Quit quibbling

Editorial

A vacillating Federal Government on one hand and a weak-kneed regulator on the other —there is, apparently, still ample space for another round of quibbling, on what to do with the electricity distribution companies (DisCos). The latest quibble is coming from the Bureau of Public Enterprises (BPE): the planned ‘re-nationalisation’ of the power sector would be a ‘fundamental error’.

According to the Director-General of BPE, Alex Okoh: “If we are able to determine that there is a certain level of capital expenditure that is necessary to improve the distribution infrastructure, let us logically determine what that investment is and look at the best way to provide that investment for the distribution end of the power chain and not to re-nationalise the power sector”.

Now, this is coming after two important moves to shake up that segment of the industry. The first was last October when the Nigerian Electricity Regulatory Commission (NERC) formally queried eight power DisCos. The firms: Abuja, Benin, Enugu, Ikeja, Kaduna, Kano, Port Harcourt and Yola distribution companies, were given 60 days to submit their written responses, outlining why their licences should not be cancelled.

NERC had accused the companies of breaches in the “terms and conditions of their respective distribution licences, based on the provisions of Electric Power Sector Reform Act (EPSRA) and the 2016-2018 Minor Review of Multi-Year Tariff Order and Minimum Remittance Order for the Year”.

They were also “to address the issue of “optimal utilisation of resources” (imposed by EPSRA’s section 32) and “efficient operation” (under section 76 of the same law), in their written responses to the cancellation notice.

For these, the firms were given a December 7, 2019 deadline.

The second came via the November 2019 National Economic Council (NEC) meeting, presided over by Vice President Yemi Osinbajo. Then, the body set up an ad-hoc committee, chaired by Governor Nasir El-Rufai, to review the status of the ownership structure of the distribution companies. BPE is represented in that committee.

Both developments, interestingly, underly what is clearly a national resolve to deal with the ugly chapter of power sector privatisation. With generation and the transmission companies posting modest performances, the verdict, virtually across the board, is that the distribution segment has been an unmitigated disaster.

This background is important if merely to demonstrate that the latest call by BPE is not only misguided but suspicious. Understandably, the dithering by NERC and the Federal Government in taking action has fuelled all manners of speculations surrounding the fate of the DisCos, of which the rumour of a possible take-over by Siemens is only the latest. (The Federal Government has since denied this latest rumour). Nonetheless, the attempt by BPE to frame the matter as ‘re-nationalisation’ would seem not only deliberate but one to force the government to pander to powerful vested interests. It smacks of cheap blackmail.

Surely, Nigerians have not forgotten the role played by the same BPE in foisting the current mess on the country. Just as the push to retain the bunch of inept, clueless actors in the power sector chain is bound to fail, so also the move to deploy some specious, technical legalese to force the hand of the regulator and so get the Federal Government pandering to sentiments deserving of condemnation of every Nigerian.

It is shameful, coming from an agency funded by taxpayers.

The truth, of course, is that the Federal Government has been far more restrained than the current reality demands. One part of the story often ignored is that the sector has never been privatized, in the real sense of it. In fact, the NEC ad hoc committee would have us know that the Federal Government has, in the last three years alone, shelled out N1.7 trillion to keep the sector afloat. Yet, the entire sector still reels under permanent threat of insolvency – no thanks to the DisCos’ wonky business model.

So, whether the country can afford to continue on this fruitless trajectory is the issue. Our understanding is that the same issue is at the heart of NERC query of last October; it also informed the ad hoc committee set up by NEC. The government, therefore, cannot be accused of not fully appraising the issues before plunging into a decision — which is why we expect it to be guided strictly by the crux of the matter, as against the sentiments of those who want the status quo to remain.