213 Billion Naira Bailout For Power Sector – Foolishness At Large!

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.