Vice President Yemi Osinbajo says Nigerians are willing to pay for electricity if the services they receive from the distribution companies are constant and better.
Speaking during a webinar on Economic Sustainability Beyond COVID-19 organised by Emmanuel Chapel, the Vice President said it is not true that Nigerians do not want to pay more for power but that they have been unhappy with the poor service over the years.
Reacting to a question posed by the former Emir of Kano, His Royal Highness, Muhammad Sanusi II, the Vice President said, “Just to comment on the point you made and I have alluded to it that income elasticity is more important for persons living in the rural area and for the poor who need to have electricity for whatever means of livelihood they have.
“What we have discovered especially as we have worked with private sector to deploy solar power in different parts of the country is exactly the point you have made.
“For example, in Wuna, a village which is just outside Abuja, they never had light until a private company provided solar power there, what they pay on average for their power is well in excess of the N37 per unit that we pay for power of the grid.
“There is no question at all and Turankawa in Sokoto pay almost N100, so from many of the areas where we have been it is evident that this business of people not willing to pay for power is not true at all, as a matter of fact the reason why there is such great resistance is really the service level.
“Most people are used to poor service so they just see every tariff increase as injustice because they are getting poor service but are asked to pay more but where service is guaranteed people have been prepared to pay.
“This we have seen in Sabon Gari market in Kano, we have seen this in Ariaria market (in Aba) and in Sura market (in Lagos) and in so many different parts of the country. So I do think the question really is one of service, there must be a way of guaranteeing service in exchange for tariff increase which is really the point we have made with the DisCos and in truth, the DisCos are negotiating already with several of their clusters, the easiest, of course, are with industries but there aren’t much negotiations anyway because they are already some sort of cost-effective tariff for the preferential treatment that they get.”
Asked what is more important to the government, power for the industries or power for homes, Prof Osinbajo said, “I doubt if we have the luxury of choosing between both options. We need to do both as much as we can. The market failure in the power sector is mostly due to how the privatisation was done, as we now have a market that is so problematic due to not allowing market forces to determine price.
“We need to get to the market-based system in which the NERC would only serve as a regulator and not a determinant of the cost price of power. In March of 2020 the DisCo’s were mandated to go to the customers and negotiate based on service, this will help remove the subsidy regime that the government is bearing.”
The VP added that, “the entire grid currently leaves out about 60 million persons who do not have power and this is one of the reasons why the Economic Sustainability Plan has adopted renewable energy for the rural people by encouraging the private sector to install micro grids.
“It has already been done in Sabon Gari and Ariaria markets where power is paid for by store owners. In these two markets, the people are willing to even pay higher for the better services they are receiving. We have a target of 25 million homes for the micro grid across the country.
The Vice President also spoke on the 2020 budget for the health sector. Asked by the moderator, Prof. Konyin Ajayi, SAN, why the country is not spending more on health as the revised health budget shows a marked reduction.
In his response Prof. Osinbajo said, “the 2020 health budget has recorded the highest budgetary allocation to the health sector over the last five years. In 2018, N356bn was allocated to healthcare out of the total budget of N9.1tn. In 2019, the figure was N372bn out of the total expenditure of N8.91tn. This is a 13.3% increase of N372bn that was budgeted in 2019,” he said.
The Vice President added that, “of the total N9.45tn budgeted for 2020 by the Federal Government, N427.3bn (4.5 per cent) was allocated to health. The 2020 budget also made provision for N44.5bn for Basic Health Care Provision Fund (BHCPF), which is part of the FG’s total expenditure on health.
The Vice President added that, “the basic Healthcare Provision Fund stipulates one per cent of Consolidated Revenue Fund and we have witnessed a drop that went to the budget since revenue has dropped there is a corresponding reduction to that effect hence one notices this in the reviewed budget that was submitted to the Senate but we should also note that aside from the figure of N25 billion in the budget there is also 500 billion Naira which was the initial stimulus for stimulating the economy past COVID-19 which had 192 billion Naira specially for health.
Noting that N76 billion was also earmarked specially for health infrastructure such as hospitals and equipment, the VP added that there is another 70 billion Naira which the World Bank has designated as impetus for the health sector in Nigeria with the majority heading for the state governments.
“Altogether this will help shore up the difference noticed in the budget. For example, we should all have noticed how the states have risen up to the challenge of COVID-19 and we now see more testing centres which currently stand at 32 against the initial three when we began.
Other discussants at the webinar were Dr Ngozi Okonjo-Iweala, chairperson, GAVI, the Vaccine Alliance; Dr Donald Kaberuka, former AfDB President and His Royal Highness, Muhammadu Sanusi II, the former Emir of Kano while Dr Chinny Ogunro moderated the conversation alongside Prof. Ajayi.