Simon Kolawole: The evil that diesel does

by Simon Kolawole

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MTN alone spent N34 billion on diesel to power its business, mainly generators serving its 11,000 base stations. You may wish to read that figure again: N34 billion!

Glad and sad. That sums up my mood since MTN released its 2013 results last week. I have been going through the statistics with a dose of gladness and a tinge of sadness. One moment, I am smiling. The next, I am frowning. I see possibilities. Then I see pains. I have also gone through the report of a Pyramid Research study commissioned by the Association of Licensed Telecoms Operators of Nigeria (ALTON) on the socio-economic impact of the telecommunications industry on Nigeria and Nigerians. It is amazing how the sector has changed, and is still changing, our lives. Beyond the regular statistics on mobile penetration and revenue, the story is that of a radical transformation of our lives in a decade. I am glad that I witnessed the evolution, not that I read it in books or got it from oral history.

Every statistic that stares us in the face tells us something good. There are now over 120 million active telephone lines, compared to 400,000 in 2001 before the revolution started. Millions of Nigerians now earn their living either directly or indirectly from the sector. Telecoms is fuelling the economies of other sectors ─ including media, advertising, aviation, hospitality and professional services. Many Nigerians have become millionaires and billionaires through the economic activities generated by the telecoms industry. From a paltry contribution of less than 1 per cent to the GDP 13 years ago, telecoms’ share is now close to 9 per cent. By the time the National Office of Statistics completes its rebasing of its GDP metrics, that figure is expected to rise to about 20 per cent. This is remarkable and we cannot say anything to the contrary.

But these sweet statistics do not tell the whole story. Last year, for instance, MTN alone spent N34 billion on diesel to power its business, mainly generators serving its 11,000 base stations. You may wish to read that figure again: N34 billion! I do not have the figures for other operators such as Globacom, Etisalat and Airtel, but given the fact that MTN controls almost half of the market, we can guess that the overall diesel spend of the sector should be in the region of N60 billion. All because our power sector is pathetically and pathologically useless! The negative impact of poor electricity on telecoms equipment is better imagined: they were not calibrated to be run on diesel and that makes their lifespan much shorter than the manufacturers intended ─ and that requires frequent change of equipment which is an unnecessary expenditure.

Look at the figure again. MTN spent N34 billion on diesel last year alone. That, according to the telecoms giant, is enough to build 5000 more base stations and banish poor services forever! Diesel is an injurious item which is hampering expenditure on infrastructure. In perspective, 5000 more base stations would be more than what Airtel or Globacom or Etisalat currently has. Telecoms services are available in towns and villages where there is no electricity at all. That means 100 per cent reliance on diesel. For the rest 70 per cent of Nigeria that is electrified, there are probably only three hours of power supply per day on the average. Basically, these base stations run on generators. For every base station, you need two generators to run a “relay race”. One generator will serve for 12 hours and the other will complete the lap.

The Nigerian Communications Commission (NCC) often punishes operators for poor services and makes a good public show of it, but who punishes the PHCN for the power epilepsy? Who punishes the vandals who damage telecoms infrastructure on a daily basis? Who punishes government agencies that stall installation of more base stations, hiding under some inaudible excuses? Ironically, it has to be noted that it is not in the interest of telecoms operators for services to be poor. While subscribers are in discomfort, the operators lose good money. They lose revenue for every dropped call. They could be making double the profits if their services improve ─ so it is actually in their interest for services to be smooth. The common sense, therefore, is for the government to see how to help not hurt the sector.

The tendency for us, as Nigerians, is to look at the profits of the telecoms operators and scream: “Wow! These guys are making a kill!” I do that a lot. While I appreciate the fact that they are making good money under these difficult circumstances, I often wonder why they are still complaining despite smiling to the bank. They are clearly making a kill. But the kill is for all of us. Judging from MTN’s figures (the financials of other operators are not available publicly), millions of Nigerians and their businesses are sharing from the “kill”: the copies of newspapers they buy every day; the advertising spend, including billboards; the artistes whose songs are downloaded on their platform and who get paid promptly, thereby dealing a blow on the pirates; the airlines (who sold tickets worth N275 million to MTN alone last year); the hospitality industry; and the lawyers whose services they engage.

We can talk about the insurance companies who rake in billions from insuring the telecoms sector; those who offer lease services to the operators; consultants from various professions; massive expenditure on corporate social responsibility; medical services; security companies; trade partners; the trillions of naira shared by the three tiers of government in taxes and levies; and so forth. The telecoms sector is such a big field and value provider that the government must do anything to encourage it by making the operating atmosphere less severe for them. If we look at the whole picture, the expansion of the sector should be a priority for government at all levels. When a sector of the economy is making a “kill” that goes round, it is in our interest to make sure it stays that way. The more “kill” they make, the more the economy benefits and the more value goes round down the chain. That is how they can have enough “kill” to go round. It is a virtuous cycle.

I am an advocate of lower tariffs  and, indeed, tariffs are going down effectively, mainly through competitiveness in the industry. But I believe that the tariffs can even be lower if we begin to put the necessary support infrastructure and less harmful policies in place. We should not take it for granted that the telecoms sector cannot go burst. It can go burst. If enough investment is not pumped in as a result of lack of confidence on the part of the investors, we will start seeing the negative impact someday. We should not discourage investors. I was very surprised when the NCC auctioned 2.3Ghz spectrum recently and big global players did not show any interest. Many players who were targeting our market before such as Vodafone  would ordinarily have shown some interest. Why did they stay away? Is there something they saw? I don’t know, but that is not a good sign.
I would implore the government of President Goodluck Jonathan to pay more attention to the needs of the telecoms sector. We should never take anything for granted. Today’s success needs to be further strengthened through more investments,  encouraged by a friendly policy environment and less injurious regulation. With the national broadband policy in full swing, we are headed for bigger and better tidings from the telecoms sector. I want to be glad, not sad.

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We should not take it for granted that the telecoms sector cannot go burst. It can go burst. If enough investment is not pumped in as a result of lack of confidence on the part of the investors, we will start seeing the negative impact someday
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CONFERENCE CON
I’m a bit worried about the preponderance of old timers on the delegate list to the National Conference. We are expecting them to define the future of a country that they may never be part of, and, most worryingly, they are going to be talking more about yesterday than tomorrow. I find it amazing that while the Awolowos, Azikiwes and Bellos made their marks in their 20s and 30s, our youth are being squeezed out and will have little or no say about the country they will be living in for the next 50 years. Analogue thinking in digital age!

APC, GOOD MOVE
There are reports that the All Progressives Congress (APC) have asked their lawmakers to block an attempt by Presidency to buy another jet and renovate Presidential Villa yet again. That is a smart move. This exactly is what I expect the opposition party to be doing ─ advancing the national interest rather than blocking the passage of the budget or preventing the screening of ministerial nominees just to score a political point. The budgets for another jet and Aso Rock renovation should be directed into productive use.  Our leaders have no right to be comfortable when most Nigerians are not.

OBI, TAKE A BOW
There are some governors I have a soft spot for, purely because of their record of public service. I never get moved by orchestrated criticisms against them. I recognise their failings, of course, but in a country desperately lacking in public-spirited public officers, it is always good to see outliers like Mr Peter Obi, the outgoing governor of Anambra State. I knew Obi before he became governor and I can testify that nothing has changed about his life. Focused, prudent, modest and people-oriented, Obi is not your typical Nigerian politician. I hope he will serve Nigeria in some bigger capacity one day.

ABG, THUMBS UP
As expected, the Minister of Sports, Malam Ganiy Bolaji Abdullahi (we call him ABG, not GBA), has fallen victim of the 2015 politics in the cabinet. Having been nominated by Senator Bukola Saraki, a sworn enemy of President Goodluck Jonathan, ABG had always been on the precipice. He was sacked by Jonathan on Wednesday while air-borne on an official trip to Europe. ABG is, without questions, one of the most successful sports ministers we’ve ever had, and I am happy that he was not sacked for corruption or ineptitude. He has done my generation proud. Very proud of you, ABG.

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Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.

One comment

  1. The sequel is 'the good that we can do'! Insightful expose..much to glean from it!

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