Making the power privatisation exercise succeed
Nigeria’s power sector has long been characterised by low efficiency with resultant poor and unreliable electricity supply across the country. The dependence on alternative power supply from generating sets, plants and inverters has been taking a huge toll on the meagre finances of many households, adding more costs to the operational costs of institutions, firms and businesses, and has continually become an embarrassment to the country.
With huge oil and gas resources, Nigeria’s inability to provide dependable electricity supply is a clear indication of the extent the country has poorly managed her resources.
As the journey towards the finalisation of the power sector privatisation draws closer, Nigerians are quite anxious and expectant they want to see an end to their power woes. Thus, there is need for all the stakeholders involved in this vital power privatisation process to play their roles as required towards achieving an efficient and effective power sector in the country.
In this regard, we need to draw attention to some critical areas that would enhance the timely achievement and effectiveness of the on-going power privatisation process.
For instance, the Bulk Traders that constitutes a critical plank for the success of the exercise. The provision for Bulk Traders emanates from the National Electricity Sector Reforms Act of 2005. Their major mandate is to take up the single biggest risk in the growth of the power sector- paying generating companies(gencos) in bulk and in advance for the power that would be eventually sold to distribution companies(discos) for onward supply to consumers.
There is a risk that arises if these gencos are not assured of recouping their investment following the poor performance of Bulk Traders, discos and even consumers in the timely sourcing of electricity revenues.
Quite a large number of institutions including government owned agencies do usually default in this regard. These agencies are known to be usually reluctant to redeem their debts to the Power Holding Company of Nigeria (PHCN). This ugly trend and challenge has discouraged investors to participate as expected. This situation has remained a sort of hydra-headed monster in the sector.
If Bulk Traders, discos and major consumers like government agencies are unable to perform their functions properly and thus incentivise gencos to become the driver of the sector, it means that there would be problems achieving the desired government objective of making Nigeria’s power sector private sector driven.
The current level of debt owed some of the gencos by different stakeholders is huge and alarming and discourages any reasonable investment.
The Bulk Traders according to reliable sources owe the Niger Delta Power Holding Company the sum of about N38 billion. This is aside from the debt government institutions owe the discos. This huge debt situation would definitely be a great dis- incentive to potential investors, as they would want to be assured of recouping their money when they finally kick start the investment process.
The Bulk Traders need to step up its activities to forestall the likelihood of obstacles to be encountered by the emerging bidders for the discos of the power sector. But the atmosphere is not yet clear as confusion now reigns over the ability of the agency to perform its functions properly.
Another area of concern is the guaranteed supply of gas to gencos. If the power sector must thrive, gas supply to the gencos must be steady without any fear of interruption. The government has a big role to play in this regard, as it must put in place the necessary security apparatus to secure and protect the gas -right -of way from the nefarious activities of vandals and saboteurs.
With this highlighted trend, it appears that the power sector business environment is currently un-friendly for business operators. We urge government to be totally committed to making this power sector privatisation work. All stakeholders must play by the rules of the game, and stop further delay in the process and its full implementation.
By: BusinessDay