Power-starved citizenry ought to be forgiven if they barely paid any heed to what was supposed to be a milestone in the quest for steady electricity supply. Blame it on reform-fatigue, the deadline for payment for the preferred bidders of the generating (GENCOs) and distribution companies (DISCOs) closed Wednesday last week without the typical bang that one would have expected. Save for the few sighs here and there, it may well have sneaked on us like the proverbial thief in the night.
Not that it was entirely shorn of some drama though. Some 96 hours before the Wednesday deadline, there were in fact apprehensions about the preferred bidders being able to cough out the balance to make good their bid. There were equally reports about outstanding sticking points between the government and the powerful electricity workers union on the issue of severance packages; indeed, there were hints, at some point, that the preferred bidders had served notice on the federal government that the final payment will be kept in abeyance until all outstanding liabilities were cleared.
And all of these were going on in the context of the latest rumble in the banking sector: the apex bank’s so-called sterilisation of 50 percent public sector deposits with immediate, direct impact in the tightening of liquidity in the economy.
Of course, if it seems any attestation that Nigeria is a place where miracles happen, the historic process designed to usher in the regime of liberalisation of the power sector sailed almost flawlessly and without serious hiccups. It was too good to be true. By close of work on Wednesday, nine out of the 10 bidders for distribution companies (Discos) had paid in full; it also emerged that four preferred bidders for generating companies (Gencos) had also perfected payments to assume ownership of the entities. Only two fell by the wayside. CMEC/EUAFRIC Energy JV, the preferred bidder for Sapele Power Plc which reportedly made a “substantial” payment; Interstate Electric Limited, the preferred bidder for Enugu Distribution Company, failed to make any payment aside the initial 25 percent by due date.
The exercise therefore can claim to be an unqualified success. However, the issue of whether the intractable power crisis is finally over just by mere coming to pass of the milestone event is one that Nigerians would have to wait to answer in the coming months. I do not think however that anyone should be in doubt as to the historic import of what happened. Aside heralding a new beginning for the sector, it also promises a new paradigm for doing business. Taken together with the foundation laid by the Power Sector Reform Act 2005 and the Power Sector Roadmap of August 2010, there is absolutely no longer any question about the stage being set for turning the power sector around. Perhaps, what is left is the debate on what the change of ownership portends in the short, near or even the long term; no longer at issue is the need to dismantle the inept, irredeemably corrupt and dysfunctional utility firm and its the antiquated business models and architecture.
While we celebrate the overdue interment of the Power Holdings Company of Nigeria (PHCN) and its bundle of bad rubbish, I need to enter a caveat though that the development alone is neither the magic wand nor the cure-all pill that the sector requires to get out of the bind. What it does is offer a new basis, or, if you like, direction to salvage a sector that has been held down by the twin forces of monopoly and corruption.
In any case, no one disagrees that a dime of public funds sunk into the old behemoth is anything but money down the drain. After nearly eight years of reform odyssey and a capital spend in excess of $16 billion from the public till, we may have, as ex-President Obasanjo once touted, earned ourselves a global record in power expenditure; we have also arrived at a point where it has since become an embarrassing understatement to state that the deliverables come far short on expectations.
This is why the import of the tectonic shift in the power sector should not be understated. First, it means that those vanishing billions we hear at budget defence sessions can, at least theoretically, be put to other uses. It also means better prospects of investment and hence value delivery in the long run – something that most Nigerians would readily affirm as alien.
Agreed, all of the above may not sufficiently address the question of what the future holds in store. First, I don’t that anyone should be mistaken about the changes as merely about substituting the tyranny and the crass inefficiency of the erstwhile government monopoly for the potentially exploitative antics of a compulsively-obsessive market operator. Both of course represent the different sides of the same coin of bad business practices that denies the consumer the value for his money’s worth.
Going forward, the development must go with the understanding of what the requirements are under the transition period, and what is clearly a long journey to a liberalised power sector driven by the ethos of competition and fair market prices. The milestone at this stage needs to be understood for what it is: a transitional one. Parcelling the erstwhile behemoth among disparate players does not itself qualify for competition. Far from it; the suggestion that the development marks the dawn of competition smirks of a misuse of the word. The nation’s expectation of revamped, robust, efficient, cost-driven, and well-regulated electricity market is still a long way ahead.
Finally, I must say that things can only get better; however, how well things turn out would largely depend on the role of the regulator – the Nigerian Electricity Regulatory Commission (NERC). For much of what is clearly an uncharted course, NERC has done admirably well at least in terms of setting out the ground rules for the players and also in generally keeping faith with the entire reform programme.
But then, that is not nearly a fifth of the job NERC needs to undertake; or is it?
