The Conundrum On The Power Sector

Edo State Governor Godwin Obaseki broke with niceties and elite consensus recently when he walked out from his office the managing director of Benin Distribution Company, Mrs Funke Osibodu. The chief executive of one of the 11 Discos licensed to ensure electricity reaches citizens entered the office as part of an entourage visiting the Governor. Obaseki was bitter over poor power supply in Edo State and was frontal in expressing his disappointment.

Disappointment over the power situation is boiling over across the land. Labour is unhappy, the investors are in debts and blaming the government for failing to approve “market-reflective tariffs”, citizens are not amused particularly as the heat returns in Southern Nigeria this season while the government itself is in a quandary.

What do you do with the power situation? Who will break the logjam? When will Nigeria join the league of nations that take power as a given in this age when power is as important as air given that modern life revolves around it?

Concern over the power situation heightened at the beginning of December when all the government agencies delivered a verdict of non-performance on the Discos. Their summation is that the privatisation of power assets has not worked. It throws the matter open to conjecture.

Federal Government agencies that spoke on the matter include the Nigerian Electricity Regulatory Commission, Niger Delta Power Holding Company and the Bureau of Public Enterprises. They submitted that the power distribution firms failed to meet Key Performance Indicators and other agreements built into their contracts since taking charge of the assets in November 2013.

The government agencies blame the Distribution Companies for the failed privatisation of power assets. The Generation Companies have done well in their records. The challenge is with the Discos.

Their verdict is nothing new to citizens in homes and offices across the country. Power remains a major source of unplanned expenditure and agony. The absence of power disrupts plans. Nigeria still operates an analogue economy in the age of digital where everything runs on power and interconnectedness based on functional electricity systems.

The Discos failed in not meeting performance targets in Average Technical, Commercial and Collection loss reduction. They failed to increase the number of connections. They did not stop estimated billing and failed to serve citizens with meters.

Since 2016, Labour has consistently asked the Federal Government to review the privatisation agreement with the Discos and the Generation Companies. Labour is a party with a dual interest in the matter, being the fate of workers laid off from the former Power Holding Company and their positions as citizens. Whether as the United Labour Congress, alternate to the Nigerian Labour Congress or as the National Union of Electricity Employees, labour has been calling out the privatisation effort. Joe Ajaero, president of the United Labour Congress, said the privatisation had led to “suffocating darkness” rather than light. Labour claims the privatisation led to the loss of jobs for 48, 000 workers. As at mid-2016, about 2000 workers were yet to receive their severance packages and 16 months arears in agreed packages.

Labour delivered a damning verdict on the privatisation. “The exercise has not worked and has become a platform for official corruption. We do not understand why this government will continue the fraudulent dishing out of taxpayers’ funds to private entities to which it has sold its assets. How can you sell your house to somebody and continue paying him money for buying the house from you?”

The government intervened to assist the distribution companies. Power, Works and Housing Minister Babatunde Fashola receive the most flak over the power situation. He earned the opprobrium with a one-upmanship remark that improving power supply is a walk in the park for any serious government and should be done within six months. Three and half years on, the situation has worsened even as the Minister displays nimble footwork to claim progress. He talks about “incremental power and similar fanciful terms that do not translate to any improvements.

More importantly, Fashola in the last two years resisted calls on the Federal Government to revoke the privatisation. It was sensible. Apart from breaching a valid contract, such a revocation would send negative signals to local and foreign investors already scared at the unsavoury reputation of this government in terms of economic management.

The end of the initial five-year contracts, however, provides a grand opportunity for the review of the privatisation of power assets. The Federal Government must find the courage to do so and to cut off all those who scored below 50% on technical and financial parameters. The privatisation was wrongly managed. The then Government walked the wrong lane as did the investors who mostly lacked the technical capabilities but imagined huge revenues such as accrued to investors in the telecommunications arena. Utilities may be bread and butter businesses, but investors must build a bakery and bring the ingredients to bake the bread and take returns.

Now is the time. Commence the process of resolving the power conundrum. Review the privatisation. Bring in new and capable players. Let there be sustainable light.


Source: Business Day

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