Towards a private sector-driven power sector
By 5pm on Wednesday, August 21 2013, the deadline for the payment of the 75 percent balance of the bid sum by the preferred winners of the bid for the 15 generation and distribution companies of the Power Holding Company of Nigeria (PHCN) expired. The nation is now on the brink of a private sector-driven power sector with the payment of the 75 percent balance of the bid price. The country is expected to realise about $2.5 billion (N402.5bn) from this final phase of the exercise that began February this year.
The federal government is expected to hand over the successor generation and distribution companies carved out of the Power Holding Company of Nigeria (PHCN) to the new investors this year, which will conclude what is the first wave of privatisation in the sector. This ushers in a new phase wherein private sector companies will drive the generation and distribution of electricity with commensurate efficiency, while offering service and deriving profits.
Needless to say, the privatisation of the nation’s power sector is expected to open up vistas of opportunities and benefits to Nigerians and help in actualising the nation’s quest of becoming one of the 20 biggest economies in the world by 2020.
The journey has been long and tortuous. The process has encountered stiff resistance; the award of the management contract to Manitoba Hydro of Canada was almost scuttled. The president, the National Council for Privatisation (NCP), the Bureau of Public Enterprise (BPE), the Ministry of Power and the Nigerian Electricity Regulation Commission (NERC) must be commended for hitting the ground running and sticking to the plan despite vested interests.
Once more, as in the case of the privatisation of the telecommunications industry, government has proven it can deliver the goods. Gone will be the days when Nigeria, sub-Saharan Africa’s biggest oil and gas exporter, was benighted, only capable of generating electricity for 1 in 30 Nigerians.
Nigerians, above all, will be pleased, in the words of President Goodluck Jonathan “to see an end to the chronic electric power supply shortages we know too well, and witness the birth of a modern, efficient, customer-focused, private sector driven electricity supply industry” No more “please have candles nearby” or “never expect power always”. This time, power has really changed its name.
Name change, however welcome, is only the beginning. Many of the new owners of the distribution companies (Discos) and generation companies(Gencos) will probably discover that what they bought was not exactly what they bargained.
This means we should not expect instant solution to our power problems. Like any networked industry, networks are as strong as its weakest link. In the case of Nigeria’s electricity industry, the Transmission Company of Nigeria(TCN), still subject to excessive bureaucratisation and political corruption, remains a bottleneck.
Chinedu Nebo, power minister was recently reported to have said that N335 billion would be required to build a robust super national grid network that would ensure uninterrupted and steady supply of electricity.
Thus we re-echo the president in his foreword to the Roadmap for Power Sector Reform document which he unveiled in August 2010 “The availability of reliable electric power to the homes and businesses of our citizens has been one item in our national life that we have approached with so much hope and yet experienced so much frustration over the past decades.”
We insist that the optimism, good will, from the privatization should not jeopardized by meddlesome bureaucrats and their cronies. We believe that a lot still needs to be done by the government to facilitate the birth of a modern, efficient, and customer-focused, private-sector driven electricity supply industry. Government must continue to provide the enabling environment, especially provision of a strong transmission network and apply the necessary political will to drive through the entire process.