Energy poverty affects millions worldwide, particularly in developing countries where corruption perpetuates inequality and hinders economic growth. In this exclusive interview, Valuechain’s William Emmanuel Ukpoju delve into the intricate web of corruption that plagues the energy sector, exploring how it contributes to energy poverty, undermines economic development, and compromises the well-being of vulnerable populations.
In this discussion, Ekanade Israel Kehinde sheds light on the complex relationships between corruption, political instability, and weak governance structures, highlighting the vulnerabilities in the energy value chain. The interview examines the role of international financial institutions, donor agencies, and civil society organisations in combating corruption and promoting transparency.
From energy subsidies and price controls to state-owned enterprises and national oil companies, we probe the factors that facilitate corruption and energy poverty, our conversation also explores practical solutions, including policy reforms, technological innovations, and community-led initiatives.
Excerpts:
Let’s look at corruption and energy poverty: How does corruption contribute to energy poverty, particularly in developing countries?
Corruption contributes to energy poverty in many ways in developing countries. An epileptic power supply causes backwardness in many economies, and monies meant for power generation or the overall improvement of the energy sector are in the private pockets of politicians and government officials, especially in the third world.
Can you provide examples of corrupt practices aggravating energy poverty in the energy sector?
Sure; the diversion of funds meant for energy prosperity is a major example.
How do political instability and weak governance structures enable corruption in the energy sector?
Political instability and weak governance structures create an environment conducive to corruption in the energy sector in several ways:
Lack of clear policies and regulations, frequent changes in government and leadership, insecurity and conflict, disrupting energy operations, weak institutions and lack of accountability. There is also inadequate oversight and monitoring mechanisms, a lack of transparency in decision-making and contracting, ineffective anti-corruption agencies and laws, limited civic engagement and participation, embezzlement and theft of energy revenues, bribery and kickbacks in contracting and licensing, nepotism and cronyism in staffing and promotions, manipulation of energy data and statistics, collusion between government officials and energy companies. Lastly, political instability weakens the energy sector because there is no continuity of desired goals.
What role do international financial institutions and donor agencies play in perpetuating or combating corruption in the energy sector?
They serve as Ombudsman and intervene through the provision of funds. The civil society has done some good work in this respect. When they fail to diligently monitor the activities in the energy sector, the consequences will be dire.
How do energy subsidies and price controls contribute to corruption and energy poverty?
Energy subsidies are not made public and people are not aware of how the government reel out monies to subsidise energy consumption. Energy cabals are at work and the whole thing is shrouded in secrecy for personal gain at the expense of the citizens.
Let’s delve into energy sector vulnerabilities: Which aspects of the energy value chain (e.g., extraction, transmission, distribution) are most vulnerable to corruption?
All are vulnerable to corruption. Corruption can occur at various stages of the energy value chain, but some aspects are more vulnerable due to inherent risks and complexities. The most susceptible areas are:
1. Extraction (Upstream):
– Licensing and concession allocation
– Contract negotiation and management
– Revenue collection and management
2. Transmission and Transportation (Midstream):
– Pipeline construction and maintenance contracts
– Transportation tariffs and pricing
– Third-party access and capacity allocation
3. Distribution (Downstream):
– Network expansion and maintenance contracts
– Metering and billing systems
– Fuel subsidies and pricing
In addition, we have high-risk areas such as:
1. Trading and Marketing:
– Oil and gas trading agreements
– Price manipulation and market fixing
– Counterparty risks
2. Refining and Petrochemicals:
– Feedstock procurement and pricing
– Production planning and allocation
– Product marketing and sales
3. Power Generation and Transmission (Electricity):
– Plant construction and maintenance contracts
– Fuel procurement and pricing
– Transmission and distribution losses
Thus, key corruption risks in the energy sector are bribery and kickbacks, embezzlement and theft, nepotism and cronyism, conflict of interest, data manipulation and falsification, regulatory capture, and lack of transparency and accountability.
How do state-owned enterprises (SOEs) and national oil companies (NOCs) contribute to corruption in the energy sector?
Officials of NOCs often collude with state bureaucrats to rip and steal money; they under-declare the amounts of funds invested. This is another form of organised crime.
How has corruption affected energy access and affordability in Nigeria?
Corruption has had a devastating impact on energy access and affordability in Nigeria. Despite investing nearly $20 billion in the electricity sector over the last two decades, only 12.5% of Nigeria’s population of 170 million people have access to distributed electricity. This means that about 43% of the population, or around 90 million people, are left without access to the electricity grid. PHCN was privatised, what came out of it? The EU gave us some money some years ago for the purchase of free energy for the populace, politicians sat on the money. Monkeys and snakes have been swallowing money in Nigeria.
Lastly, let’s look at solutions and recommendations
What policies and reforms can help reduce corruption in the energy sector?
Hold the stakeholders accountable. Criminalise corruption in this sector and a specialised court to try offenders, the law should prevail in all circumstances, and government interference should be minimal or zero.
How can civil society organisations and community groups effectively advocate for energy sector transparency and accountability?
They can do this by whistle-blowing or calling them out. They could also organise to sensitise the citizenry about whistle-blowing.
What role can technology (e.g., blockchain, digital platforms) play in reducing corruption and improving energy access?
They can mitigate corruption and block potential loopholes. For example, South Africa’s energy utility, Eskom has urged prepaid customers to update meters before the 24 November deadline. Energy rouges have been circumventing the system, hence this new move would mitigate such crimes.
How can energy companies prioritise local community needs and concerns?
When they engage the locals, they should employ CSR ideals and better the lots of these communities and the inhabitants.
What indicators or metrics can assess the impact of anti-corruption efforts on energy poverty?
Energy availability is very important. Arresting and prosecuting energy touts/rogues, providing forums to challenge/ expose compromising energy, and organising anti-corruption conferences on the above subject will also go a long way.
Ekanade Israel Kehinde is a Postdoctoral Research Fellow in the Department of Law, Safety and Security, Tshwane University of Technology, Pretoria, South Africa. He obtained his PhD in Political Science from the University of Venda, Limpopo, South Africa. He has presented papers locally, regionally and internationally. He is a fellow of the prestigious Bergen Summer Research School (BSRS), Norway. Ekanade has publications in peer-reviewed high-impact factor journals and books. His research interests include Politics of Belonging, Terrorism and Violence, Race and Ethnicity, Political Economy of Migration, Political Islam, and African Studies.