Price of meters shoot up; president directs tariff reduction. It’s endless tales of woe in power sector
What age-worn cliché: garbage in, garbage out would come in quite useful here for that is what has happened in Nigeria’s power sector under President Goodluck Jonathan. For tragically mismanaging its laudable power privatisation programme, what therefore, might have been this government’s most outstanding legacy may sooner be its lingering albatross.
Nearly one and a half years after the bulk of Nigeria’s power sector was transferred to private ownership, and notwithstanding billions of dollars committed into power projects by the Nigerian government since 1999, darkness still hovers over most of the land. The requisite energy to galvanise both corporate and individual endeavours continues to fall short and the country is stumped and rooted in backwardness.
In other climes, privatisation immediately bolsters a sector as it rides on the massive infusion of private capital, financial discipline, managerial and technical know-how and all the time-tested management acumen lacking in the public sector. Even in Nigeria, we have seen the aviation and telecommunications sectors leap to life upon privatisation. But it has not been so for the power sector and the reason is simple: the process of divestment was fraught with opacity.
In the first place, established power firms, especially foreign ones either shunned the process or were shunted. The result is that the power generating and distribution facilities were handed to cronies and party stalwarts who had neither capacity nor knowledge of the industry. Thus, since November 2013 when the new (private owned) generating and distribution companies came into existence, Nigeria’s power situation has failed to improve. Many of the people who scrambled to hijack prime power assets either have no funds to invest in them or would not invest. Instead, they have elected to continue to finagle with obsolete equipment and installations that had been the bane of the sector under government’s watch. It is like milking a scrawny, old cow.
But in this intervening period, they have inveigled the Nigerian Electricity Regulatory Commission (NERC) to increase tariff a couple of times even though power supply has not improved by any appreciable margin. Most galling, they have connived to make sure that electricity distribution is not metered so that lucrative but arbitrary billings would continue.
Late last year, a N213 billion facility was availed the privatised power firms by the Federal Government through the Central Bank of Nigeria (CBN). This is taxpayers’ money being funnelled to private firms at low interest rate. Quite a number have already accessed this fund.
Yet the problems linger to the pain of electricity consumers and the ruin of the country. It was reported last week that electricity meters will now sell for about N60,000 for the multiple phase industrial use and N40,000 for the single phase, household use. These are increments of 20 and 56 percent, respectively. The reason for this sharp hike in price is said to be because of the weakened naira value. Ironically, all the meters required for operation could have been installed many years ago and long before privatisation. Interestingly, it is only in Nigeria that the consumer has to pay for meter, a property of the power companies!
Recently, President Jonathan reportedly directed the NERC to reduce tariff. A 50 percent reduction was announced this week. This, clearly, is the result of the dysfunction built into the new power sector reform; that is why a presidential order is now required to control the tariff structure. There are also, lingering issues with gas supply, generating capacity and transmission.
We insist that giving a presidential directive is mere palliative if not an aberration in a supposedly privatised business environment. Indeed, it is only a political decision meant to get some mileage for the government. The Federal Government must review the power sector reform in order to correct the flaws; especially the handing of critical power facilities to incompetent people.
