Reversing the privatization is the best option in the circumstances the country finds itself with its electricity industry and it is in the national interest to do so. This is necessary in order to remedy the shoddy privatization exercise carried-out in 2013 by the Jonathan government and to redirect the process a new to permit level playing field to all investors, if the government is really serious about fixing the electricity debacle and to attract serious investors, particularly foreign investors who have the financial resources and technical expertise to the power sector.
Our policy-makers have not made the effort to assess the situation, in other words they have not asked themselves the three basic questions about the privatization. Will the shoddy privatization stand the test of time? Will it work? And will the present core investors (who neither have the knowledge of the electricity business nor the financial muscles) make it work?
It is this last question that is crux of the matter. What I am saying in essence is that far more education in privatization of the electricity and its implications should be insisted on especially among our policy makers and politicians to familiarize them with its parameters. Otherwise, they will always make the wrong decisions! And the solution to the electricity problem will remain elusive forever.
The government lacks a clear strategy of what it is seeking in the power sector. Why in the years since the power sector reforms were made, nothing has been done to improve power supply to the consumers other than to jack-up the tariff? The reason for this is simple: the people in-charge do not seem to understand what is required to turn-around the power sector. All they are interested in was to spend huge sums of money on constructing massive power infrastructure to raise the country’s generation capacity to 10,000MW. If I may ask, what does 10,000MW generation capacity represent in real terms?
In fact, the current generation capacity in the country is more than adequate to meet the electricity need of the existing consumers nationwide 24/7, if the right approach is made. But, surely, they lack the capacity to synchronize and optimize the existing power infrastructure to provide steady power supply to the consumers nationwide. The resultant effect of all this was to create white elephant projects and tie up huge capital for years without any benefit to the nation.
But what else one can expect while the government seems to have an inbred determination to keep engineers out of the high echelon of the power sector by appointing non-engineers (e.g. lawyers, accountants, etc.) to head the ministry of power or key positions in the power sector?
The foremost of the woes of the power sector is the broader issue of organizational structure. The power industry as it is today, cannot be said to be properly organized as a viable industry with appropriate organizational conditions such as variables and policies necessary for the efficient and effective running of the industry.
The lack of proper organizational structure has badly affected the performance of the power industry, vis-à-vis, the proper functioning of the electric energy supply chain (Generation-transmission-distribution) and also because of this, it fails to achieve maximum value from the resources made available to them to provide regular power supply. This is the root cause of all the ills in the power industry, which were over-looked over the years in tackling the electricity debacle.
Another big problem hindering progress in the power sector was the premature privatization of the GENCOs and DISCOs. The exercise was hastily carried out by the Jonathan government in 2013, when the industry was still in a poor state and in dire need of restructuring. For instance, there was no serious preparatory work done to put the unbundled NEPA (18 companies) on sound modern commercial footing prior to the privatization since the idea to privatize electricity was first conceived in 1999.
I must stress the importance of this point. The privatization was intended to be achieved over a period of time and in phases. Each phase was designed to clearly, represent defined activities over some specified number of years in the shaping process as to mold the unbundled NEPA (18 companies) in order to transform them into a well-organized viable electricity supply industry capable of generating and supplying affordable and uninterrupted electricity 24/7-before the GENCOs and DISCOs were offered for privatization in the final phase. I know this because I was involved in designing the scheme during the Obasanjo administration.
But this was not followed through. Instead, the process was subverted by the Jonathan government in 2013 in order to satisfy some primordial sentiments or political agenda by prematurely privatizing the GENCOs and DISCOs to selected individuals in the society. Hence, what would have been otherwise a vibrant electricity supply industry is now in shambles.
Aside serious signs that all is not well with them since the privatization as they were unable to generate and supply reliable electricity to the economy, matters were compounded by the fact that the GENCOs and DISCOs were in serious financial distress. Just barely, a year after privatization, they asked for and were given huge financial bail-out of N213 billion by the Jonathan government (2014). Some of the DISCOs were reported to have invoked the force majeure clause to disengage from business altogether, in a buyback deal with the government. The Yola distribution company is a case in point.
What is really alarming about the whole matter is that all of these are happening right in the wake of the privatization, when in actual fact private funds or investment were expected to be available to bank-roll the running of the power industry without any hitches, as was given of the objectives of the privatization exercise in the first place. That the GENCOs and DISCOs are now being subsidized by the government has defeated the purpose and objectives of the privatization. This is good enough reason why the privatization should be reversed.
Will the Buhari administration with its reputations for fighting corruption and illegality allow this glaring injustice to society to stand?
To say the least, the current situation with the GENCOs and DISCOs portend serious danger to the entire power industry and threaten Nigeria’s electricity development. Until and unless urgent steps are taken by the government to take a second at the privatization of the GENCOs and DISCOs with a view to correcting the anomalies, the power industry will collapse.
The artificial jacking up of the electricity tariff would not make a difference to the pathetic power situation -or attract investors when the power industry is still in shambles. Certainly, if the power industry is properly organized, there is no reason why it should not provide cheap and stable electricity supply to the economy at the current country’s generation capacity, as well as to undertake other complementary businesses to electricity generation and supply, such as retail activities in electrical/household appliances and other ventures to boost their revenue profile and for the consumers to enjoy reduction in the tariff, through efficiency and enterprise gains.
- Dr. Muhammad, a Chartered Engineer, was a General Manager in the defunct National Electric Power Authority (NEPA).
