Unshackle the power sector now!

The headline on Businessday edition of 6 April 2017 titled “Troubled Discos Threaten to Unravel Nigeria’s Power Privatization,” confirms my views in this column on 12 May 2015 that “if Nigeria is known for corruption and low ethical standard of business conduct, it is bound to face challenges when privatizing state-owned enterprises.” Dishonesty, man-no-man syndrome and other reasons, are responsible for Nigeria’s inability to derive maximum benefits from the privatization of the nation’s power sector.

Regrettably, Nigeria’s power sector is trapped. It would’ve to be unshackled by the federal government (FG), investors, and other stakeholders. When a member of the Federal Executive Council says the power sector has gone from 5000Megawatts (MW) to 7000 MW, I asked: where are the megawatts? Since the last quarter of 2016, the best interrupted power supply I get in my area in Lagos, according to Kingsley Omogbon, is about 4 hours/day.

Nigerians are worried as to why increased power generation hasn’t translated into physical supply of electricity as statistics show that “only 6% Nigerians enjoy 20 hours’ power supply daily in 2016.” Out of the remaining Nigerians who have not been enjoying electricity supply daily, 79 percent, have suffered transformer failure or other forms of electricity supply infrastructure failure.”

At the time of privatizing the Power Holding Corporation of Nigeria (PHCN), the FG had a plan. The PHCN Privatization Plan, like any other plan of governments in Nigeria is heavily compromised by politics. Politics flavored with corruption is the 1000-ton elephant that has not made the privatization of the power sector to function effectively. How can investors in the power sector pay for assets in dollars at the time of privatization without thorough inspection of the assets? I strongly feel that a genuine investor would have done due diligence before investing a dime on the assets. This gives an impression that there is more to the privatization of the power sector than ordinary eyes can see.

Since the unbundling of the PHCN in 2013 into 6 generating companies (GENCOs), 11 distribution companies (Discos) and the Transmission Company of Nigeria (TCN), the FG has been pumping money into the power sector. The N701 billion for the Nigerian bulk electricity trading (NBET) is also for the supply of gas from 2017 to December 2018. Injection of funds is to help improve service delivery and performance of Discos, Gencos, TCN, and other firms in the entire value chain. All the same, the power sector has some challenges namely, cost reflective tariff, effective regulation, market illiquidity and debts, power evacuation constraints and load rejection, amongst others.

If Nigeria is struggling to generate about 7000MW after privatization of the power sector, and the Discos are unwilling to procure generated electricity due to paucity of funds, it shows that all isn’t well with the privatization process. I’m sure that those running various segments of the power sector know that energy not consumed cannot be stored in a suitcase. Resources are being wasted generating power that isn’t consumed. Yet, the entire industry is looking for funds to improve its performance. One would’ve expected investors to take appropriate measures to conserve energy and available funds. Besides, 7000MW of electricity is too meagre for a nation of almost 180 million people aspiring to be an industrialized nation.

Some experts have argued that privatization should have been the last step in the development process of a developing nation like Nigeria. Nigeria should’ve demonstrated clearly that it’s willing to have an efficient managerial ability through merit in appointing chief executives of public parastatals and thereafter, privatize them from a vantage position of knowledge. Privatization of the PHCN and our steel plants are failures because due process wasn’t followed, while son-of-the-soil syndrome, and wrong application of federal character system are of importance in the country. Most plans of economic and educational importance don’t work in Nigeria because the political class would have politicized the issues. The culture of not doing things well has eaten deep into the fabrics of the society, such that privatization of PHCN was done on a weak foundation, with negative returns.

Metering, billing, and revenue collection are areas that are of great deficiency in our power sector. The Gencos haven’t generated sufficient power. The Discos are required to make meters available, with the Nigerian Electricity Regulatory Commission (NERC) issuing a cost reflective tariff. If NERC could ensure that the 6 Discos, 11 Gencos and one transmission company (TCN) produce sufficient electricity, provide meters for consumers with a cost reflective tariff, Nigerians will pay for electricity consumed. The main problem is that there is no meter, yet Discos want to collect tariff from consumers at arbitrary rates. But, consumers are resisting this move because NERC wants to “rob Peter to pay Paul.”

The NERC must get the issue of metering right, as this challenge evokes several sentiments for different people. With insufficient power output, and inadequate meters, the Discos are clamouring for increase in tariff. About 54 percent of Nigerians don’t have electricity meters, according to a source. That is why consumers are resisting increase in tariff. While foreign investors have insisted that locally made electricity meters are of inferior quality, thus, they want imported ones.

The FG has an opportunity to unshackle the trapped power sector by realigning it with policies and practices that make for development. For the health of Nigeria’s economy and in order to have improved electricity supply, the NERC has greater roles to play. The NERC should ensure that Nigeria increases its power network through local content by manufacturing power components and devices, as the nation can’t survive on importation of transformers, meters and other auxiliaries. NERC must ensure metering of consumers, equipment testing and certification. NERC should review tariffs as often as possible to reflect fluctuations in the macroeconomic environment, while expanding distribution infrastructure. The FG must unshackle the power sector now, in order to make the recently released recovery plan work.

MA Johnson