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OPINION

Why Power Sector Is Not Working

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For the purpose of clarity and in order to a have full understanding of the problems bedeviling  the Power  sector, it would be better to go down the memory lane and give a summarized state of the system before it was privatized. This will give Nigerians a chance to see how the sector transited to the current state and why the present arrangement no matter what is done is bound to fail.

Pre-reform period

Nigeria has had a reputation for poor power infrastructure and unreliable service – from NEPA (Never Electricity Power Available) to the PHCN successor companies. The sector suffered from lack of maintenance, lack of investment, aged and aging dilapidated distribution network, lack of funds, political interferences and bureaucratic bottlenecks, etc. Various governments’ efforts if any did not yield the desired results.

In line with the international trends, the government decided to tow along the line to reform the sector through a privatization exercise. This was alright, after all reform is part of living. But then, we, as always, tend to do things differently and wrongly.

The implementation of the reform was supposed to be staggered in phases rather than trying to do it all in one go. This was the beginning of the problem.

The setting up of a regulatory commission, market operators and transmission companies etc. are all in line with the international best practices but in our case, self and personal interest were the major considerations.

The mother of all mistakes in the Power sector, as far as I am concerned, is the privatization exercise as carried out by the previous government. There are some definite steps that are supposed to be followed before the privatization is embarked upon which the government should have done. This applies especially with regard to the distribution companies. As earlier stated, the distribution network had numerous problems and that, as part of the pre-privatization exercise, these problems should have been addressed.

The refusal to address these problems and going ahead to privatize the companies was one of the many reasons why the privatization was destined to fail because you cannot privatize problems. Dodging these problems is why we are in this situation.

The privatisation process 

The privatization process itself was flawed and fraudulent from start to finish and the new government admitted that the companies were shared amongst the friends of the previous government and their cronies.

The advertisement calling for technical partners and other requirements looked like they were tailor–made to suit the plan of the officials who wanted to benefit from the exercise. For example, the technical partner requirement was not well articulated and had many flaws. That was why no credible and experienced international power operators showed any interest and those that showed quickly withdrew when they read the Bid Documents, and visited the BPE’s data room. As a result, most of the bidders used sub-standard and small regional operators and even these small technical partners refused to take any equity in the Discos and were only used for the purpose of winning the bid. They also refused to be part of the Management and Board of these privatized companies. 

Take over/hand over of the companies 

With the failure of the technical partners to be part of the Board and Management of these companies, the Discos were handed over to people with no knowledge of the power business, no technical knowhow or management skills to run the companies. This is the beginning of the journey to ruins for the Power sector.

The Discos require people with deep roots in the power sector and with the competence, capability and skill to move the companies forward. The main concerns and interests of the new owners was the finance of the company and hence their first target. The NERC (the regulator) found this within 3 months of the take-over of the companies. They immediately launched assault on the financial resources of the companies. The Amadi-led NERC rang an ALARM BELL in its report of the OPEN REVIEW EXERCISE of the Discos. Mr. Amadi went further to expatiate and explain his findings on television but he was warned not to act. This report is available.

The interference by the former Vice President Namadi Sambo, chairman of NCP gave the Discos blanket approval to do what they like, the directors representing the 40% stake of the FGN on behalf of Nigerian people never raised any alarm about the direction the companies are going which is in direct violation to the terms and conditions of sale.

The current situation   

There have been no meaningful or tangible improvements in the operation of the companies, rather the situation is far worse than the PHCN days. Various reports do indicate that the Discos finances are in perilous state and are headed to insolvency and bankruptcy. The government itself admitted that they are not paying the market operator.  Based on this, it appears the Discos are over pampered, supported, shielded and it is looking like they are too big to account, too big to comply with the provision of the sale and are Untouchable. This has raised many concerns and suspicions in the minds of Nigerians, especially that they currently do not see any good in what the previous administrations did. It is strange that the government that said it would not allow anybody or group to cheat or short change Nigeria and its people is turning blind eye to this monumental corruption and fraud.

The people, whose properties were sold, and who still have 40% stake in the privatized companies are being extorted and are in pains while the new owners are profiting from their pains. This privatization arrangement is strange in the sense that a 40% stake holder surrendered everything to the 60 % partner. The revenue and dividend should be shared in that proportion. Government must look into it.  All these problems enumerated above are what led to the current mess and there is no any sign of relief.

–Engr  Adamu sent this piece from Abuja



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