By Idowu Oyebanjo
Earlier in the year, the Nigerian Power Sector
witnessed an unprecedented development wherein Government decided to give a
whopping sum of 213 billion Naira as "bailout" to Privatised entities
who now own and operate the Nigerian Power utilities in what was seen by many
as another means of sharing the wealth of the nation by a few. Last week, after
disbursing up to 58 million Naira, the Central Bank of Nigeria (CBN) governor suspended further
disbursement to beneficiaries. Some of the pertinent questions include: What becomes
of the already disbursed funds? Will disbursed funds still be recouped as
intended via the 10 percent interest rate and repayment spread? How will this
be tracked?
*Buhari
The lack of coordination and policy somersault
from the Nigerian Power Sector reforms leaves no one in doubt that the lack of
planning and deployment of square pegs in round holes in the execution of
strategies contribute greatly to the problems of the electricity supply
industry in Nigeria .
Why do we not have the right kind of people in the right places so that
thorough analysis and evaluations are carried out before jumping to execute a
strategy only to realise half way that some issues needed to have been looked
after before embarking on a journey that technocrats in power sector have
warned us against? The answer lies in not involving power system engineers in
the decision process plus the lack of knowledge of power systems in Nigeria . The
most disturbing thing about the 213 billion Naira been shared is that it came
at a time when quality of power supply is low or better put non-existent even as
consumers face the ludicrous decision by NERC to start paying higher tariffs
for electricity unused. Insult upon Injury!!! Why do we have many reversals of
policies in the Nigerian Electricity Supply Industry especially when this does
no more than infuse lack of confidence in investors who are the custodian of the
much needed investment in the sector?
The Nigerian Electricity Regulatory Commission
(NERC) in the very early days ruled out funding of Electricity Distribution
Companies (DISCOs) beyond 2012. This was even against calls from Government to
continue to fund the companies. Sound as the reasons for calls for continued
funding may appear, let us ask ourselves what the rational and motives behind
such call is. If you as an individual offer to sell your car as “scrap” – so
cheap, will you want to maintain the car or fund the additional repair works
required to put it right? In the first instance, if you are prepared to do just
that, you may as well keep it and fix the car for keep.
The
buyers of the Discos have definitely prepared to milk Nigerians dry. Their
intention is to continue to eat fat from Nigeria ’s oil wealth using a
different disguise.
The interesting thing is that they have for many years been
eating fat from this same source. The main weapon to check mate such would have
been a proper technical and commercial evaluation of interested bidders at the
appropriate stage of the selection process. Technical and Commercial evaluation
criteria should have been set ab-initio in such a manner that will preclude
this barbaric idea of funding privatised entities. It is up to the owners of
the privatised utilities to ensure they meet their obligations as required by
law. I have in the past expressed concern about the quality of the companies
that won the different bids as most of them have not been known to have
demonstrable experience in this highly technical field.
*Sam Amadi, NERC Chairman
The idea of a foreign
technical partner does no much good in Nigeria 's favour in this instance. The
commercial, political, and economic order of the Nigerian polity is too
volatile hence it is no surprise that reputable companies in the business of
electricity distribution worldwide did not express interest in our power
network. The amount required to put it right is huge. The investment they will
have to make cannot be guaranteed because the country is so unstable that one
good policy today can be upturned within minutes tomorrow. This is why World
Bank guarantee had to be sought for some investment. How did we get “learners”
to win the bids in the first place? This showed me that the criteria for
evaluation is flawed to the highest proportions right from the beginning. The
idea that DISCOs cannot meet their obligations for whatever genuine reasons
they may have is unacceptable. This is setting a precedence that is foreign to
the principles of business or privatisation. The market rules must be made
independent and enabled to sort such matters and more relating to this business
on its own. For example, Discos cannot buy electricity if they cannot collect
money from the customers. You simply do not supply that customer. You need to
think of what you have to do to achieve this because it is not rocket science. If
you do not know how to do it, you may have to pay consultants to help. There
are too many ways to skin a cat!
NERC however has favoured pitching consumers
and suppliers neck-to-neck and this will lead to disaster. Electricity
consumers will disagree with distributors on tariff increment anytime, anyday,
anywhere! It has taken several court orders and the 8th senate to persuade NERC
not to rescind from its earlier promise regarding hike in tariffs. In reaction,
the DISCOs and other benefactors took their case to the presidency where they
secured a bid to increase tariffs. Says the vice-president: "Until there
is stability in the power sector, electricity tariffs cannot remain at the
levels they are right now". Put in another way, Nigerians should brace
themselves up for increase in tariffs if they want stable electricity.
Who
caused the instability of the power sector? I have maintained this position for
a long time now that Nigerians will pay for the wastages of others in the power
sector and if possible, provide the funds for revamping the ailing network in
what is seen as a shameful reversal of roles. This is a basic responsibility of
government. Needless to say, the decision by NERC to hike electricity tariffs
in the face of poor services to consumers will generate furore anytime.
To ask Nigerians to continue funding DISCOs is
more or less saying the entire concept of Privatisation in Nigeria is again
“Business as Usual” in which case, we will not see electricity in generations
to come. With Nigeria
supplying gas to Ghana
so that they can continue to enjoy uninterrupted power supply, it is becoming
clearer day after day that some sort of restarting of the process may have to
be implemented. A holistic review of the power system is needed. Perhaps, the
government may have to take ownership of the electricity assets again under the
management of privatised entities. Any which way this goes, it will be
unprecedented in the history of privatisation of power utilities. A word is
enough for the wise!
*Idowu Oyebanjo, MNSE, CEng MIET, a Chartered Power System
Engineer in the UK is a regular contributor to SCRUPLES
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