A little over a year ago this month, President Goodluck Jonathan made History when he presented 14 new private investors in the Power Holding Company of Nigeria (PHCN), the country’s electricity company, with their share certificates and licences. This was at a ceremony in the Presidential Villa on September 30, 2013.
This was the culmination of the power reform started by President Olusegun Obasanjo when, in 2015, he split the PHCN into 18 companies, six for electricity generation (GENCOs), one for transmission (TCN) and 11 for distribution (DISCOs). This disaggregation of PHCN was itself part of a promise he had made to provide, at least, 4,000 Megawatts of electricity in the country by 2003. In addition to the disaggregation, the law backing the decision provided for independent power generation. About 29 of the many independent companies that applied were licensed to do so.
At the time Obasanjo made his promise, the supply was less than 2,000 MW out of the country’s demand of 5,000. By 2003 he was able to deliver 3,760, a huge improvement over the past but still a little short of his promise.
Actually the demand of 5,000 MW which fell short of our installed capacity of 5,600, was itself light years short of the global standard of 1MW supply per 1,000 people, meaning we should’ve been producing well over 150,000 more than a decade ago if all Nigerians were to have had access to electricity. As it is, less than half do so even today.
To put all this in global perspective, more than 1.3 billion people around the world, or around 20 per cent of its population, lack access to electricity, according to the International Energy Agency (IEA), the Paris based club of 29 or so rich-country members, including the U.S., UK, Japan, South Korea and Turkey. More than 95 per cent of these people with no electricity, says IEA, are in sub-Saharan Africa and developing Asia. Nigeria, as the most populous country in Africa, clearly shares in this predicament of severe shortage of electricity as a vital source of energy for growth and development.
The long running failure of government owned electricity company to meet the demand for the commodity led to the conclusion that privatisation was the solution. Hence, government’s decision to privatise the PHCN as it did telecommunication with relative success.
Four years after President Obasanjo created the 18 companies out of PHCN and provided for independent power generation, hardly any investor, foreign or local, indicated any interest in them. Similarly none of the licensed independent electricity generating companies generated even one watt of the commodity. The general excuse was that the tariff was too low to make any profit. To date this has remained the excuse for the relative lack of enthusiasm by investors in investing in the sector more than a year after the GENCOs and DISCOs have more or less taken off.
Four years ago this month, I said on these pages that our thinking that privatisation was the solution to our electricity problem was a bit of a delusion. Public ownership, I said, may have failed to deliver satisfactory service but neither would private ownership. This was as long as we pursued privatisation in the opaque and self-serving manner that has characterised the decisions of our policy makers since the first indigenisation of the commanding sectors of our economy in the 1970s. Time and again, I said, public assets have all too often been undervalued and sold, not necessarily to the highest and the most competent bidder, but to the most well-connected.
“Consequently,” I said on these pages, “we have, time and again, experienced how promises of more efficient and cheaper goods and services from privatised companies have been broken.” (November 17, 2010).
The September 30, 2013, ceremony, during which President Jonathan launched the privatised electricity companies was itself the culmination of his own version of Obasanjo’s earlier power reform. The president unfolded his own road map in 2011 when he set himself a target of 14,000 MW by 2013 to be increased to 40,000 by 2020.
A little over a year since then it seems we face the grave danger that I may be proved right, at least in one case. On October 8, Daily Trust led the day’s edition with the story that the Kano Electricity Distribution Company (KEDC) made an “illegal” payment of N670 million to a sister company, Northwest Power, that was the preferred bidder of the Kaduna Disco. One of the KDEC shareholders, INCAR Power Ltd, owned by the former banking magnate, Alhaji Umaru Mutallab, then filed a complaint to the National Electricity Regulatory Commission (NERC), to say that the transaction was never authorised by the consortium’s board.
A NERC audit had found that this payment and others totalling over N1.3 billion in six months up to April this year were dubious and were mostly on the creature comfort of some of its directors and senior managers. These payments were made from revenues collected from consumers. Meantime the delivery of the commodity to them has been dismal, to put it mildly.
This apparently prompted a group calling itself “Concerned Consumers of Electricity in Kano”, to publish a full page advert in Trust (September 23) appealing to the president to “intervene in the mismanagement of Kano Disco by Sahelian Energy.” Sahelian is the leading company in the consortium that owns KEDC. The advert was signed by Garba Muhammed as “Coordinator” and four others, Yusuff Bala, Benjamin Agu, Mukthar Kankarofi and Boniface Ononiwu.
The following day Sahelian Energy replied in the same newspaper with a full page advert signed by Mukhtar Baffa Usman as its head of corporate affairs. The company dismissed all the allegations in the earlier advert as baseless.
Two days later the Kano consumers’ group rejoined Sahelian’s rejoinder with another full page advert. The well-informed adverts of the group suggested they were possibly fronting for the reserved bidder of the Kaduna Disco, LEDA Consortium Ltd, which has petitioned the Bureau of Public Enterprises (BPE) over what it says is preferential treatment being accorded Northwest, the preferred bidder, in failing to meet the deadlines and extensions for payment for the Kaduna Disco, a failure which should have opened the way for LEDA to take over. The insinuation is that Sahelian has strong connections in the presidency and has so far been allowed to get away with blue murder, in a manner of speaking.
Whether the Kano consumer group is fronting for LEDA or not, the fact is that KEDC has not been providing satisfactory service to consumers in Kano, Katsina and Jigawa, their area of operation. One probable explanation is greed, that is, if you subscribe to the suspicion, as I do, that the money Sahelian paid to Northwest with which it shares directors was to enable it buy the Kaduna Disco.
The Kano Disco is not the only one under suspicions of diverting revenues from providing services paid for. However, it is the only one that has been queried so far by NERC. And as usual, an ethnic and sectional dimension is being introduced into the matter to confuse and bury the issues; partisans of Sahelian are said to be making allegations that its crime is where its main shareholders come from.
Obviously this is nonsense. It would be wrong if Sahelian is the only Disco singled out for a query for diverting its revenues from providing satisfactory services. But then the scale of its “malfeasance”, as INCAR called it in its petition to NECR, is all in a class of its own.
It is acts like this which give privatisation a very bad name. Elsewhere they call it crony capitalism. And as with all counterfeits it is very unlikely to deliver satisfactory goods and services.
The BPE and the NERC have a duty to protect consumers from the greed of a few. They should do so without fear or favour.
