Ariaria Market: Failed power project forces Aba shoemakers to spend millions on powering generators (part 3)

<SUNBIGHT>~Biafra~Nkwo~13th March,2022 @ 10:59 WAT

WHEN President Muhammadu Buhari commissioned the Ariaria market off-grid power project in January 2019, it was amidst glamour and great expectations.

The project developed by the Ariaria Market Energy Solutions Limited (AMESL), Aba, Abia State, was meant to achieve two major goals: support micro, small, and medium scale enterprises (MSMEs) with cheap, efficient power and also help achieve Nigeria’s climate ambition.

It is significantly among several market clusters piloted for the Energizing Economies Initiative (EEI) of the Federal Government (FG).

With about 37, 000 shops comprising 90 zones, the Ariaria International Market is described as one of the largest in West Africa. Each zone has close to 300 shops. So, it can be considered a huge cluster.

Due to its trade volume estimated at about N144 billion, the market is often recognised as the China of Africa. This is not to mention the shoe-making cluster and leather business at the powerline section.

And so, the expectation was simple. With such project, executed through the FG’s Rural Electrification Agency (REA), traders were to begin to enjoy cheap, steady, and efficient clean energy, thereby improving Nigeria’s Ease of Doing Business which stood at 53.4 point in 2019 and 56.9 in 2020.

“These shops are presently receiving constant, clean, and metered electricity with the remaining shops expected to be connected this year,” said REA’s former Managing Director Damilola Ogunbiyi, at the project commissioning in 2019.

But the reverse is the case.

Thousands of shops are still heavily dependent on generators and grid power. And this is similar to earlier findings in Kano and Lagos states.

Shoemaking artisans spend over N1 billion annually on power, lament exclusion

Just by the Ariaria market is the entrance to ‘Powerline,’ the shoemaking cluster. At the industrial cluster, you are welcomed by the deafening sound of generators.

The striking feature of the market is that it comprises artisans who solely manufacture footwear for domestic use and export to the West African countries. Unfortunately, the shoe cluster was excluded from the EEI project.

In Aba, traders troop in from Cameroun, Gabon, Abidjan, and other neighbouring nations for the locally manufactured Aba-made shoes.

The exports indirectly contribute to the local economy, the state’s Internally Generated Revenue (IGR), and the nation’s economic growth. Little wonder traders have continued to demand inclusion in the power intervention.

Field findings show that shoe artisans spend as high as N8, 000 monthly to power their generators, aside from monthly bills from the Enugu Electricity Distribution Company (EEDC).

While revealing the challenges confronting his members, President of Powerline Shoe Manufacturers Association of Nigeria Ikechukwunwa David says there are over 70, 000 shoe artisans battling with energy problems in Aba. David manages at least 5, 000 of them within the powerline cluster.

David assumes that considering the association’s contribution to the economy, the EEI should have been extended to the shoe manufacturing line. But, that was not the reality.

“It was restricted to just within Ariaria market.”

He insists if the FG was sincerely committed to diversifying the economy, and empowering business hubs nationwide, then the shoe artisans should not have been left out.

He noted, “…it is quite unfortunate that, here, where we have not fewer than 70, 000 artisans, does not have stable electricity, and we know we can grow our economy and make Nigeria one of the international manufacturing hubs.”

Meanwhile, two months before The ICIR’s visit, the feeder supplying electricity to the shoe cluster was dismantled due to a bill of N1.7 million.

Even though the artisans were able to raise the sum of N600, 000 so that power could be restored and external subscribers connected to the same feeder, the energy still remained erratic.

“We will be grateful if the government can come to our aid. The money spent on generators, Petroleum Motor Spirit (PMS), oil daily could serve other responsibilities,” says David.

Artisan spends 18, 000 monthly on power

For over 15 years, Steve Benjamin has been in shoe manufacturing. All through this period, he relies on grid power and generator. No government support has come his way, whatsoever.

He pays about N8, 000 monthly on the use of a generator. Also, he spends about N10, 000 monthly from EEDC estimated billing.

If he is lucky, he could make about N150, 000 monthly, deduct his rent. Yet, he believes the amount spent on power, especially alternative sources, is on the high side.

“The amount we spend on power is not encouraging. We waste money on generators, and the ‘NEPA light’ is not steady” he explains.

Regardless, Benjamin, who is the zonal vice chairman of the association, believes strongly that the Energising Economies Initiative will be useful if the intervention is extended to the shoemaking cluster.

Jude Ekene, also a shoe manufacturer, also shares the same position as Benjamin.

The shoemaker says the Enugu Disco has failed to supply power to them for three days, and that will not deter the EEDC from collecting its monthly tariff.

“In a month, we spend between N15, 000 to N20, 000, buying fuel. After that, we still pay ‘NEPA.’ ”

“If you refuse or  argue with them over the erratic power supply, they still get you disconnected, so that has been frustrating.”

Nevertheless, if one shoemaker spends about N8, 000 monthly on a generator, over 5, 000 shoemakers, for instance, will have to spend N40 million in a month, and N480 million annually just to buy PMS to fuel their generators.

With an estimated sum of about N18, 000 on power (generator and grid), at least 5, 000 shoemakers would be spending N90 million monthly, and N1.08 billion in 12 months.

This defeats the essence of the EEI project, which is to increase energy access to market clusters across the country and improve ease of doing business.

Fewer than 4, 000 shops connected from the 37, 000 targeted stalls

The REA says about 4, 000 shops have been connected to the independent power project but multiple sources say otherwise during The ICIR’s first field visit on December 4, 2021.

Some shop owners attribute their apathy to the project’s inefficiency. Others put the blame on the energy provider’s poor coverage of the entire market.

Except for the A-Line shops initially connected, most stalls are powered by ‘maja’ and other private generators, as earlier found in Sabon Gari in Kano as well as in Iponri and in Surulere, Lagos markets.

‘Maja’ is a local generator that provides a private power supply to individual shops in Aba.

The connected shops on A-Line have been demolished as of the time of visiting the market. The C-line and Medical line were not left out. They were pulled down in September 2021 for rehabilitation by the Abia State government.

The occupants have since left for an adjoining structure, also not powered by solar. Hence, the AMESL only connected a few shops, compared to the 37, 000 target.

Chinedu Benjamin’s shop is located beside the demolished A-Line. He is in the business luminaire – fancy bulbs and fittings. His shop is luckily among those powered. He says he enjoys the electrification project, except for occasional outages.

“This is better because when I was connected to ‘maja,’ the electricity would go off from 12 noon and would not be restored until 1 pm,” he says.

“There is always intense heat during this period, but, with solar, if you recharge, it may not trip off from 8 am to 5 pm.”

Still, it is a different experience for most traders. Another trader who speaks in confidence says even though he is connected to ‘maja,’ he will not mind using the alternative power intervention so long it is cheap and efficient.

He says about 199 other nearby shops are connected to the generator.

Further findings show that each shop owner pays based on points. That is, traders pay based on connected appliances (energy consumed). As such, an average shop owner pays N1,200 weekly for three points. This implies N4, 800 monthly. All these are power expenses made while operating ‘maja’.

Ultimately, the billing for independent generators is basically similar to findings in other markets investigated by this reporter.

“Maja is steady, and it is left on from 9 am to 5 pm. But, if solar is efficient, fine. What we need is the cheaper and stable alternative” he explains.

A shoemaker’s shop formerly at the A-Line is among those demolished for rehabilitation, but he currently operates a new shop. Though he also prefers anonymity, he describes the EEI tariff as ‘very costly.’

He now runs on a private generator spending about N6, 000 monthly to power his business.

Dynamics of Ariaria power project

Based on the project design, the AMESL is to work with other partners. They include Total Support, a project sponsor providing power generation services; Talevares, which provides power distribution services and Candesco Limited, designated to cater for metering.

Basically, the AMESL is to rely on Compressed Natural Gas (CNG) and an independent distribution network as mentioned above.

But findings reveal other firms were later established to complement the supporting services. They are the Ariaria Energy Meters Limited, the Ariaria Independent Energy Distribution Network Limited, and the Ariaria Market IPP Limited.

These companies are owned by two directors Okoye Chikwunenye and Iweze Odiakachukwu.

Chikwunenyeis is linked to at least 10 other companies while Odiakachukwu has interests in about five.

They all share the same address as the AMESL – 16 Rasheed Alaba Williams Street, Off Admiralty Way in Lekki Phase 1, Lagos State, except a few.

Odiakachukwu has stakes in Ariaria Energy Meters Limited, the Ariaria Independent Energy Distribution Network Limited, the Ariaria Market Energy Solutions Limited, Legal Technology Limited, Somolu Independent Power Plant Limited, and Sura Independent Power Limited.

Chikwunenye, on the other hand, has interests in Alvarez Investment Partners Limited, Ariaria Energy Meters Limited, Ariaria Independent Energy Distribution Network Limited, Ariaria Market Energy Solutions Limited, Betatech Investments Limited, and Iponri Market Energy Solutions Limited.

Other businesses in which he has interests are Kaptain Energy Resources Limited, SabonGari Energy Solutions Limited, Somolu Energy Solutions Limited, and Somolu Independent Power Plant Limited.

Based on findings, the energy firms specially registered for the purpose of providing stable clean energy for the Ariaria market were all inactive. Efforts to reach the owners to react to the findings failed even after reaching out to the implementing agency.

Head of Public Affairs at the Corporate Affairs Commission (CAC) Rasheed Mahe says a firm is tagged inactive once it defaults in its obligations to the CAC.

Meanwhile, the AMESL ought to power over 37, 000 shops in the Ariaria market. But apart from the 4, 000 shops REA claims are earlier connected since 2019, on-ground findings show the second phase is yet to commence.

And some of the initially connected stalls (4000 shops) are already demolished. Hence, traders still largely rely on generators and the grid.

Two months later zero shops connected to Ariaria energy project  

About two months after the first visit, On Saturday, February 19, this reporter visited the Ariaria market again to further verify the actual number of shops currently connected to the commissioned power project. But, none of the stalls was connected.

The shops under reconstruction which ought to have been completed since December were still at the foundation level.

Basically, the over 37, 000 shops now rely on either generators or the grid.

Security officials at the AMESL office say all of the shops (4, 000) initially connected to the power are already disconnected, including the customer care office located within the market.

The Managing Director of AMESL Kelechi Ihebuzo confirms this development, saying the firm is yet to exceed the initial 4, 000 shops connected as of 2019.

“You can see by yourself we have removed some of our equipment,” he tells this reporter through the security operative – an elderly man, protecting the power station. The elderly man identifies himself as ‘Bakassi.’

Ihebuzo confirms that the firm is expected to power over 37, 000 shops but none is currently connected.

Until the state fixes the needed infrastructure, such as the road project and shops being rehabilitated, AMESL will not power other parts of the market, he adds.

REA in urgent need of review

Unlike the Nigeria Electricity Regulatory Commission (NERC) which has the legal teeth to sanction and perform regulatory functions in the Nigerian Electricity Supply Industry (NESI), REA lacks such powers.

A highly placed source in the agency acknowledges the gaps, saying since projects are mostly private-sector driven, sanctions have become difficult.

The REA plays more of a supervisory role in facilitating especially off-grid power and independent power projects with support from the private sector to power unserved communities.

Subsection 13 of Section 88 of the Electric Power Reform Act (EPRA), from which the REA was established, spells out the ‘purpose of the REA’ through the REA Fund.

But through Public-Private Partnership (PPP), it is to “achieve more equitable regional access to electricity; maximise the economic, social and environmental benefits of rural electrification subsidies; promote the expansion of the grid and development of off-grid electrification, and stimulate innovative approaches to rural electrification.”

Nevertheless, the source within the agency reveals that efforts are ongoing to review the act through the National Assembly.

Power ministry keeps mum, Abia State government reacts

The Director of Information of the Federal Ministry of Power Austin Asoluka did not respond to calls and text message when he was contacted over the project failure.

But Chief Press Secretary to the Abia State Governor Onyebuchi Ememanka has responded by directing this reporter to Commissioner for Trade and Investment in Abia State John Okiyi.

According to the CPS, Okiyi will be in the best position to speak on AMESL failure to cover the 37, 000 shops and especially the shoe-making cluster.

In his reaction, the commissioner admits the entire market has not been fully covered by AMESL.

There are other energy sources from independent power firms which the traders can consider, he says. And for that reason, he adds that the state government will not enforce shop owners to patronise the Buhari-commissioned project.

He lists other options to include the EEDC, Aba IPP by Geometric Power Limited, ‘Maja’ (power providers through independent generators), and the controversial AMESL.

“We have always given our traders options whether the EEDC, Geometric or AMESL. In making such a decision, they will look at the cost of each offer. If they consider it capable of delivering on the condition of service, I’m sure they will subscribe to that.

“We will not, and cannot compel them to subscribe to any particular one. What we set out to achieve is to give people options; when it comes to a power supply, we have achieved that at Ariaria. It is now left for the service providers to find means to compete.”

“If you are a trader in Ariaria and the independent power is selling power to you at N100 and EEDC is selling at N20, you will look at which one is steady and at what time you need the service. And that is the same thing we have been preaching nationally,” Okiyi adds.

The commissioner advises FG to consider the same approach by deregulating some of its sectors for the public to have alternatives, rather than empower individuals in the name of subsidy and allow selected persons to import some products.

“Allow a free market environment where people can compete with the big providers. That is what happened in the telecom sector.”

He tells The ICIR that the state government is aware of the traders’ challenges, especially the high tariff.

“At the moment, we are aware they complained of the cost. I can assure you that…”

Okiyi, a former commissioner of information in the state, however, confirms that some of the issues raised in this report are responsible for deregulating the power supply in the market.

Some shop owners, he says, have already subscribed to Geometric Power while others make use of ‘maja.’

The new independent energy provider (Geometrics), he says, will commence operations in May, at most before the end of 2022.

“The beautiful thing is that they have options. It is a free market economy. We want to even improve the option more by shopping for any other power providers.”

REA unveils plan to visit affected markets

The ICIR wrote to the communications department of the REA but it is yet to get feedback on the array of questions put to it as of the time of filing this report.

Earlier, this reporter had met with the Special Adviser on Media to the REA DG David Otu to share some of the findings and concerns raised by shop owners at the markets.

He unfolded plans by the agency to inspect the markets and address the crisis.■

[Culled from Olugbenga ADANIKIN// International Centre For Investigative Reporting]

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