Those in the know are aware that Nigerians are already overburdened by huge taxation, which has made the cost of living very harsh. While hikes in tariffs and taxes may bring in more revenue for the government, the truth is that no nation has been able to tax itself to growth and prosperity.
Governments easily forget they cannot tax employment without creating jobs. It is proven that governments do not create growth; businesses do. Anyone following the Nigerian economic trajectory since 2015 will easily reach the same conclusion: that businesses are closing down faster than they are coming up. Several blue-chip companies have left Nigeria due to harsh economic conditions, which include high tariffs and epileptic power supply, multiple taxation, and unfavourable business conditions.
Our leaders talk a lot about China and its economic strides. They forgot too quickly that China did not migrate from a poor country to a super economic power through taxation. China exploited its huge human resources, created a favourable business environment to attract foreign and domestic investments. China eliminated all the red tapes that hinder industrial growth and fought corruption.
In China, corruption is a capital offence, met with a stiff penalty of death. Nigeria may learn from China how to be ruthless in the fight against corruption. It is shameful that we impose and collect harsh taxes on impoverished people, only to loot the same taxpayers’ money with no fear of consequence.
The more we make it difficult for our citizens to survive, the more we create bottled-up anger that may one day erupt into volcanic proportions that we may not be able to contend with.
To avoid such a sudden eruption, people in government must be careful about how they are throwing the people as scrap. They must gauge the people’s pulse. Only someone living on another planet will fail to acknowledge that Nigerians are suffering, that the people are unhappy, and that hunger and insecurity have become a plague and a common scourge.
The best solution to our dwindling economy is not heaping huge tax burdens on the citizens, because no nation has been able to tax itself into prosperity without considering the people’s marginal propensity for consumption. Ours is a litany of failed dreams, broken promises, and squandered opportunities. The best investment we can make today and for the future is an investment in the people, an investment that will be backed by effective demand based on productivity.
I decided to pen this opinion after listening to Nigeria’s Minister of Power, Adebayo Adelabu, who warned Nigerians to prepare for the introduction of new tariffs that reflect the true costs of electricity, a euphemism for higher tariffs.
Adelabu, who spoke through his spokesperson, Bolaji Tunji, said the country’s economy can no longer afford to maintain electricity subsidies. The Federal Government, he said, presently has an outstanding debt exceeding N4 trillion owed to Generating Companies (GENCOs) for overdue subsidy payments. According to the minister, citizens must pay the appropriate price for the energy consumed.
I was baffled by the insensitive statements of the minister. Many questions came to mind: Was the minister deliberately dishing out lies to the public? Was he properly briefed on the subject? Has he met with consumers to determine if they are consuming what they are paying, talk-less paying more? As a minister of the Federal Republic, I had thought that his primary interest should be making informed policy decisions geared at protecting public interest and not pushing the false narratives of the generating companies who are now the new subsidy cabals.
Part of the problems we have in Nigeria’s public service is that we have very poor memories and people apply for jobs they have no passion for. Otherwise, if the Minister of Power cares about the truth, the questions for which he should be demanding answers are; ‘how did we get into this N4trillion electricity debt trap?’ How did we migrate from petroleum subsidy cabals to now electricity subsidy cabals? The answer is simple: The disparity between payment and service delivery is quite glaring. Despite paying high tariffs, consumers especially those in the fraud termed BAND ‘A’, do not receive promised 20 hours of electricity. Instead, they experience frequent outages and rationing. The high tariffs being paid are already killing and hurting businesses as no business can thrive with nearly 40 per cent borrowing at interest rates and paying N116.18 per kilowatt hour of electricity that was never supplied.
The root cause of our current energy crisis can be traced to the indiscriminate issuance of gas generating and supply licences by NERC on the basis of ‘take it or pay’ contract deliberately entered with the gas suppliers. A patriotic Minister of Power would have since taken an audit of gas suppliers. Determine the actual quantity of gas being supplied in real time. For the record, he may want to compare this statistic with the quantity of gas being received by DISCOs and consumption. What is the storage capacity of our existing gas infrastructure when compared with what the suppliers are said to be supplying? My findings reveal that our existing infrastructure can only handle less than 50 per cent of what is supposedly being supplied by the GENCO’s to the DISCO’s. NERC is aware of the infrastructural deficit, yet it allowed the Nigerian Electricity Trading Company to be pressured by corrupt powerful individuals in the industry to continue to issue licences and enter into supply contracts with suppliers who supply nothing except the phony invoices that are submitted to NERC for payment, and NERC though knowing the invoices are fictitious are bound to honour ‘the take-it-or-pay contract’ they wilfully consummated.
In his new book, Mr Bawa, the immediate past EFCC Chairman, chronicled the staggering scale, complexity, and audacity of the schemes used to siphon public funds under the guise of fuel subsidy payments.
His insider narratives revealed how billions of naira were recovered and several culprits brought to justice, while also shedding light on how entrenched corruption allowed the fraud to flourish for years.
Some of the strategies applied in the subsidy regime include: “Ghost importing and over-invoicing: Here, companies submitted claims for fuel that was never imported or inflated shipment volumes to receive excessive subsidy payouts.”
“Manipulation of bills of lading: By altering shipping documents, fraudsters exploited international price fluctuations to claim higher subsidies. Round-tripping and double claims: Single shipments were often used to obtain multiple subsidy payments.
Diversion and smuggling: Subsidised fuel was frequently diverted to black markets or smuggled out of Nigeria for profit.”
These practices, Mr Bawa said, were enabled by forged documents, weak regulatory oversight, and systemic collusion between corrupt government officials and private sector actors.
What Mr Bawa revealed in his new book is the same story playing out in our energy sector. Nigerians are paying for power neither supplied nor consumed. Where are the National Assembly representatives representing the people in all this? Do they have oversight responsibilities? If ‘YES’, why are they shirking their oversight duties? If indeed we want the economy to grow, the people’s representatives should be seen to be working for the people by asking the right questions. They can at least question the N4 trillion gas subsidy debt and how we got into the whole scam. The people need to know the truth. When we understand the root causes of the problem, we can begin to clean the mess and create a beautiful life for our people.
NERC and NEBTC must stop further issuance of gas supply licences and, if possible, review all licences issued as of December 31st, 2017, to Date. NERC must increase its regulatory oversight to ensure that contracts are fair, transparent, and in the best interest of consumers. Such a transparent contract will ensure that NERC pay for only what is taken by DISCOs. The current Take-it-or-Pay Contract is riddled with corruption as it has no provisions for liquidated damages for suppliers’ default.