Balogun: Non-compliance to Local Content Act Hampering MAP Scheme

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The Chairman/Chief Executive Officer of MOMAS Electricity Meter Manufacturing Company Limited, Mr. Kola Balogun, in this interview with Peter Uzoho, gives insights into issues around the Nigerian power industry, especially regarding to meter supply and local content. Excerpts:

You have been an active player in the Nigerian power industry and you are abreast with the challenges facing the sector. So what do you suggest should be the way forward?

The way forward is for government to call all stakeholders and look at new road map in achieving optimisation in our power sector. We cannot solve the problem of Nigeria power sector by mere academy exercise, or by throwing blames. it is important that all the stakeholders have one thing in mind, which is, our power sector must work, we must have reference cases where we can boast of success story. We need to start creating success stories by ensuring uninterrupted power supply.

That should be the new next level agenda for government. Also there is need for government to be more drastic in dealing with defaulters of local content in power sector. Government should jail those contravening the Local Content Act especially with regard to the supply of meters. People need to be punished for disobeying the Local Content Act. It is when the violators of Local Content Act are punished that they we know the importance of creating the local content in power sector. If people contravene the Executive Order 5 of the Local Content Act, they should be punished because until some people are punished, no one will sit up and embrace the Act.

There is need for us to create employment opportunities through the power sector. This sector can take many jobless people off the streets. So, until government insists on adherence to local content in power sector, we will not be able to go anywhere. It is through collaboration with the ministry, the agencies and players that we can address the challenges in the power sector. Enough of this deceit in the sector. We should not depend on people from outside to clean up our power sector. We can do it ourselves, the power sector degradation is as a result of we, Nigerians and we can fix it ourselves.

The MAPs that was launched since May doesn’t seem to be working. Also it was alleged that some power equipment imported into the country are still pending at the port due to high customs tariff. How do you react to this?

I am of the opinion that meter imported into the country is a total contravention of the Local Content Act. If regulation said you must do 30 per cent local content and you did not fulfill it whereas you are fulfilling the 70 per cent foreign importation of meters, what do you call that? I am confirming to you that none of the MAP licensees has approached me to buy meters according to the 30 per cent local content provided by regulation despite signing an MoU. So, the 35 per cent level by federal government is a welcome development to increase local capability. It is a serious issue which is a contravention of local content for them to even import meter without fulfilling the 30 per cent initial order from the local factory.

And I’m telling you that locally manufactured meters have passed all the tests required, validated and confirmed for consumption by all agencies responsible for the testing. As mandated by the metering code, they should pay for their negligence for importing meter without patronising local manufacturers. The Local Content Act must be respected. I don’t have problem with importing components and raw materials which I still pay five per cent on. Why would someone go and import meters without patronising 30 per cent local mandatory specification by government? I can table my capacity if I’m encouraged and same goes to other local meter manufacturers. So, we need to sit down and find out how to address the anomalies in the system. We need to develop our technological capability to address our power problem. Everybody should come and manufacture in Nigeria, we have what it takes in Nigeria to produce locally.

The regulation says that when you are to supply 1,000 meters, 300 must be purchased locally while 700 be imported and with the condition that you can only do otherwise if local factories cannot meet up the 300 meters. Fortunately, we have the supply. Then, you must keep patronising local company. But our MAPs licensees would rather prefer sending money to China and neglect the local manufacturers. Meanwhile, if they want to deal with local company, they will be asking for credit. I have never seen this kind of people in my life. I have never seen where people will disrespect your local company at the expense of foreign companies, it is absurd.

How do you think government can enhance the local content in power sector as it is being done in the oil and gas industry?

That is the responsibility of the ministry of power and the agencies under it. The minister of power should endeavor to call all the stakeholders in the ministry –the agencies, power equipment manufacturers, the Discos and all concerned and be emphatic about the importance of local content. The ministry also needs to chart a new road map in the sector on what needs to be achieved on a timely basis –the improvement required in the sector.

How do you ensure that each Disco has a feeder that we can say yes, this feeder delivers a cost-reflective, uninterrupted power supply and also ensures that feeders keep improving themselves? That should be the new target. They should ensure that each disco, within a quarter, cleans its feeders totally.

It is better we solve a problem out of a thousand than solving half problem out of a thousand or ignoring it. So, if one feeder has cost recovery, it means the disco will pay market operators their money and consumers we also pay bills. The minister should order that each Disco should improve its feeders and give quarterly reports on their performance. There must be a centralised database system by the regulators to know the exact volume of consumers we have. It’s not by request but as one stock point where they can see all consumers of power sector, not just what the Disco gives. They should have a supervisory council that will supervise the entire discos which of course, we have the technology to do.

The world is a global community which is growing significantly in IT compliance and this means we should trend with them because we have all the intellectuals that can do it. We need one single spot data base to monitor the entire discos effectively with their performance and it should be pluggable and done locally because we have the strength and manpower. We should not trade ourselves off by bringing foreigners to our local company for what IT can do. The ministry should champion new road map for the industry. The road map should be target-driven; this is what will change the power sector. This is what we should be talking about right now. Defaulters should be punished and local content should be respected and target to all the discos performance should be defined. The Nigerian Electricity Management Services Agency (MEMSA) would have to effectively play its role especially, on how many network they supervise. How often are the regulators checking regulatory compliance? These are things that every agency needs to do. And Disco should ensure improvement on quality. –how many feeders were they able to clean? How many consumers have stable power supply?

Meter manufacturers are lamenting low patronage, which negates the agenda of government in setting up MAPs. In your view, how would you assess the patronage level?

It’s part of my earlier submission that our people do not respect local content, that is why the emphasis on defaulters of local content should be made to face the wrath of the law, they should not allow anybody who contravenes the Executive Oder 4 of 5 of the local content to go scot-free. Often times, people contravene laws without facing the consequences which affects the implementation, but such should not be encouraged. We need to define the rule better, that anybody who contravenes the Local Content Act should be punished, because if all the MAP licensees respect the Local Content Act, the factory will be busy, and perhaps there will be more expansion. Now that there are levies on imported meters, that can force any other Chinese companies to come and set up their factory.

If these kind of levies are imposed on virtually all houses and equipment, we would have built up other factories that produce television, decoder and other in Nigeria. If we don’t address the failure of the past, we cannot sustain the tomorrow we want to build. We need to ensure local content remains, and to improve on the power sector, everybody should respect local content, everything produced in Nigeria must be consumed herein, and anybody who defaults must be punished. Until somebody is jailed for contravening local content, nobody will take Nigeria serious.

Do the local meter manufacturers have the capacity to meet market demand?

The same question was what some foreign investors who wanted to set up factories in Nigeria asked me. They said the few factories set up in Nigeria have not been optimised to full capacity. First and foremost, we must prove that these people are not fulfilling the local requirements. Let me tell you the procedure of ordering a meter – If you want to order a meter from China today, you will be asked to pay 30 per cent before the shipments, you will be asked to make the balance of 70 per cent and that period will take minimum of three months, but if they want to buy from the local companies, they will not give notice.

So, what you have is that they want to pay money and collect immediately. As we speak, I have over 20, 000 meters manufactured in my factory which is worth over N5 million. To borrow N5 million from bank was not easy. I cannot continue to produce when I am not sure of patronage. These are the issues we need to address. We must ensure everybody respects the sanctity of local content.

We have the capacity to produce more than what we have presently and we can grow it, but the capacity has not been stated. The ministry of power needs to investigate if truly we cannot meet the target just as they are doing to foreign factories. We are under-utilised, we need the intervention of all the agencies in ensuring they drive local content because that’s the only way to solve the problem of power sector. The solutions are here; we need to be given the opportunity to implement it

Do we assume that the importation of meters is affecting local meter manufacturer?

Absolutely, the importation of foreign made meters is destroying local factory development or sustainability in Nigeria. Therefore, we should commend the effort of government for increasing the tariff of imported meters. The effects of closing the boarder is yielding good results in the country. How it has increased the production of rice farmers is the same thing we need in the power sector.

We need to take a bold step to show that that tariff on imported meters remains, and that it does not change, and we have one of the best facilities to produce electricity meters in the entire West Africa which anybody can attest to. I can boldly tell you that electricity meters can solve energy theft in Nigeria. Be it bye-pass, revenue leakages, technical losses, the meter is enriched and designed locally to solve the problem.