National Economic Empowerment and Development Strategy (NEEDS) (Vi)
Continued from last week

Polity trust and targets
NEEDS proposes a targets for the power sector to meet 2007:
• Increase generation capacity from 4,200 MW to 10,000 MW (an increase of 138 percent).
• Increase transmission capacity from 5,838 megavolt amperes (MVA) to 9,340 MVA, a 52 percent increase.
• Increase distribution capacity from 8,425 MVA to 15,165 MVA (an increase of 80 percent).
• Increase tariff collections from 70 percent to 95 percent.
• Reduce transmission and distribution losses from 45 percent to 15 percent.
• Reduce controllable costs by at least 30
size to reduce staff strength by about 15 percent.
• Create 11 semi-autonomous business units (capital centers). (This target was met in January 2004.)
• Make the transmission company a semi-autonomous unit by April 2004.
• Unbundle generation by the fourth quarter of 2004.
The electricity supply industry is capital intensive and cannot be funded adequately by the government alone. The sector therefore needs to be reformed in order to attract private sector participation.
Key strategies
Necessary reform of the electricity industry cannot take place without enactment of Electricity Power Sector Reform Bill. Competition (facilitated by unbundling of NEPA and private sector investment) will not take place without an appropriate legal and regulatory framework, clearly defined market rules and adequate trading arrangements, tariffs that reflect costs, and improvement in tariff collection. Reform of the industry is therefore predicated on the federal government’s national electric power policy and the enabling legislation. The proposed Electric Power Sector Act will entail:
• Unbundling NEPA into distinct business units
• Establishing a regulatory agency for the electricity industry
• Establishing a rural electrification agency and fund
• Increasing access to electricity
• Privatizing business units that will emerge from unbundling NEPA.
The unbundled entities can be incorporated into separate legal entities only after the Electric Power Sector reform bill is enacted. Nonetheless, actions are being taken to operationalize the unbundling programme and to carry out other transitional initiatives that are consistent with the overall reform process and have the potential of fast-tracking the restructuring and privatization of the sector
There are several other important strategies for the power sector:
• Revenue enhancement measures. The Commercial Re-Orientation of Electricity Sector Toolkit (CREST) initiative has commenced in some NEPA business units. An extensive metering programme has begun, with a view to metering all customers within the next two to three years. Particular attention will be given to industrial and high-demand customers. Efforts are under way to put all government establishments on prepaid meters by the end of 2004. Outsourced revenue collection contracts will be strengthened, and measures will be introduced to discourage the payment of bills.
• Distribution and customer service
Some short-term external managerial and technical support will be provided to the unbundled entities. Expansion and reinforcement of the distribution network will be carried out to improve the quantity and quality of supply and to reduce losses. The proposed expansion and reinforcement will be funded largely from internally generated revenue, since the unbundled distribution companies will be the first to be divested to the private sector
• Transmission. The government will continue to own most of the major transmission company (TransysCo), but the company could be operated under a management contract. TransysCo will be responsible for electricity transmission and for marketing system operations. Meanwhile, projects to close the grid loop and decongest bottlenecks in the network will continue. The ongoing World Bank—assisted transmission development plan project will be concluded. Multilaterals will provide up to $500 million to develop the additional transmission capacity required for the enhanced generation.
• Genera tion:
The private sector is already participating in electricity generation. The federal government is funding four new stations, with a total capacity of about 1,400 MW. Most of the anticipated new capacity will come from the private sector. Generation will be unbundled by the fourth quarter of 2004, ahead of its ultimate privatization. Coal-fired generation will be developed as a strategic alternative source of electricity, mainly through private-public partnership, a proven option for this sort of activity. An initial integrated coal utilization project proposed for Enugu will incorporate a 500—1 000 MW power station. Before its implementation, comprehensive studies will be undertaken to ascertain actual levels of coal reserves. Other proposed programmes include development of the Mambilla and Zungeru hydro stations on a private-public partnership basis (with project development studies for Mambilla to be concluded in 2004) and commencement of the second phase of major rehabilitation for some power stations (Jebba, Kainji, Egbin) to prevent a reduction in capacity gas pricing. The gas and electricity industries in Nigeria are very interdependent. Reform in both sectors is imperative. Gas producers will need to make gas-gathering investments, while the Nigeria Gas Company will need to expand or upgrade its transportation infrastructure. The Nigeria Gas Company and NEPA have agreed on gradual adjustments in gas prices compatible with NEEDS economic empowerment and rural development priorities.
• Vandalism. Preventing vandalism of distribution and transmission infrastructure is a major challenge. (The timely completionof the Abuja-Shiroro line was threatened by vandalism.) The high cost of emergency repairs of the power infrastructure as well as lost of revenue during periods of repairs are of grave concern and pose threats to the reform process. The government will consider forming a special security unit for policing power installations.
Water resources
Nigeria is blessed with abundant water resources . Annual runoff at the Lokoja gauging station on the Niger River has peaked at 165.8 billion cubic metres. There is also a substantial hardwater available in the large sedimentary basins (the Sokoto and the Chad basins) that lie along Nigerian borders. Surface water potentials is estimated at 267.3 billion cubic metres, and groundwater potential is estimated at 51.9 billion cubic metres. Irrigation potential for about 3.14 million hectares is only 0.02 percent utilized and only 18 per cent of the total impoundment of 31 billion cubic metres of water in about 200 dams nationwide is effectively used. The Federal Office of Statistics ‘ 1999 Multi Indicator Cluster Survey estimated that only 52 per cent of urban dwellers (48 percent including semi-urban dwellers) and 39 per cent of rural dwellers have access to potable water. Water shortages are increasing in the North, major pollution is growing in the Delta area, and gully erosion is occuring in the southeast.
Policy thrust
The government policy direction commits to eradicating water being diseases and to improving water supply and management for other productive economic activities. NEEDS particularly recognizes the importance of managing water resources in an integrated and sustainable manner. The policy thrust of the government therefore will build on the National Water Resources Management Strategy, which involves all stakeholders to ensure integrated management and development of water resources in the country. The thrust is more on integrated management and development of water resources in the country.The thrust is more on integrated and price resources management to meet immediate and future water resources needs in all demand sectors—including human consumption, animal husbandry, agriculture, hydropower, inland waterways, environmental protection, and industry. The key objectives of the water resources policy include:
• Ensuring the development and management of water resources in an integrated manner and as a national strategic resource
• Protecting water resources and the environment for balanced social and economic development
• Involving all stakeholders—particularly the private sector—in the sustainable development of water resources through coordinated management and holistic utilization
• Optimizing the use of water resources at all times for present generations to survive on without compromising water supplies for future generations
Strategies
Key strategies for water resources include:
• Develop and implement a system of quality assurance consistent with WHO standards with hydro-geological mapping and water quality laboratories.
• Reactivate the River Basin Development Authority and other urban water development schemes.
• Protect watersheds to enhance underground water supply for sustainable aquifer recharge.
• Establish a legal and regulatory framework to promote rational use and protect water resources.
• Create an institutional framework and participatory approach encompassing all stakeholders in a public-private partnership in the sustainable development of the nation’s water resources.
• Build an information and water resources data-base to coordinate management and use of water resources in an integrated and holistic way.
• Uphold the principles of water resources economics and financing to ensure adequate funding and economic viability in water resources management.
• Maintain high standards in water resources infrastructure and assets management.
• Uphold riparian principles and the philosophy of sharing of benefits in matters of international waters.
The national water supply and sanitation strategy
Because water supply and sanitation are central to improvements in so many aspects of human development, health, education, urban and rural development, development of industry, and general economic development—and thus central to the government’s primary mission of poverty reduction—water supply and sanitation will remain a primary focus of the government under NEEDS. The National Water Supply and Sanitation Programme proposes a strategy for the water supply and sanitation sector in four subsectors: urban areas, small towns, rural areas, and water resources management and sanitation.
For urban areas, federal and state governments have agreed to cooperate in financing capital investment. State governments that are directly responsible for operational service will also need fundamental reorientation of their provision of services. Reform will require basing institutional and regulatory frameworks on the concept of water supply as a service industry.
Despite the public monopoly characteristics of water supply, separating infrastructure investment and ownership from service operation creates competition with significant efficiency gains. Allowing state water agencies more autonomy and increasing commercialization through service management, and lease contracts with private firms could increase efficiency. Detailed legal, institutional, and financial preparations are needed for water utilities to be efficiently managed and adequately regulated, and for state water agencies to become asset owners or regulators
For small towns, government policy is to decentralize ownership and management of water supply systems to attract and involve optimal community involvement and support from the private sector—including operating under contract—and regularizing the services of independent providers or franchisers. In small towns, the focus is on community ownership coupled with local private sector contracting for operations.
For rural areas, government focus is on increasing the water supply to attain 60 percent rural coverage by 2007 with a three-pronged approach of water rehabilitation, expansion, and construction of low-cost rural water schemes. This strategy includes sharing ownership and management by communities and local governments, with communities taking charge of operations and maintenance. In small towns and rural areas, the fiscal focus must be on phase-out subsidies for maintenance and on restriction subsidies to partial coverage of capital costs to engender greater community ownership.
Environmental management
The environment provides the foundation for a’ development efforts in Nigeria. Its close linkage to other major sectors of the economy is exemplified by the fact that agricultural productivity and therefore food security cannot be guaranteed in a degraded environment. Environmental degradation is caused by declining soil fertility, sustainable land use practices, lack of land for mining, harsh climatic conditions for crop growth, animal rearing and other factors.
The environment provides numerous opportunities for wealth creation and employment generation which reduce poverty. The forestry sector provides a plethora of income opportunities for the poor, including collage industries and the action of non-timber forest products, such as rearing sticks, ogbono, and a variety of healthful condiments. The majority of the rural population lives on medicinal plants for their health care-services indicating another important source of irrigation from forests. The coastal environment areas seafood, including fish, sea turtles, and periwinkles which serve as income sources and external exchange earners. The potential to develop ecotourism and to generate income by converting the wealth are also worth noting.
High levels of air, and, and water pollution and unsanitary environmental conditions predispose Nigerians particularly the poor, to disease. The result is an unhealthy workforce and the reduction of the potential for productive activities. A degraded environment also forces people to use resources to treat diseases that could have been prevented by maintaining a healthful environment.
It is a glaring paradox that despite the contribution of the environment to the national economy, environmental consideration are rarely mainstreamed into national development planning in Nigeria. The lapse probably reflects the fact that the contribution of the environment to the economy is not readily captured by traditional measures of growth such as GDP.
Critical issues in the sector include the following:
* Rapidly increasing production of waste.
• Uncontrolled development, without regard for waste management or pollution control, and the lack of proper management of waste
• Low level of sanitation, especially in city centers and peri-urban slums
• Absence of significant private sector involvement in waste management
• Environmental degradation, including deforestation, erosion, desertification, and pollution of the air, water, and land
• The impact of oil and gas development on the environment and unsustainable land use
• Weak enforcement of environmental laws
• Loss of biodivensity
• Extreme climatic events, such as droughts, floods, and climate change
• Inadequate environmental data
• Impact of agro-chemicals on the environment and public health
• Absence of a system of national accounting that captures the contribution of the environment to development indices
Policy thrust
NEEDS focuses on ensuring a safe and healthful environment that secures the economic and social well-being of Nigerians on a sustainable basis. The specifics of the agenda are enunciated in the Environmental Renewal and Development Initiative, the primary objectives of which are “to take full inventory of Nigeria’s natural resources, assess the level of environmental damage, as well as design and implement restoration and rejuvenation measures aimed at halting further degradation of our environment.’
Targets
The reform programme includes several targets:
• Control environmental degradation processes.
• Bring environment and waste pollution in cities and urban centers under control.
• Foster private sector participation in environmental protection.
• Comply with international standards in controlling and monitoring the environment.
• Promote local manufacture of equipment and the use of raw materials for environmental protection and conservation.
• Standardize the use of equipment in environmental services.
• Comply with international safety, health, and environmental standards as they relate to specific industries and sectors of the economy.
• Reverse the loss of biodiversity
• Phase out persistent organic pollutants.
• Phase out ozone-depleting substances.
Key strategies
The government’s strategic intent is defined by the following:
• Establish a central self-sustaining regulatory agency responsible for environmental enforcement, compliance monitoring, environmental auditing, impact assessment, and standards setting.
• Strengthen the machinery for desertification, erosion, and flood control.
• Promote synergy in implementing environmental conventions.
• Use space-based research and information technology for environmental management.
• Develop a private-public partnership scheme to address the increasing urgency of waste management.
• Promote a programme for private sector investment in waste-to-wealth management in cities and urban centers.
• Evolve proactive management of extreme climatic conditions.
• Reduce deforestation, especially in ecologically fragile areas.
• Adopt community-driven development approaches to environmental management.
• Promote community-based sanitation services.
• Install, calibrate, and standardize relevant early warning systems for monitoring the onset of environmental hazards.
• Promote the safe use of pesticides and other agro-chemicals to protect the environment and public health.
• Ensure food security by engaging in sound food sanitation practices.
• Promote sustainable measures for reforestation and afforestation that foster community-based industries and improve food security.
• Promote agro-forestry.
• Monitor and evaluate environmental management plans.
• Implement a strategic environmental assessment.
• Review the environmental impact of Decree 86 of 1992.
• Promote wildlife farming, sericulture, apiculture, and the marketing of non-timber forest products.
• Develop and adopt a system of national accounting that captures the economic contribution of the environment sector,
• Encourage the growth and adoption oft aromatic and herbal plants for primary health care.
• Implement the National Biodiversity Strategy and Action Plan.