Nigerian govt. to review power sector privatisaton

electricity lines
electricity lines [Photo: RETA - WordPress.com]

The Federal Government on Thursday indicated that it would soon review the privatisation of power plants in the country to enable the government restructure their ownership and capacity to deliver value to the people.

President Muhammadu Buhari said this on Friday at the closing of the 23rd Nigerian Economic Summit in Abuja.

He said that the review would involve the restructuring of the ownership of the power plants to ensure that owners who do not demonstrate sufficient capacity to operate the facilities cede their stakes to new investors.

The president, who was represented by the Minister of State for Budget and National Planning, Zainab Ahmed, said this was to open up the sector for new investors to bring in fresh capital to make the plants more functional.

The president said negotiations would commence with power generation companies where the country is having the most difficulties in ensuring adequate power supply.

At the opening session, Vice President, Yemi Osinbajo rejected a proposal by one of the operators who urged the federal government to inject more money into the sector by buying more stakes.

Mr. Osinbajo said rather than give fresh funding, current owners of those companies who have no capacity to finance their operations should transfer their equity to fresh investors to help realise that objective.

The chairman of Transcorp Ughelli Power Limited, Tony Elumelu, had urged the Federal Government reconsider refinancing the Electricity Distribution Companies, DISCos by acquiring fresh shares of the firms.

Mr. Elumelu had said injecting fresh capital would check the current situation where operators of these power plants were holding the government to ransom with endless demands.


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  • mohammed dauda

    The strange going-on
    in the power sector

    The Nigerian power sector has been in serious troubles and
    problems for many decades and the GEJ nailed the coffin of the sector with his
    so-called reform which led to a fraudulent privatization of the sector in 2013
    and Fashola has buried this sector when he assumed duties as the minister.
    Three years into the privatization and even earlier the signs coming from the
    exercise indicated that we are on the brink of disaster. Everyone who is
    everyone has spoken that if nothing is done the sector would collapse.

    Nigerians were
    jubilant and hopeful when the Buhari Administration came to power and that
    finally a government that came with the Hope and Change Agenda and its
    commitment to fight corruption and put right what was wrong would be addressing
    this crucial sector. Our hopes were raised when the President in his inaugural
    speech said inter-alia-that our attempts to overhaul our electricity sector
    have only brought darkness, frustration, misery and poor service as drag on
    Nigerian economy.

    These hopes were
    dashed when a super ministry was created and a super minister was appointed to
    run the newly created ministry. Immediately the super minister took change he
    sent a very strong signal that the privatization of the power has come to stay
    and all his action from day one to date show that the minister is never moved
    by the public outcry about this mess called power privatization. Since his
    assumption of duties it has been one excuse or another, one explanation after
    another all trying to justify his stand. The minister seems to forget that he
    is HIRED to work for Nigeria and Nigerians but not a cheerleader and a spoke
    person of some fraudulent incapable and incompetent investors.

    Our expectations
    are that based on the PMBs speech and the public outcry, the government should
    have appointed experts to look into the transactions and find out exactly what
    happened. Not for a political appointee to stand his ground as if the company
    belongs to him. He slammed us with tariff increase and continues to make noise.

    The National
    assembly particularly the House of Representative held PUBLIC HEARINGS in 2015
    and 2016 respectively and the Senate did the same on this power privatization
    debacle. Curiously in their joint
    statement the Senate President and the Speaker of the House said what they
    found in their investigations was MIND BOGGLING but they refused to let us see
    the findings.

    The minister
    continues talking and issuing statements on the same issue without offering any
    solution. A cursory look at the minister’s actions and speeches indicate a
    total lack of knowledge of what is going in the sector. It is a National
    disgrace that a minister and his technocrats do not know the exact situation of
    the sector. Contradictory Statements and excuses are the hallmark of the
    minister’s tenure while the situation continues to deteriorate at an alarming
    rate.

    It is not only
    strange but suspicious whereby both the minister and National Assembly could
    not do anything about this sector even if the entire system collapses speech
    volume of the powers and connections of these so-called investors. It appears
    the 180 million Nigerians do not matter. Another matter of serious concern is
    that the minister is adding fuel to fire by insisting on a tariff increase.
    This is clearly the highest form of INSENSITIVITY to public outcry by any
    minister. On what basis is he calling for tariff increase? In the first place
    these people have not invested a kobo into the system and that alone should be
    a reason to not allow any tariff increase. They also have failed to achieve the
    Technical and Commercial Losses which were the hall mark of their qualification
    for winning the bid.

    This writer
    believes that the government is being led to believe there is legal quagmire in
    this privatization. This is not true. The Sale Purchase Agreement clearly
    states the terms and conditions of the sale which includes penalty, revocation
    etc. The minister is clearly hiding this from the government. Another concern
    is that there is nowhere in the world that a stakeholder of 40% is no body in
    the business. The minister’s stand is that he does not care or mind if that 40%
    becomes 0%. The BPE and the consultants who carried out the sale are not mad
    people and have tried through that Agreement to safeguard the FGN 40%. I am wondering why the minister is behaving the way he is
    behaving.

    With all the problems we are facing one would expect the
    government to make a case for review of the performance of these companies based
    on the terms and conditions of the sale as outlined in the Sale Purchase
    Agreement by setting up a TECHNICAL and COMMERCIAL TASKFORCES to look into the
    performance of these companies including their FINANCES because the companies
    were handed over to them with no debts.

    The suggestion by the minister to sale the 40% is dubious
    and illegal and must not be allowed to be done. It is an illegal way of hiding
    and cover for the fraud that has taken place during the sale. Any attempt to
    sell the 40% must be resisted. At any rate only a dubious investor will buy
    this stake because the entire system is in a mess and anybody wanting to buy
    this stake must carry out DUE DILLIGENCE and including the background check on
    the people he is going to do business with.

    There is not going to be any genuine foreign investor in
    this sector as long as the people in charge of the system know next to nothing
    about the industry. We are just deceiving ourselves that some people will come
    from nowhere to run our system. An investor that cannot provide ordinary meters
    to his customers is by any standard not a serious investor. What one expects is
    that metering should be the top priorities for any investor to enable him
    collect every kobo that is due to him. It is very strange and it is only this
    country where metering has become a ministerial issue. I cannot remember
    hearing minister of communication asking MTN or all the Telecom Operators to
    provide meters to their customers.

    It is really insane to pursue a policy that would fail .The
    government must be serious about the sector and investigate the deal on case by
    case basis to know if the country and its people are not short changed
    including the staff of the defunct PHCN. The President lamented during his
    Inaugural speech and said the same in his October Speech. So there is a problem
    and instead of lamenting the best thing is to get into the roots of the
    problem. The government is supporting and bailing these operators with public
    fund and even going further paying Billions of power bills which were never
    verified. What kind of privatization is this?

    From the above one can clearly see a problem in a very near
    future because the government will reach a point where it cannot sink more
    money to support these investors.