Electricity: New year, new deal?- Nigerian Tribune

By The Citizen

As Nigerians enter Year 2014 today, evidently with a mixture of trepidation and stubborn hope given the grim realities of everyday existence in the country, one critical issue of intricate concern is efficient and stable power supply. The logic is quite straightforward: Nigerians desire stable power supply for day-to-day existence. It is also a solid foundation for economic activities. The country has traversed an extensive, tortuous terrain from the Electricity Corporation of Nigeria (ECN) to the National Electric Power Authority (NEPA), and from the Power Holding Company of Nigeria (PHCN) to a multitude of operators-electricity distribution companies and electricity generation companies, or, simply put, discos and gencos. The trajectory of a change in name in the face of worsening performance has however only served to further compound the woes of a tormented populace.

Still, the privatisation of the PHCN succession companies and eventual handing over of their assets to the new owners was a major landmark in the reform of the electricity sector. The Goodluck Jonathan administration can be credited with the completion of a process that started in 2005 and that was over seven years behind schedule. With the privatisation of the electricity sector, Nigeria has moved into an uncharted terrain that requires a lot of responsibilities, not less from the government. However, very few countries in the world, especially in emerging countries, have left the management of their electricity sector almost exclusively in the hands of the private sector. It has always been a mixture of private and public participation in the delivery of the electricity supply, given the importance of the electricity sector to the socio-economic development of any nation, and its vast security implications. Moreover, to allow for energy access to all strata of the society, irrespective of income status and location, governments have always been very active in the provision of the electricity.

Electricity reform in Nigeria has not been without challenges, including the stiff opposition and resistance from entrenched political and economic interest groups. However, with the poor performance of the state electricity monopoly, PHCN, there is little sympathy for the maintenance of the status quo and most Nigerians wanted any change that would ensure stable supply of electricity. Perhaps this was one of the major reasons for the lack of strong public support to former electricity workers who rose stoutly and fought vigorously against the privatisation of the holding company. However, there were also those who opposed PHCN privatisation on the ground that the new private owners in the search for maximum profits would relegate the interests of many vulnerable Nigerians. Others feared that many of the potential owners may not have the financial capacity and experience to successfully manage the companies and make timely investments for the expansion of electricity supply.

In spite of the opposition, government had successfully sold off the companies. The new managers have taken over the running of the generation and distribution companies. However, several issues still have to be resolved. First, some workers that lost their jobs are yet to be paid their full entitlements as promised by the government. We call on the Federal Government to honour its promises to the workers as a matter of honour and at the earliest possible time.

Second, in the aftermath of the privatisation, electricity generation has gone down significantly, affecting electricity supply to several parts of the country. While this might be associated with the transition period, it is however important that the relevant authorities do something urgently to address this situation. In one of his interviews with the press, the Executive Chairman of the Nigerian Electricity Regulatory Commission (NERC) alluded to idle generation capacities due to unavailability of gas to power the thermal plants. This is a very grave situation. The gas issue cannot be resolved in a fundamental sense without the passage of the Petroleum Industry Bill (PIB). This shows the interconnection between the petroleum sector and the electricity sector. Yet, there seems to be very minimal urgency towards the passage of the Bill beyond mere promises. The issue of gas must be addressed urgently.

Another issue that needs the urgent attention of government to ensure the delivery of stable, reliable and quality electricity to Nigerians is the strengthening of the very weak transmission capacity. The transmission infrastructure is very weak, and lacks the capacity to wheel the expected increase in electricity generation in the country when all the planned power plants go onstream. Transmission is regarded as the weakest link in the electricity supply chain in the country. Yet its effective functioning is critical to the success of any power sector reform.

The oversight function of the regulatory agency is also very important. Nigeria has embarked upon a journey with few examples to copy from. California that left its entire electricity sector in the hands of the private sector was seriously punished some few years ago when the market system failed. While a gradual approach to liberalisation would have been a preferable alternative, it is already too late to advocate such. We therefore call on all the relevant agencies of government to be quite vigilant, responsive and play their roles in ensuring that the high expectations created in the minds of Nigerians are met. The Bureau of Public Enterprises (BPE) and NERC must perform their oversight functions very diligently to ensure that the new owners keep to the performance contracts they signed with the government. The interests of consumers must also be protected at all times to ensure that the new private monopolies do not take advantage of the consumers in their areas of operations. All said and done, this year should be a new, happy deal for Nigerians.