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Published On: Wed, Nov 1st, 2017

Power still elusive, 4 years after privatization

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Official Portrait of the Hon. Minister of Power, Works and Housing, Babatunde Raji Fashola, SAN

Official Portrait of the Hon. Minister of Power, Works and Housing, Babatunde Raji Fashola, SAN

By Etuka Sunday

Four years after the privatisation of the power sector by the previous administration, the electricity perceived would change the lives of Nigerians and the economy of the country is still elusive.
Recall, November 1, 2013 witnessed the divestiture of the federal government from the Power Holding Company of Nigeria (PHCN); divided into 11 Distribution Companies, 6 Generation Companies and 1 Transmission Company of Nigeria (TCN).
The eleven (11) Distribution Companies are: Abuja Electricity Distribution Company plc, Benin Electricity Distribution Company plc, Eko Electricity Distribution Company plc, Enugu Electricity Distribution Company plc, Ibadan Electricity Distribution Company plc, Ikeja Electricity Distribution Company plc, Jos Electricity Distribution Company plc, Kano Electricity Distribution Company plc,
Kaduna Electricity Distribution Company plc, Port Harcourt Electricity Distribution Company plc, and Yola Electricity Distribution Company plc.
The six (6) Generation Companies are: Afam Power plc, Egbin Power plc, Kainji Hydro-Electric plc, Sapele Power plc, Shiroro Hydro-Electric plc, Ughelli Power plc, and the Transmission Company of Nigeria (TCN).
However, four (4) years down the line, the joy and happiness that greeted the news and the actual privatization in the country has now turn to nightmares for Nigerians especially the electricity consumers who are at the receiving end of the failed deal.
According to experts, the factors responsible for the abysmal performance of the power sector in Nigeria since privatization are: corruption, liquidity issue, lack of transparency on the part of government and operators, inability of government to respect the sanctity of contract, poor revenue collection, unresolved legacy issue, inappropriate power pricing through tariff among others.
Speaking on the issue, the former Chairman of Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi said, the first grid electricity is a 25megawatts coal-fired in Ijora, Lagos in 1896.
He said, by 1999, it has less than 6,000megawatts of installed capacity and less than 2000 of daily generation. However, today, Nigeria has installed capacity of about 13, 000megawatts and highest sustainable generation of about 4,000megawatts.
Amadi listed persistent failure in service delivery over decades, inadequate and limited coverage/power generation capacity, years of neglect and under-funding, weak transmission network with attendant losses, inefficient billing and metering system were part of the challenges of the sector.
He gave others to include: huge supply demand gap, aging infrastructure and workforce, lack of appropriate investment in network capacity development and expansion.
Recall, six months after the expiration of his tenure of office, federal government is yet to appoint a chairman for NERC that is supposed to regulate the sector; that too is contributing to the current challenges in the sector.
Another notable fundamental problem of the sector is that, the distribution companies borrowed money to buy the companies instead of borrowing to improve the network, therefore, cannot improve power supply.
Since they find it difficult to improve the power supply to their customers, the customers in turn refused to pay because there is no light. And there is no punishment in place for discos for not improving power supply.
Nevertheless, the Director of Association of Generation Companies, Mrs Joy Ogaji said, there an improvement in power generation in the country.
She said, as at takeover by private companies in November 1, 2013, available generation capacity has increased from 4,500megawatts to 7, 913megawatts. Also, installed generation capacity currently stands at 13, 496megawatts as against 12, 500megawatts at takeover.
Meanwhile, Abuja Electricity Distribution Company (AEDC) said it has procured a new U-Vision and computers worth N400 million that would enhance its revenue collection.
The Managing Director of AEDC, Engr. Ernest Mupwaya said, the new infrared tech would begin operation this week and would monitor the company’s field staff while distributing electricity bills to customers and during disconnection.
“It will raise our revenue collection and will help to improve power supply to our customers because we will have more funds to buy transformers, install meters and enhance our services,” he said.
Speaking in a workshop organised by the Company for Energy Correspondents, the MD said, that the liquidity issue in the power sector is affecting the company therefore, the new technology would help trace customers history of payments.
According to him, his firm which is among the 11 power supply firms privatised in 2013, has spent N6.5 billion to improve infrastructure in its coverage area.
He said the firm has also reduced its Aggregate Technical Commercial and Collection (ATC&C) losses to 48 per cent while ranking first on energy payments to the Generation Companies (GenCos) for over one year.
This is coming three days to the fourth anniversary of the power sector privatisation in Nigeria, with private investors taking over operation of 11 Distribution Companies (DisCos) and several GenCos on November 1, 2013.
He said the breakdown of the N6.5bn spent include N900 million for the replacement of over 374 faulty transformers, procurement of 145 vehicles to ease logistic issues and bush clearing of over 11,400 kilometre power lines to check avoidable power outages in its franchise area.
At present, the Abuja DisCo’s network spanning the states of Kogi, Abuja, Nasarawa and Niger have been upgraded to 870 megawatts (mw) capacity which the management said is higher than the 650mw highest electricity is has ever received from the national grid.
“We have maintained 8,138 distribution substation transformers since 2016 out of the 12,000 units we have. We are maintaining about 60 to 90 every day and we have a target to reach the 12,000 by the end of this year when we will start a fresh cycle again,” Mupwaya explained.
The AEDC boss noted that although its electricity customers may not see any impact yet but when the second cycle of maintenance is reached, there is bound to be visible and stable electricity supply across places.
Also speaking at the workshop, the Pioneer Chairman of Nigerian Electricity Regulatory Commission (NERC), Dr. Ransome Owan said, once power is gotten right, Nigeria’s GDP would be ahead of other countries of the world.
He said, the economic availability of power should be considered for the economy of the country to grow, therefore, urged the federal government to de-risk the sector so as to attract more investors.
He said, Foreign Direct Investment has been frozen in the power sector, saying that the velocity of electricity flowing in must be matched with the revenue coming in so as to have a balance business.
However, there are strong indications that the Power Sector Privatisation may be reviewed by the present administration of President Muhammadu Buhari.
The review may be due to the industry failures recorded since the taking over of the sector, by the private operators in November 1,2013.
Recall, the privatisation was done as an antidote to take Nigerians out of darkness and as a catalyst to economic prosperity of the country.
However, the expectation was not met due to lack of sincerity on the part of government and the operators to deliver on the promises made to Nigerians before the privatisation.
The President was reported to have said, at the closing of the 23rd Nigerian Economic Summit (NES23) in Abuja that the review would result in the restructuring of the ownership of the power plants to ensure that new investors who have the capacity to operate the facility are allowed to takeover.
The President who was represented by the Minister of State for Budget and National Planning, Zainab Ahmed disclosed that the intention of government in that regard was to open up the sector to new investors to bring in fresh capital to make the plants more functional.
Recall, the Vice President, Prof. Yemi Osinbajo at the opening ceremony of the summit declared that the current investors who lack financial capacity to finance their operations should transfer their equity to fresh investors.
Meanwhile, Association of Nigerian Electricity Distributors (ANED) said, those clamouring for cancellation of privatisation should have a rethink.
ANED said, privatisation is not the issue but inconsistent regulatory framework and liquidity of the sector based on pricing.
Addressing newsmen in Abuja at a workshop, ANED spokesman, Barr. Sunday Oduntan said: “For those clamouring for cancellation of on privatisation, privatisation is not the issue but inconsistent regulatory framework and liquidity of the sector based on pricing.
“Cancellation of the privatisation would worsen the sector, and portrays to foreign investors that Nigeria does not respect sanctity of contract and that we are not open for business,” he said.
Barr. Oduntan said, “the privatisation of the power sector was not rigged. Saying that the World Bank was involved in the privatisation process and it applauded it as the most transparent in Nigeria’s history.
“It was that transparency that made powerful people like Aliko Dangote and Femi Otedola lose their bid.”
“$1.4billion was paid by investors for the acquisition of the 11 Discos. Regrettably, most of the funds were paid as severance to PHCN workers.”
“Discos investors have continued to seek funds in spite of the encumbered balance sheets due to NEMSF Fund that went to legacy gas debts,” he said.

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