The Federal Government’s attempt to privatise the Power Holding Company of Nigeria, PHCN, suffered a setback on Wednesday as the $24 million management contract awarded Canadian state-owned Manitoba Hydro was terminated by the presidency.
The Federal Government had been commended when the contract was given to Manitoba to manage the national power transmission network, with observers describing it as a major step forward in the ongoing reform process.
Though no immediate reason was given by the presidency for the annulment of the deal, fears were expressed in some quarters about political interference working against efforts to secure foreign investment into the power sector.
“Mr. President has cancelled the Manitoba power contract with immediate effect,” Presidential Spokesman, Reuben Abati, said on Wednesday.
He did not give any further explanations.
According to Mr. Abati, the Ministry of Power is expected to issue a formal statement later to explain the background to the decision.
The privatisation programme in the power sector has been a long and tortuous journey that resulted in the proposal to select a management firm to take over and run the power transmission system, a process that enjoyed the support of the World Bank.
The Bureau of Public Enterprises, BPE, which handled the process that selected Manitoba for the contract had expected the firm to commence work at the beginning of September, while the transmission is still in control of the government.
Following the emergence of Manitoba, some powerful interests in the ministry of power were reportedly unimpressed with the arrangement to transfer the management of the transmission plants to Manitoba.
An official of the company said the politics of the management contract began immediately it was sealed.
The award of the management contract to Manitoba was championed by the former Minister of Power, Barth Nnaji, who the PHCN workers accused of using the Canadian firm as front to hijack the privatised company.
No sooner had the contract been concluded than the workers union of the PHCN embarked on an industrial action to protest against the new management.
For several weeks, the company was not allowed to settle till security operatives were deployed to facilitate the process.
Mr. Nnaji was later removed by the president over clashes he had with another presidential aide on power.
The electricity transmission network is a major component of the power supply infrastructure designed to help convey power from the power plants to the sub-stations for distribution to the end users.
Over the years, the dilapidated transmission network across the country and its management were identified as some of the reasons that accounted for the inability of the country to guarantee adequate and stable supply of electricity in the country.
The unbundling of the PHCN into 18 successor companies, consisting of eleven generation, six distribution, and one transmission company, under the ongoing power sector reform, was part of government’s effort to ensure improvement in power supply.