Crusoe Osagie
28 February 2005
Lagos — The Organised Private Sector (OPS) has called for the urgent privatisation of the National Electric Power Authority (NEPA), to resolve the excruciating energy crisis in the country that is crippling many industrial outfits.
While electricity generation by NEPA had declined rapidly to 2,900 megawatts from 4,000 in December 2001, leading to major power outages, the Federal Government's pledge to privatize the behemoth since four years ago is yet to materialise.
In separate interviews with THISDAY, the National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Manufacturers Association of Nigeria (MAN) stressed that the privatisation of NEPA remained the only possible solution to the problems of the incessant power outages.
The Director General of MAN, Mr Jide Mike, explained that MAN has always advocated the privatisation of NEPA, which, he said, was the way to go if succour will ever come to manufacturers and Industrialists.
Mike however stated that the process of privatising the power outfit was going to be relatively delicate as the law establishing it will have to be changed for it to be legal.
He however said it might be more practicable to embark on the privatisation of NEPA considering the three major components that make it up.
"NEPA is made up of three major components which include generation, transmission and distribution and it will be easier to privatise some of the components of NEPA instead of attempting all at once."
The Chairman of the Manufacturing and Export group of NACCIMA, Mr. George Okolo, stressed that privatisation was the only way out of the present predicament.
He explained that a look at the books of any company operating in the country clearly reveals energy cost as the highest cost manufacturers and industrialists have to tackle as they carryout their businesses.
"The power situation is pathetic; it has driven up our operation costs markedly and because of the competition our goods face with imported finished products coupled with the fact of the very low purchasing power of Nigerians it becomes difficult to transfer the increase in cost to the consumer. Which leaves us with two options: to either absorb the cost and have our margins further reduced or shut down"
He stressed that privatisation seemed to be the only way out of the problem since it will lead to improved services, and regular power supply.
He pointed out that no matter how high the energy tariffs will be under privatization, consumers will not have to pay as high as they are paying to run their companies with privately generated power.
"Now we practically do our business 100 percent on privately generated power," he said. "Which means we have to buy very huge volumes of diesel, which is now very costly. "
According to him it is also very difficult to maintain the generator due to the lack of manpower to handle the machines when they require servicing or go bad.
This he said results in situations where very expensive plants are damaged by the technicians who lack the capacity to manage the equipment.
After the increase in diesel prices in the country fortnight ago leading to very high cost of privately generated power supply, which is industrialists last resort bearing in mind the inefficiency of NEPA
However privatization of NEPA has proven to be a very technical process and the Bureau of Public Enterprises BPE in 2002, then under the leadership of Mallam Nasir El Rufai proposed that the first step towards the sale of NEPA was the unbundling of the authority into about 18 firms including 6 power generation firms, one transmitting firm and 11 distribution firms.
The new companies were to be issued licenses by the proposed industry regulatory agency, the Nigerian Electricity Regulatory Commission (NERC), which shall also monitor their activities.
A draft bill tagged "Electric Power Reform Bill," which is to give legal backing to the NERC, was at that time sent to the National Assembly.
In the draft bill the commission is expected to:
ocreate, promote and preserve efficient industry and market structures, and to ensure optimal utilisation of resources for the provision of electricity services;
omaximise access to electricity services by promoting and facilitating consumer connections to distribution systems in both rural and urban areas;
oensure that adequate supply of electricity is available to consumers;
oensure that prices charged by licencees are sufficient to allow the licencees to finance their activities and to allow for reasonable earnings for efficient operation;
oensure safety, security, reliability and quality of service in the production and delivery of electricity to consumers; and
oensure that regulation is fair and balanced for licencees, consumers, investors and other stakeholders.
The progress of the whole process was however stalled by the technicalities and politics involved with the consumers and the entire Nigerian economy bearing the brunt.
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