Wednesday, April 25, 2012

Public disapproval of NAWEC’s proposed tariff increase leaves little hope for a refusal

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It is increasingly becoming clear that the last thing Gambians and residents would accept is an increase in electricity tariff by the Government-owned National Water and Electricity Company (NAWEC).
The people said they are already grappling with the realities of economic hardship - rising food prices, poverty, low income and unemployment. But NAWEC, which enjoys hegemony in the production, transmission and distribution of essential social services (electricity, water, and sewerage), says the company desperately need to increase charges to avoid collapse.
On March 17, 2012 the company’s proposal for a 33 per cent increase on the above social services was open to debate for consumers to (approve or disapprove) during a Public Hearing organised by the Public Utilities Regulatory Authority (PURA). The Voice Newspaper’s Modou S. Joof recounts.

After brief opening statements by the PURA Managing Director, Mr. Abdou Jobe, NAWEC Managing Director, Mr. Ebrima Sanyang who both give a background of the tariff review process and a presentation on NAWEC’s proposal for tariff review by Finance Director Alhagie Jallow – the subject was open to debate to every Tom, Dick and Harry.

NAWEC will have a very big problem trying to increase so-called prices for their services, stressed Mr. Pa Modou Faal, Secretary General of Gambia Workers Confederation. “Gambia is not an oil producing country,” he said, noting that the company depends heavily on a variety of imported fuel.
He charged that the company should reveal when last it imported fuel into the country and whether the company does have other markets were fuel prices are cheaper. For him, an increase in tariff could increase fuel prices in the country.
NAWEC commercial director Mr. Nani Juwara agreed. He said Gambia is not an oil producing country for now, but says the company can neither control fuel prices nor the importation of fuel into the country. 
His managing director, Mr. Ebrima Sanyang explains that the company does not import fuel in small amounts. “The fuel is procured based on contracts with our suppliers,” he said.

NAWEC’s expansion project is increasing problems faced by the company, argues a man who only introduces himself as Mr. Jallow. He recalled that in 2011 the overall power supply has gone up to 51megawatts, which was only enough to cover one-third of the country. “Why do you want to expand when your services has not been improved,” he asked. “As long as we cannot be assured of improved services, I do not agree on a tariff increase.”
However, Mr. Nani Juwara says NAWEC cannot scale down expansion. This is a government company guided by policies. If we want to scale down expansion then we’ll contradict government policies, including the rural electrification expansion project.
He argues that services have been improved, citing electricity supply brought to what he called “disadvantaged communities” in Tallinding and Mandinaba. “If you look our debt, there is no way we can sustain the company if there is no increment on our tariff,” Juwara said.
The expansion project is the solution to the erratic power supply, argues Mr. Ebrima Sanyang, saying the Venezuela network upgrading project in the Greater Banjul region (of more than D331 million) will solve the problem of obsolete machinery. He assured: “If tariff is increased, service will improved. We will be able to do maintenance on time, address leakages and attract investment.”
 
On PURA, Mr. Jallow said, last year people opposed a 37 per cent proposed increment on electricity.  Why should 99 per cent of the public oppose the proposal and yet PURA grant NAWEC a 17 per cent increase? He said it’s like a waste of time to call people to the hearing.
“People have lost confidence in the public hearing, that is why the poor attendance,” said Mr. Yorro N. Jallow of Ibo Town, who observed that majority of the attendees are made up of NAWEC and PURA staff, a small mobilized group from the Consumer Rights Protection Consortium (CPC) and a few individuals.
But PURA managing director, Mr. Abdou Jobe argues “We’ve not call people here just to waste their time.” He explain that the Public Hearing is the six of nine steps required of the utilities regulatory body in the tariff review process before NAWEC’s application is granted or refused.

The only woman who subscribed to the February 12, 2011 proposal, Aji Haddy Jobe of Bakau says she still favours an increase in price of electricity one year later. However, Jobe, who is yet to have NAWEC-supplied electricity in her home, admits people are living in hard times.

“The CPC is concerned that an increase on electricity tariff will have a multiplier effect and will translate into higher production cost of businesses and could trigger a proportionate rise in prices of goods and services,” the CPC said in a statement.
In response, Mr. Nani Juwara said NAWEC has no control over a projected increase in prices of basic commodities which may come as a result of electricity tariff increase. He lament that 90% of the company’s expenditure on (heavy fuel, lubricants, spare parts etc) is beyond their control. "So we need help. The 33% increase is not enough to breakeven," he said.
MD Ebrima Sanyang argues that he never heard the CPC raise voices against the frequent unannounced fuel price increase in the country that are normally effected without consultations. The CPC had earlier emphasize in  a long lists of goods that the proposed tariff increase could also result to an increase in prices of second-hand clothes, but Mr. Sanyang disagreed. He said that is very unlikely.

“90 per cent of stakeholders, including designated consumer groups who were consulted during step-two of the tariff review process opposed NAWEC’s proposed 33% tariff increase,” a representative of the CPC, Mr. Alpha Jallow reveals.
PURA MD Mr. Jobe agreed. He said PURA is working in the interest of consumers and utilities service providers but that does not mean that if the public disapprove of the tariff increase proposal PURA will have to refuse the application.
“It has to be thoroughly looked into in the next step of the process based on the application and the comments during the public hearing. Then PURA makes a justified decision based on all the steps taken,” Mr. Jobe explains. 

Notwithstanding, the CPC recommends that NAWEC scales down operations and PURA suspend the review for 6 months to enable establishment of a taskforce committee of various stakeholders to study NAWEC’s situation and come up with a workable formula to bail it out;
A final report of NAWEC audited financial accounts made available to the taskforce to look into its operational cost and effectiveness in utilization of scarce resources;
A study be conducted to determine network losses and degree of wastage and leakages; NAWEC and stakeholders explore available opportunities to review operations and look at alternative renewable energy sources (solar, wind, biogas etc);
PURA and stakeholders assist NAWEC to recover pending bad debts and look for alternative sources of funding from within and outside the country; and
That PURA does not unilaterally approve tariff increment without another consultative stakeholders meeting.

Another representative of the CPC argues that NAWEC can never repay its loans of (D3, 198, 859, 422) if it wants to rely purely on tariff increase. He said NAWEC needs a government bailout or else it will default in its debt. He blames the company for a lack of maintenance of its equipments and over staffing.
As usual, Mr. Nani Juwara will not agree. He argued that the company is manned by responsible people, citing that some of NAWEC engines are three decades old – still operating 24 hours and has been maintained rightly despite resource constraint.
 “Our staffing has always been an issue. We are not over staff, we still need more staff. Only eight per cent of our budget goes to staff salaries and allowances,” he said.
Contradictorily, he said the NAWEC management had recommended redundancy of 45 staff. This, according to him, is contained in an internal report by the company. However, no one has lost his job as a result just yet.
  
The issue of Senegal's SENELEC Company once faced with similar financial woes and subsequently bailed out by the Senegal government was also raised. As NAWEC’s MD explains, the Senegalese Government was able to tap previously untapped revenue sources to solve their problem.    

When the issue of NAWEC to focus on collecting its outstanding debts than increasing tariff was raised, Mr. Juwara said the company successfully collects 80 percent of monies owed to it monthly. However, he fell short of admitting that the remaining 20 per cent has been proving difficult to collect from the government. “It is only the government that we sometimes have to “maslaahaa” (compromise),” he said. “NAWEC is own by the government.”
In the absence of a cost-reflective tariff it is important that we come up with measures on how this (loan) can be paid, Mr. Ebrima Sanyang added.


At the beginning of the hearing, the moderator Mr. Malick Jones introduces two panels recording questions, comments and responses, as experts from NAWEC and PURA.
I was happy to hear you say these are the experts, said Christiana Jatta, a political science student of the University of The Gambia (UTG).
What are experts for, she asked. They should be able to look into the issues affecting NAWEC and come up with tangible solutions to the problem instead of depending on a tariff increase. She compared "our experts" with those in Europe who would go to the extent of forecasting issues that are likely to affect people and give recommendations and measures to be taken to avert any future problems.
Can't these experts work like that and come up with reasonable measures to address NAWEC's problem, she asked, arguing she did not mean to "embarrass" them anyway. Christiana, who suggest it’s high time for Africans to take their priorities right, laments now-a-days people knew when they will have or will not have power supply. “You can hear people saying today we will not have light,” she said, apparently referring to the ever-increasing shifts adopted to supply power to the most populous region in the country, Greater Banjul Area.


The managing director of Gambia Postal Services, Mr. Momodou Ceesay said he did not oppose the proposed tariff increase, but note that the 33% is far beyond peoples’ income. “We should also remember that the average wage in this country is D1300,” he said.
He said his office pays one million Dalasis on electricity annually and a 33% per cent increase means he will spend an extra D330, 000.
For him, access to electricity is in fact viewed as a human right in some countries in the world, but Mr. Nani Juwara, NAWEC commercial director argues that electricity is more of a commodity than human right.

The propose tariff increase also applies to water and sewerage, but people in The Gambia are more concerned with the cost of electricity, which has been in erratic supply over the years. No one talk about water and sewerage and when the moderator urged them to do so, one man claimed Gambia has the “lowest charges” for water in the sub-region.  

They voted 12-3 in disapproval of NAWEC’s proposal; however, their stance leaves little hope for a refusal of the application by PURA.
“A bag of rice is costing D1000 and this country is already heading for a food crisis, yet they want to increase the tariff for electricity,” grumble an “angry-looking man” who would not introduce himself as he walks out of the Father Farrell Hall at West Field, Serrekunda where the public hearing was held.


The Author, Modou S. Joof, is the news editor of The Voice newspaper in Banjul. He is also a contributor to the Daily News newspaper and the Market Place Business Magazine in Banjul and the African Voice newspaper in Dublin.
As IIJ Alumni, he also writes for the IIJ-Weblog and the publisher of The North Bank Evening Standard.
He twits @thenorthbankeve and you can also follow him on Facebook: The-North-Bank-Evening-Standard

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