned energy expert, Prof. Wunmi Iledare, noted that interventions by the CBN as a payable loan was understandable, even if it is a forgivable loan.

He insisted that the current structure of the electricity market in the country could mar the interventions, stressing that there must be a decentralised energy planning system.

According to him, while it is good that banks are targeting spending, subsidy may be a political expediency instrument, not economic efficiency hence “it should be disavowed. By the way, estimated billing now termed electronic billing is fraudulent! A quick way to bring subsidy to an end is metering and decentralisation of power management and services. Nearly everything centralised in the fashion of militarism has failed woefully, education, health, energy services road infrastructure, name it,” Iledare said.

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An energy expert, Eseosa Lloyd Onaghinon, stated that the energy sector must be rid of inefficiencies, which is usually passed on to consumers, adding that there are about 40 per cent inefficient losses between transmission and distribution.

“If we do not address such losses that occur, we might as well get into a trap where it’s an unending discussion of ‘subsidy’ even though it is continuous inefficiencies covered up as subsidies,” Onaghinon stated.

For energy lawyer, Osagie Agbonlahor, most of the woes experienced in the sector were responsible for the poor electricity situation in the country, adding that the development should be blamed on electricity operators, revenue collectors and the powers that be.

“How many army, police, air force, navy barracks in the country that their residents pay electricity bills at all? How many government ministries, army, air force, navy offices pay for the electricity that they consume? Who has ever dared to drive to the barracks and disconnect their source of public power supply the way they do to ordinary Nigerians? For how long has this been going on in this country? If you take away these huge leakages, you will see that the ordinary Nigerians have been sustaining and subsidising the electricity consumption of these people.

Agbonlahor said that the government broached the idea of deducting the huge outstanding electricity bill consumed in barracks and government offices under President Olusegun Obasanjo.

He noted that “until we start to do the right things, we are just going to be beating about the bush.”

He asked the government to do a forensic audit of the N1t subsidy to check where the so-called subsidy is coming from.

The Guardian had earlier reported that the failure of federal and state governments, as well as their ministries and agencies to pay over N100b outstanding electricity bills is currently worsening the liquidity crisis in the sector.

The situation has also reportedly led to distribution companies hounding private electricity consumers who pay more through estimated bills and higher tariffs, rather than recover outstanding debts from government agencies.

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AutoTrends: Customs to reintroduce suspended e-valuation of vehicles Friday

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The Nigeria Customs Service (NCS) says it will reintroduce the suspended electronic valuation of vehicles on Friday.

The NCS said this in a letter dated May 17, 2022, and signed by Ajibola Odusany, NCS’ deputy controller, administration, on behalf of Yusuf Malanta, area controller in charge of the Apapa Command of the service.

Also known as vehicle inspection number (VIN), the policy has generated controversy since its introduction this year.

Clearing agents associations had protested against the e-valuation policy and grounded activities at the ports.

The freight forwarders said the e-valuation system sharply increased duty paid on imported vehicles.

This had forced the NCS to suspend the implementation of the VIN policy, following the intervention of the House of Representatives.

In bringing back the policy, the NCS said there would be a sensitisation programme for stakeholders in the clearance chain in preparation for the redeployment.

“In line with the planned nationwide deployment of the VIN Valuation on Friday, 20 May 2022, and the need to continually enhance the platform for optimal performance and service delivery, the sensitisation which is scheduled to take place on Thursday, May 19, 2022, at 11:00 am is to hold at the Apapa Command conference hall. The Deputy Controller Administration, A Y. Odusanya, on behalf of the Customs Area Controller requested that clearing agents should send their representatives to attend, saying the session would benefit everyone and further clarify any question,” the letter stated.

Acting President of Nigerian Licensed Customs Agents (ANLCA), Kayode Farinto, confirmed the development,

saying the association would speak after the training.

“We’re going for the training. So, we can’t say anything until we’re through with the training,” he said.

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AutoTrends: Stop driving your old crossovers, Mercedes warns, recalls ML, others

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Mercedes-Benz has asked owners of certain older crossovers to stop driving due a to corroded brake booster that could cause the brakes to fail.

The automaker said the request and corresponding recall applied to 292,287 ML-, GL-, and R-Class crossovers and SUVs from the 2006-2012 model years.

Recalls are common, but urging customers to stop driving is not,  according to thecarconnection.com.

In the affected vehicles, water exposure in the brake booster housing can cause a joint to corrode, leading to a leak in the brake system.

Brake force may also be reduced, forcing drivers to press harder on the brake pedal to decelerate and come to a stop. In rare cases, Mercedes said, it may be impossible to stop if there has been severe corrosion.

The risk of a crash or injury would increase, although Mercedes said it was aware of no known crashes or injuries related to the issue.

According to the premium brand automaker, the emergency brake pedal is not affected, and could be used in case of a regular brake pedal failure. Mercedes will provide complimentary towing of the affected vehicles to service centers.

Dealers are expected to inspect the brake booster housing and replace parts as required. If the part cannot be fixed immediately, Mercedes said it will help “coordinate an individual solution for the customer, including alternate mobility.”

 

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AutoTrends: Hyundai Sonata models face fuel leak risk

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A potential fuel hose leak in 2013 and 2014 models of Hyundai Sonata has again led to the immediate recall of the vehicles globally.

The NHTSA disclosed this, noting that the factory fault could increase the risk of a fire.

The 2013-2014 Sonata and 2013-2014 Kia Optima had previously been recalled for a fuel hose that can crack prematurely and leak fuel.

The tape and zip-tie remedy for those earlier recalls did not stick.

With the new recall, the fuel line will be replaced at no cost to owners, Hyundai states.

Without the proper fix, the leaking fuel could come in contact with a spark or ignition source that could cause a fire in the engine compartment, thecarconnection.com notes.

The recall encompasses 215,171 Sonatas. Owners may smell fuel on vehicles equipped with either the 2.0-litre turbo-4 or 2.4-litre inline-4 engines. Hyundai reported 138 incidents in the past two years of the defect, but the automaker said there were no known crashes, fires, or injuries.

Hybrid versions of both sedans from those model years were recalled for a separate fire risk.

Hyundai and sister brand Kia have issued a series of recalls for increased fire risk for a variety of reasons, ranging from a faulty electrical socket (2011-2012 vehicles) to a short circuit in the braking system (2006-2011 Elantras).

Owners will be notified by mail as early as July 5, and will be instructed to take their affected Sonata into a dealer to have the fuel feed line replaced at no charge, regardless of warranty status.

Hyundai owners who paid for fuel line repairs to address the leak will be reimbursed.

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