Of power supply two months after privatisation and investors’ challenges

Flash back to November 1, 2013; the federal government officially handed over 14 of the successor companies carved out of the defunct Power Holding Company of Nigeria (PHCN) to private investors and Nigerians had expressed high hopes for an end to incessant blackouts.

Hopes for improved power supply has since turned to despair as power supply went from bad to worse in many parts of the country. Two month after, the downturn still persists. Clearly, the post-privatisation era has not been palatable for households and businesses in Nigeria.

The situation had been attributed to the massive disengagement of workers by the new owners, especially the distribution companies (Discos), and the reduction in load allocation from the generation companies (Gencos).

Industry analysts had described the entry of the private sector as the beginning of a long-drawn journey fraught with pitfalls as the new owners may struggle to undo decades of rot in the electricity sector.

Atedo Peterside, chairman, technical committee, National Council on Privatisation had said at an event on September 27 in Abuja that “it is pertinent to remember that this is really the ‘beginning of a journey’ and not the ‘end of a journey’ as it has been mistaken in some quarters.”

While noting that the purpose of privatising the Discos and Gencos was not just to transfer ownership of the assets, Peterside stated that the primary purpose was to bring into play new owners with ‘deep pockets’ who could finance and/or access financing for the rapid restoration of lost capacity and/or add significantly new capacity to make up for decades of government neglect and mismanagement.

Apparently, Nigerians want to see the ‘rapid restoration’. Analysts believe that the situation would improve as soon as issues ranging from dilapidated equipment to inadequate generation capacity, gas supply and weak transmission are effectively addressed.

Ayodele Oni, an energy law and policy expert and senior associate in top law firm, Banwo & Ighodalo said that “everyone who has been following this process would know that quick fixes should not be expected. These are indeed challenging times. What’s currently being experienced could be regarded as teething problems which every new comer to an industry, process or programme, typically experiences. I know that NERC, the government are in talks with these investors to help mitigate some of the challenges they are facing.”

Nigeria, with a population of 170 million people, is estimated to need about 40,000 megawatts (MW) of electricity over the next decade, but currently has less than 6,000MW of available capacity.

By: FEMI ASU