Should Buhari Reverse Power Reforms Policy? | Independent Newspapers Limited
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Should Buhari Reverse Power Reforms Policy?

Posted: May 11, 2015 at 3:21 am   /   by   /   comments (0)

Nigerians had expressed great hope of uninterrupted power supply when the Federal Government on November 10, 2013 handed over  ownership and operation of the power sector to the core investors, who acquired eleven distributions and five generation firms unbundled from the Power Holding Company of Nigeria (PHCN). One and a half year down the lane, this expectation is fast eroding because consumers across the nation are confronted with the yoke



of unstable electricity supply, ‘crazy billing,’ among other malpractices in the sector. In this special report on the power sector, our reporters: Sylvester Enoghase, Phillip Oladunjoye, Sola Alabadan, Andrew Airahuobhor, Bamidele Ogunwusi, Abel Orupke and Saheed Bakare, examine the intricacies surrounding the privatisation of the sector and the call by stakeholders advising the in-coming administration to review the entire privatisation process.

There appear to be divergent views by stakeholders in the power sector on how the incoming administration of Maj-Gen. Muhammadu Buhari should handle the privatisation of the power assets of the country.

While some call for a review of the privatisation of the power sector, others see it as unnecessary and uncalled for.

For instance, the Minister of Power, Chinedu Nebo, recently advised the incoming administration of President-elect, Muhammadu Buhari, not to reverse the privatisation of the power sector, saying it would set the nation’s reform process in the sector back several years and would not be in the national interest.

Nebo, who gave this advise while briefing State House Correspondents at the post-Federal Executive Council (FEC) meeting, also said that a new draft National Policy on Renewable Energy and Energy Efficiency (NPREEE) have been drawn that any attempt to reverse the power privatisation policy would drag the nation backwards by several years as the reform has progressed to the point that only adequate gas supply remains the major stumbling block.

He said, “On privatisation, I think the incoming government will be ill-advised to reverse privatisation, liberalisation of power generation, transmission and distribution because any attempt to do that would be to set Nigeria back many decades. The gains of privatisation are very obvious. If we can solve the problem of gas like we are talking about energy mix, we are not just going by gas we are doing hydros. It was this same administration that flagged off Zungeru hydro power plants for 750 megawatts and is in a bid to flag off Mambilla 3,050 megawatts, Shiroro has been improved and revamped, Kainji revamped and improved; the same goes for Jebba.

“So there is a lot of work being done by the government. But to turn back on privatisation would mean stopping all of these companies and then reversing the massive inflow of investments coming into the power sector. Nigeria’s power consumption per capita is one of the lowest in the world and that is part of the efforts of government to reverse that. So I don’t think it is in the best interest of the country.”

Nebo described as frustrating the sabotage inflicted on the country by evil-minded vandals who ceaselessly and needlessly damage oil and gas pipelines to the detriment of their fellow countrymen.

While tendering government’s apology for the incessant blackouts nationwide, Nebo stressed that some “demon-possessed” Nigerians that have been responsible as the vandals make little or no financial gains from their activities which cost about N120 million every month to repair.

He pointed out that many turbines at the power plants have been idle because of lack of gas caused by vandalism, while the power generating companies have been operating at about 30 per cent of their installed capacity.

“I have never in my life seen anything as frustrating as what we are experiencing today. Every month, the Nigerian Gas Company spends a minimum of N120 million to fix gas pipeline. Every two weeks, western axis pipelines are vandalised and that is pure sabotage; the eastern axis pipelines are vandalised and that is oil theft. At the end of the day, the gas that is supposed to go to the turbines doesn’t get to the turbines to generate electricity.

“As I speak to you today, if you give us gas right now we will produce 5,500 megawatts. But when the pipelines are in the state of disarray as they are now, in fact, the recent thing they are doing is testing the integrity of the entire system. And when you have broken something over and over again, you have to really look at the entire spectrum to make sure whether the rest of the pipeline has integrity to bear gas,” the minister lamented.

Speaking in the same vein, Chief Consulting Partner, Energy Services International Limited, Mr. Akin Bada, reportedly argued that the privatisation should not be reviewed; rather, the power sector should be enabled to deliver.

“PHCN was sold to people who were adjudged to be the best buyers. It went through a long due process before it was sold. So, these buyers need to have the chance to take charge. They have not been given the chance to take charge.

“Secondly, there was no thorough due diligence on the PHCN assets because the workers there were at war with the Federal Government on the sale of the assets. During that period, none of the buyers could actually go in to assess what they were going to buy. So on getting there, they found a different thing and they must tackle these issues before things will work well.

“Also, within last three or four months, we hear of the blowing up of gas pipelines every week; and gas is our major source of fuel to power plants. And when there is no gas, no energy will be sent. So, yes there are challenges but reviewing the whole thing by going back to the drawing board may not solve any problem. We have enough regulations and organs to take it to the next level. They should be enabled and not reviewing the exercise,” he said.

But in apparent response to the statement made by the out-going minister of power, Professor Chinedu Nebo, on the need for the in-coming administration not to tamper with the privatization of the power sector, electricity workers in the country have demanded a thorough review of the privatization of Power Holding Company of Nigeria, PHCN, alleging that the privatization project was fraught with irregularities.

The workers further alleged that the privatisation exercise had made electricity generation and consumption in the country ineffective.

The workers, under the aegis of National Union of Electricity Employees, NUEE, insisted that the payment of over N200 billion to the private sector by the government after the privatization exercise leaves much to be desired, and urged the incoming administration of Gen. Muhammadu Buhari, to revisit the exercise.

The executive members of the union, led by the General Secretary and factional President of Nigerian Labour Congress, NLC, Comrade Joe Ajaero, who said this in Abuja, while conducting select journalists round the site of abandoned 60 containers of 52KVA electricity transformers, at Kubwa, in Abuja, argued that if after many months, privatization of electricity in the country had failed to bring positive impact to electricity consumers, then, there was the need for the Buhari-led presidency to revisit the programme.

“We want to say, as a union that the sham, called privatization, should be revisited. If privatization, as we were told, was to bring us heaven-on-earth elderado, and it has not done that, why should we insist on it?

“Of course, our position as NUEE, has been no to privatization, especially given that we are an underdeveloped economy. It is the function of the state to provide power.

“Even the so called privatization, you can see that even this year alone, between January and now, they have even given the so called private sector over N200 billion. So, why fund them if you say the electricity is in the hands of the private sector? That brings you to the point of the fraud on who owns them.

“Why would you sell your house to somebody and you still give him money to maintain it? So, it’s a frau,” Ajaero said.

Emphasizing on the minister’s comment that privatization of PHCN must stay, Ajaero added: “We want Buhari to ask questions first and foremost because it is wrong for an out-going minister to be setting agenda for Buhari to reverse or not to reverse the privatization of PHCN.

“A minister, who inherited about 4000 megawatts and is today, battling with just 2000 and something megawatts, doesn’t have the moral courage to advise the incoming government on what to do.

“If he, Buhari, asks questions for some months, he will now know the direction to move.”

Ajaero said he was alerted on the abandoned containers by concerned citizens who got wind of the development, arguing that with the transformers hidden at the place it was discovered, it is clear that while they were privatizing, certain properties were being hidden.

Also, the Chairman, Society of Exploration Geophysicists, Nigeria, and former Head of Exploration, Nigerian National Petroleum Corporation, Prof. Charles Ofoegbu, said despite the inauguration of completed power plants by the present administration, the sector had failed to deliver adequate electricity to the citizens.

He said, “The privatisation of the power sector needs to be reviewed. The incoming government needs to do this before it can get the issue of power supply right. We keep inaugurating power generating plants, but I had warned in the past that power supply would keep diminishing and we have discovered that we are not making progress but rather retrogressing in the sector.

“This is beginning to happen because we are getting shorter hours of power supply whereas we are inaugurating many distribution and generation firms.”

Ofoegbu argued that an adequate gas master plan was not implemented; a development that he noted had rubbished the privatisation exercise.

He said, “The reason for this is because we did not implement an adequate gas master plan. It has not been fully implemented and you are beginning to put in place generating points on a master plan that is not implemented. Gas supply is not there. We don’t have adequate gas supply. There are some power stations that we have in this country that don’t have pipes that take gas to them.

“Why should that be the case? Why should we not plan? Why should we not do the first thing first? Then you inaugurate these massive projects while there are no raw materials to power them.”

Analysts at FBN Capital Research noted that addressing the power challenge was a priority for the incoming administration.

They said in a report, “One of the priorities for the new administration will be the power sector. The outgoing Federal Government broke up the former Power Holding Company of Nigeria, privatised its generation and distribution arms, and indicated that transmission could also have a future in the private sector (rather than under private management).

“Successful transformation of the sector could have proved a major vote-winner in the presidential elections but remains far off. South Africa offers a salutary lesson in the cost of neglecting the industry’s investment needs. It was often noted that it generated substantially more power (than Nigeria) for less than one third of the population.

“The new administration may care to look at the consistency of tariff policy. The National Electricity Regulatory Commission indicated in Abuja recently that exchange rate weakness could well lead to a rise in the tariff from mid-year, yet announced a 50 per cent reduction the following day. The cut did not apply to residential users, who were granted a six-month reprieve from the increase imposed on commercial and industrial consumers with effect from January 1, 2015.”

Meanwhile, the Chairman/Chief Executive Officer, Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi, said the incoming government would have to follow due process before it could review the privatised power sector.

Amadi said, “A government that comes into power has a responsibility of making policies.

“It can change policies, improve existing ones or can more vigorously pursue existing policies. So, through due process, the National Electric Power Policy, which also led to privatisation, can be reviewed by the incoming government to meet certain demands and improve the industry.”