BPE, former NERC chairman bicker over ‘poor’ power sector reforms, privatisation

High tension electric powerlines
High tension electric powerlines

The Bureau of Public Enterprises and a former chairman of the Nigerian Electricity Regulatory Commission, Sam Amadi, have clashed over the perceived poor performance of the power sector despite its privatisation and numerous reforms.

In 2013, the former Power Holding Company of Nigeria (PHCN) was unbundled into 11 electricity distribution companies (DISCos), six generating companies (GENCos), and one transmission company (TCN).

Nigerians expected efficiency and optimal performance of the sector in terms of improved capacity in generation, distribution, and supply of electricity to consumers.

However, despite the privatisation and reforms, the output from the sector remains poor, at an average of 3,600 megawatts.

The Transmission Company of Nigeria (TCN), the agency responsible for the transmission of electricity consumers said the peak output of 5,357 megawatts was attained last February.

The Ministry of Power and the DISCOs have been trading blames on who should be held responsible for the poor performance of the sector.

Privatisation fundamentally flawed

Mr Amadi said in an interview with The Cable newspaper that the reforms and privatisation of the power sector were fundamentally flawed.

The former NERC boss, who is now a lecturer at Baze University, Abuja, said if the sector is to work and deliver value to the people, the privatisation processes should be reviewed and the underlining mistake corrected.

“What I said was that after all the reforms and privatisation, the country has not got the desired result. We should review the processes adopted to see where things may have gone wrong,” he told PREMIUM TIMES on the telephone on Saturday.

“I did not say anybody rigged the process, ‘chopped’ money, or was not transparent. What I said was that there must be something that was fundamentally wrong that the privatisation has not worked.

“If we do not rejig the context and the process, it will not work.”

According to Mr Amadi, a serious government would institute a public inquiry in the power sector where all interest groups will speak on what is wrong with the sector.

“I stand by my word that the privatisation of the power sector was badly designed to fail,” he said.

“The benchmark BPE used to get the DISCOs into the sector was not one that would have allowed them to do better than the government they took over from.

“The benchmark only allowed people with capacities that would allow them do marginally better than the government.

“There was no proper evaluation of those who took over the power assets. For instance, those technical partners, how much have they contributed so far? How much have the DISCOs budgeted to upgrade the system? After eight years, there is no SCADA to monitor the power distribution system.

“We did not even have the corporate governance structure. Up till now, there is no corporate governance code on how to manage the DISCOs. We do not even have any audited account. There is no customer enumeration data on the number of customers.

“These are the things that should have been in place before privatising. If it is going to work we could have set out the structures to make it work. But, we did not do it.

“If you continue this privatisation the way it is, without going back to where the mistake is, we will not get a good result. There is something really fundamentally wrong about the reform,” Mr Amadi said.

BPE’s response

In its response, the BPE in a series of tweets published on Friday said the alleged failure of the sector must be a shared responsibility with NERC, as the “Bureau worked closely with NERC in delivering the power sector transaction.”

“The design of the reform framework was never the exclusive work of the Bureau given that the power sector policy the Act that replaced the old NEPA Act and the eventual sector structure were subjected to stakeholder reviews through intensive workshops,” the bureau said.

According to the BPE, all the transaction documents, such as request for proposal (RFP), draft contracts, evaluation criteria, etc. were all endorsed by NERC before they were issued to bidders.

Besides, it said the evaluation of the technical bids received from bidders was carried out by a panel, which included representatives from NERC, Federal Ministry of Power, NEXANT (funded by USAID), NIAF (funded by DFID), Presidential Task Force on Power (PTFP), CPCS (Transaction Advisers) and the Bureau.

The evaluation, the BPE said, was observed by operatives from anti-graft agencies and the DSS, “with members of the evaluation team having a combined experience of over 300 years in the relevant subject matter”.

“It, therefore, beggars belief that somebody who was appointed Chairman of NERC with zero years of experience in the power sector should sit in judgment over the outcome of PHCN successor company’s evaluation,” the BPE said.

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