Fate of the Electric Power Sector in the New Nigeria By Adetayo Adegbemle
Despite the renewed hope and enthusiasm brought on by the change in the Nigerian political leadership, and the perception that the new APC led government would lead Nigeria to the promised land, the poor state of the Nigerian Electric Power Sector is one that has defied all logic since the days of ECN/NDA merging to form NEPA in 1973.
There is no underplaying the importance of the electric power in the development of this country, or its impact on employment and alleviating poverty.
Successive governments have declared “State of Emergencies” at different time or other. The return to Democracy in 1999 with the coming to power of Chief Olusegun Obasanjo, however offered another opportunity to map a way out of this conundrum. Realizing the massive investment that would be needed to turn around the fortunes of the power sector, the Chief Obasanjo Administration initiated the privatization process with the aim to bring in the private investors with the required technical and financial muscles to make the process a success. Prior to the privatization, bulk of the funds, through loans and grants, for the electric power sector had come from International Bank for Reconstruction and Development (IBRD) with the remaining from the Federal Government.
Another point worthy of note is that with the way the monolithic structure like NEPA was managed, there was no way the organization could be profitable, and therefore even lend a hand in the upgrades of its own infrastructure.
The privatization and unbundling of the monolithic and inefficient NEPA was therefore a necessary and proactive step to open up the Electric Power Sector Ecosystem to more players, and the necessary investment. This also led to the signing into law, in 2005, the Electric Power Sector Reform Act. The Privatization is believed to be agreed to by Nigerians by this single act. This definitely cannot go down well with everybody.
In recent time, following the victory of the All Progressives Congress at the polls, there has been calls from so many quarters, some even powerful people who should know better, but for pecuniary reasons, for the whole privatization process to be scrapped.
Agree with me or not, one bane of Nigeria’s development is the expectation for an immediate gratification. There is a process to everything. There is no miracle anywhere. The privatization is a process. It must take its due course.
Yes, you can fault the process of bidding or selection of companies, but not the privatization itself.
The former Vice President, Alhaji Atiku Abubakar, while calling for the reversal of the privatization, recalled that the Obasanjo-led administration which sunk several billions of United State Dollars into the sector, took the wrong approach in tackling the power sector but failed to address the problem of the power sector because the government took a long-term measure rather than a short-term approach.
There is absolutely nothing wrong with taking a long term approach, what is wrong is definitely not taking into consideration the proper implementation along the way.
While there is nothing wrong with the new government taking a review of the privatization process, we should be talking about solutions that will take us forward. There are definite issues that have been thrown up by the privatized power sector, and these are what we should be looking for solutions for.
There are challenges in the Generation, Transmission, and Distribution of power. There are grey areas in the Electric Power Sector Reform Act, there are issues with Metering, and there are issues with Electric Power Consumer Rights, especially in response to complaints. There is most definite issue with finding funding, or liquidity of the privatized companies, we should look into this. We should be talking about recapitalization of these companies.
Bureau of Public Enterprise (BPE) should invite other companies that initially bid for the different Successor Companies to come back, and see how they can pull together their resources into making the power sector work.
We should encourage these privatized companies to open their books, and look at the capital market for investors. I am not too impressed with Ikeja Electric, who had hard times paying the $131million to acquire the company itself, saying they got Meters for $106million.
Most of the distribution companies are not liquid. They have to wait for payment from monthly bills to come in before they could run their operations. This is not a good omen.
The economic cost of reversing the Power Privatization is more than the cost of making the system works.
The fate of the electric power sector is in our hands. The fate of Nigeria is in our hands. We must do the right thing.
Adetayo Adegbemle is a public opinion commentator/analyst, researcher, and the convener of PowerUpNG, a Power Consumer Advocacy Group, based in Lagos. (Twitter: @gbemle, @PowerUpNg, email@example.com)