Under serious pressure to fulfil its mandate, the Nigerian Electricity Regulatory Commission has stated that it has initiated the process that will lead to the revocation of some power generation licences. Since 2006, the regulator has approved 124 licences, but this has not translated to significant improvement in electricity supply to industries and households. Reassuring consumers, NERC’s engineering commissioner, Abba Ibrahim, said, “Each licence is accompanied with terms and conditions that must be achieved within certain time limits. If those milestones are not achieved, then the licences are subject to review.” NERC’s intention to withdraw the “non-performing” licences is therefore justified.
But it will be naïve to assume that the termination of the non-performing licences is the be-all and end-all. The recall, as appropriate as it is, won’t suddenly transform a country of 170 million people with its highest-ever generation of only 4,517 megawatts (December 2012) to one dwelling in an ocean of abundant electricity. The malaise causing Nigeria’s almost total darkness goes deeper than just cancelling licences.
No part of the country is availed of regular electricity. Generation just climbed up to a new peak of 4,545MW from a precipitous low of under 2000MW in May. The Vice-President, Yemi Osinbajo, says that our transmission infrastructure needs to be urgently upgraded as the existing facility cannot wheel the potential generation capacity of 13,000MW. “The (Muhammadu) Buhari administration has identified the weak transmission grid, which prevents the wheeling of more than 5,000MW as gridlock to be removed,” Osinbajo lamented.
But the rot goes much deeper. A major impediment, as it is abundantly clear, is the scandalous privatisation of October 2013 by the Goodluck Jonathan government. Against all sound financial recommendations, that government sold most of the 17 generation and distribution firms to cronies and rent-seekers. The new companies, because they lack the resources to invest, have been living off the Federal Government. Abuja has issued a loan of N213 billion to the private entities and they are still seeking more. The result of that perfidy is the prevailing darkness across the landscape.
Initially, the power privatisation was conceived to attract international investors with financial capabilities and relevant expertise to buy into the unbundled companies. With their funds, expertise and pedigree, they would have made the difference. Even the United States, the world’s leading economy, taps into this international model by getting supplies from Canada. A World Bank report stated that Nigeria needed to invest $10 billion annually in the 10 years to 2020 to generate the 20,000MW needed to trigger its economic revival.
But under Jonathan, the privatisation was shamelessly rigged to favour some local emergency firms, who had neither the finance, experience nor the capacity to operate such a venture. Most of the new generation and distribution companies borrowed from our local banks to buy the legacy companies, after which they had little or nothing for investment and are struggling to repay. Their inability to repay is emasculating the banks and affecting the operations of the power firms, which cannot provide prepaid meters, cables and transformers for consumers.
Power is a vital peg of contemporary society. It boosts industry and research. Blue-chip multinationals, which drive growth and jobs, thrive on cost-effective electricity. The National Bureau of Statistics puts our jobless rate at 24.1 per cent. A recent survey by the Presidential Task Force on Power estimated national demand at 12,800MW, while a National Population Commission study lists only 48 per cent of Nigerian households as having access to electricity. A World Bank study, Getting Electricity, released in June 2014 rated Nigeria 187 out of 189 countries, with a new connection likely to take 260 days in Lagos, 248 days in Kano, and cost 478 per cent of income per capita. In contrast, South Korea is ranked No.1, Taiwan No.2, United Arab Emirates No.3 and Germany No.4 in the report.
The situation, though pitiable, is however redeemable. Along with reviewing the assets already sold, the scheduled auction of the Nigerian Independent Power Plants should be transparently done. As a newspaper, we will remain relentless in advocating global best practices for our power sector. We again affirm our stance that Western, Japanese and South-East Asian firms have the best track records in power plant operations and the BPE and the National Council on Privatisation should, if necessary, utilise the direct negotiation option to attract them.
The new thinking should be how to inject efficiency into our power sector by engaging the best global operators. Never again should we allow phoney firms put together by corrupt public figures, their allies and dodgy businessmen to corner state-owned assets. Nigerians voted for change because they wanted the new government to squarely tackle our uncommon challenges and cabals in the sector. A comprehensive review of the privatisation of 2013 as the first step way to kick-starting our economic development is imperative.
