At last!

LAST week, the National Economic Council (NEC) took what is probably the most far-reaching decision since the power sector was privatised six years ago: It set up an ad hoc committee headed by Governor Nasir El-Rufai of Kaduna State to review government’s 40% stake in the electricity distribution companies (DisCos). The committee has a representative of the National Council on Privatization and Bureau of Public Procurement on board, as well as the governors representing the six geo-political zones on the board of the Niger Delta Power Holding Company.

This decision could not have come to most Nigerians as a surprise. If anything, the general unsatisfactory state of the power sector and the pathetic operational lapses of the DisCos have long rendered such intervention – or any intervention for that matter – an imperative.

The regulator, the Nigerian Electricity Regulatory Commission (NERC) had, much earlier in October, issued a cancellation notice to eight power distribution companies for breaching the provisions of Electric Power Sector Reform Act and the 2016 – 2018 Minor Review of Multi- Year Tariff Order and Minimum Remittance Order for the Year. The eight firms – Abuja, Benin, Enugu, Ikeja, Kaduna, Kano, Port Harcourt and Yola DisCos – were consequently mandated to respond within 60 days or risk cancellation of their licences. That deadline expires December 7.

An updated document on the notice of hearing on the petitions by DisCos on the Minor Review and Minimum Remittance Order has since followed, dated November 5, outlining additional expectations from the DisCos. While Nigerians wait to see how quickly the DisCos will comply with these additional measures, the measures, taken together would seem to suggest that the cups of the DisCos are not only full but finally running over.

However, much as we are inclined to agree with the government on the need for drastic measures to address the current power crisis, their approach would in the end amount to merely skirting around the issue.

In the first place, the government only owns 40 percent of the DisCos, which means that the measures being contemplated are limited to their share of the holdings. The second is that the Federal Government has, through NERC, already signalled its desire to conduct a final review of the five-year performance agreement with the DisCos by December 31. The latest plan, coming some four weeks to the end of that process would seem a needless duplication.

It bears stating that the failure of the DisCos to honour their obligations is at the root of the current crisis. These failures include not only their service obligations to the electricity consumer but also to the other actors in the entire value chain.

The other part of the problem is the failure of the regulator to call the DisCos to account even in the face of their serial breaches of the MoUs. To the extent that none of these is necessarily cured by the one-sided review being contemplated by NEC, the way to go is to allow NERC to do as it had already planned – which is to finalise its review of the performance agreement by the December target date. In the end, each DisCo, hopefully, will know where it stands. That process, apart from being at sync with the global agreement, would absolve the process of any charge of arbitrariness.

Nothing of course stops NEC from pushing for a divestment of a sizeable chunk of government’s current holdings in favour of competent investors. That however is only one of the numerous options which the government is free to consider. But then, that itself would mean getting some of the underperforming DisCos to either voluntarily yield a sizeable portion of their holdings or be forced at the pain of hefty regulatory action to do so. At the end of it all, what Nigerians expect to see are swift, well-considered actions – shorn of fruitless and wearisome litigations – that would eventually guarantee relatively stable electricity supply.