Should Nigeria allow the private sector to continue the ownership of the nation’s power infrastructure, or return the sector to the days when government was in charge of electricity supply? Nigeria PowerSector ElectricitySupply
The answer to this question, is what has left the Federal Government, end-users, as well as other stakeholders in the energy sector on tenterhooks regarding the best approach to addressing the lingering challenges bedeviling the nation’s power sector more than five years after the sector was handed over to private investors.
“If we leave them for the next 10 years there would be no power in Nigeria… We gave them our common patrimony and they still come back as DisCos and GenCos to look for money from the public. I think it’s time for Nigeria to consider reversing the privatisation of the power sector or they should just cancel the entire privatisation process completely.
Apart from Buhari, some high-ranking officials of his administration, including the immediate past power minister, Babatunde Raji Fashola, and his successor, Saleh Mamman, have equally spoken of government’s dissatisfaction with the performance of the DisCos and GenCos and hinted at a review of the privatisation exercise.
“The problems are many; the entire sector is broken, there is a fundamental structural problem. The Federal Government has supported the industry with N1.7t in the past three years. The government will take some very tough decisions. There is a lot of blame game. Over 80 million Nigerians are without electricity… It is either we continue to allow the Federal Government pump in N1.7t every three years, or we take the tough decision that will ensure a stable power supply,” he said.
Based on that prevailing reality, the Federal Government planned that by this year, the country would have increased its power generation capacity to 40, 000MW, with an investment of $3.5b per year. But as of Tuesday last week, the country’s peak power generation stood at 4, 950.80 MW. Indeed, some stakeholders believe that speculations by key officials in the Buhari-led government on the possible reversal of the privatisation deal did a lot to deter investors from the sector, and added to the financial constraints, which hitherto pushed the sector toward the brink of bankruptcy.
Shortly after Fashola took the reins in the defunct Ministry of Power, Works and Housing during his first term as minister, he appeared at the 5th European Union -Nigeria Business Forum dousing tension on possible reversal of power privatisation. In 2018, the Minister of Information, Lai Muhammed, specifically told Nigerians that the Federal Government only resisted the temptation to cancel the privatisation agreement, stressing that companies that bought over the sector were under-capitalised, ill-equipped, and lack the necessary expertise.
As loud as the calls for improvement in the nation’s power situation is, it is important to know that the country’s electricity market is confronted with a number of challenges, which most stakeholders link to government, as well as the players. Apart from the fact that the sector is mired in endless blame game, with different committees set up by the executive arm, corruption and undue political interference negate the initial plan of the market.
Expectedly, the quarterly reports that are submitted to the lawmakers, if properly reviewed, would have forestalled incessant interference in the activities of the sector, as the clause was specifically designed for necessary direct collaboration and feedback. However, as opinions continue to differ on whether canceling the privatisation arrangement is the way to go, stakeholders including the former Chairman of NERC, Sam Amadi maintainED that attempting to cancel the exercise would undo all forms of successes recorded so far in the reform process, including policy continuity, which leads to lower perception of risks. This, he considers as the biggest success that the country has recorded so far.
He added that there was need for new private-public partnerships that expand capacity where the DisCos can’t, or help them to perform. “But the solution does not lie in a full-scale reversal of the privatisation of the sector. What should happen is to improve the regulation of the industry by setting high standards and monitoring compliance vigorously. If that is done, companies that do not measure up to standards will just be acquired by more competent ones, or get wound up,” Ameh said.
“They should not quickly forget what led to the power sector reform in the first instance, which was gross corruption in the old NEPA. Apart from that, we will be shooting ourselves in the foot. No serious international investor would ever consider Nigeria again in the near future,” he stated.
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