SIR: The takeover of five ailing electricity distribution companies (DisCos) by the government and Fidelity Bank was long overdue. The distribution entities in Kaduna, Kano, Port Harcourt, Benin and Ibadan were taken over in what the government called restructuring. Government said it took the step to save the companies from insolvency, among other reasons. The announcement was precipitated by Fidelity Bank’s activation of the call on the collaterised shares of KEDCO, BDEC, and Kaduna Electric. The companies were said to have failed to repay loans obtained to pay for assets acquired in the 2013 privatisation exercise.
Earlier, Abuja Distribution Company had been taken over by United Bank for Africa for the same loan default. It must be clearly mentioned here that the remaining six are not different from the sick five.
It was glaring from the onset that the challenges of the power sector in Nigeria could not be adequately addressed by privatisation alone. Keen players in the Nigerian Electricity Services Industry (NESI) were sceptical in the run up to and in the aftermath of the privatisation processes. The National Union of Electricity Employees (NUEE) in particular, had vehemently resisted the idea of privatisation and so downed tools on several occasions to force the government to back out of the plan.
Government never did. Those driving the process apparently had a brief from powerful persons they could not ignore. Whereas technical competences, trained and equipped manpower, financial capabilities and readiness for continuous infrastructural upgrade and sustainability were supposed to be the key indices for bidding, qualification and eventual takeover, the Bureau of Public Enterprises (BPE) defied the set rules and standards – gave in to pressure from those who presented proxy, non-performing and non-technical companies to emerge winners of a critical sector like power.
Eventually, the electricity generation and distribution companies were handed over to politicians. We lost it from there and then!
For more than seven years, the services rendered by the sector went from bad to worse. The general expectation was that the government of Muhammadu Buhari would have terminated the contract after the initial five years tenure without pandering to the reactions of the elites and chart a new way forward. He never did even after condemning the process in the past.
Presently, grid collapse has become a regular phenomenon. States are thrown into darkness for days. In 2022 alone, the national grid has collapsed about 15 times. At one point the cumulative energy available in the country went down below 1000kwh.
Meanwhile, there were no consequences for management failure. Nigerians, as a result, were left to groan in darkness while the only mandate of the Nigerian Electricity Regulatory Commission (NERC) seems to cherish is regular upward review of tariff.
As futile efforts were made to cover up the troubled sector by the government to no avail; the federal government chose not to do the needful – terminate the contract. Ironically, the same government would invest humongous sums of money in a private business it obviously has no business rescuing from the onset. Through this, over N300bn was injected as intervention fund for the DisCos. And now the story is that the DisCos are unable to service and repay the loan they took from the banks.
The takeover has not only revealed the sick nature of the power sector, it has proved that all is not well with the privatisation and the processes which led to it. The entire privatisation process should be reversed without further delay. The ideal situation would have been for those who have the will and capacity to do business in the sector to come up with their own fresh plans and initiatives. Build from the scratch their generation and distribution companies and find a way of selling their products to customers and compete with existing government owned companies. That they did not do!
- Sunday Onyemaechi Eze,
sunnyeze02@yahoo.com