25 November 2012

Nigeria: Privatization of Power Sector - How Assured Is Steady Power to Nigerians?


The power sector is one of the ailing sectors that is riddled with several controversies beside the high level of corruption that has become a cancerworm in the country. Michael Oche writes on these controversies trailing it that is capable of truncating the privatization process.

Power generation in Nigeria over the past few decades has suffered from corruption and mismanagement, leading to a near-stagnated energy supply. Between 1999 and 2007, an estimated $16 billion was frittered away through award of dubious contracts to cronnies.

All these were in a bid to revamp the already-ailing power sector. In spite of these, Nigerians can barely enjoy five hours of steady power supply a day because the processes leading to the award of such contracts were fraught with high level corruption.

Those who cannot afford diesels for their generators are left to sleep in the dark under the scorching heat, while those who can afford it are forced to pay through the nose, if they must continue to enjoy the erratic power supply. Such had been the sad tale of the Nigerian power sector fifty two years after independence.

While many countries around the world are exploiting the solar energy option, the Nigerian power sector is still struggling to generate 5000 MW of electricity from the delapidated dams, despite her potentials in the solar energy sector. It should be noted that these figures remain meagre in comparison to South Africa's 40,000 MW and Egypt's 30,000 MW per day.

So, when the Federal Government announced its decision to privatise the power generating plants, many Nigerians were doubtful.

Their fears were not far-fetched. Previous attempts at privatising state firms have been marred by fraud, under-pricing and brazen manipulation thereby leading to serious cynicism about the ongoing power sector reform . The result is that despite the country's huge market potentials, and a population of 167 million, the much expected confidence that would have driven the sales of these public enterprises have been completely eroded. This has always been the bane of previously privatized companies in the country.

Despite the assurances by the Federal Government about its sincerity, the recent twist that led to the cancellation and subsequent restoration of the power contract to Manitoba Hydro company raises more suspicions.

President Goodluck Jonathan has said he did not cancel the power transmission contract awarded to the Canadian firm days after his office said he had actually done that thereby adding more confusion to the already confused privatized power sector.

Just like the oil sector, the power sector has its own powerful cabal that had made it nearly impossible for Nigerians to enjoy steady power supply.

The generator and diesel market in the country nets in an estimated $13.35 billion per annum, and importers' profit margins have been burgeoning due to the erratic power supply. A more reliable and better-managed power supply is therefore not in the interest of the diesel 'cartel'.

In May this year, former Power Minister, Barth Nnaji, blamed the erratic power supply in the country on some cabals whom he said are benefiting from the decay recorded in the sector over the years.

"This thing has to do with interest. Some people want to continue to protect their interests. They want the thing to remain the same way so that they can continue to get what they have been getting over the years. Like our people used to say, they want to carry go," he said.

Though, Nnaji later resigned his appointment due to conflict of interest. Many still see his resignation as the handiwork of the cabals.

The question on the lips of every Nigerian is when there will be a steady power supply in the country moreso with the promise by Dr Sam Amadi, the Chairman of the Nigeria Electricity Regulatory Commission, NERC, that a new tariff regime would usher in a new lease of life in the sector. Nigerians have been waiting since June when the new tariff regime came into force ; If anything, the situation has been worse than the period predating the new tariff regime.

Earlier in the year, power generation in the country reached its highest level since independence, 4,477 MW per day; and for once, Nigerians became hopeful, for the first time in many years, that the country's long-under-performing power sector might be picking up.

Industry watcher say Nigeria has an energy deficit of 23,000 megawatts, which costs the economy about $1.3 billion a year. Its average per capita energy consumption stands at 129 kilowatt per hour compared with 491kw in India and 12,607kw in the United States. Nigeria spends about $13 billion a year in diesel-generated power when she only requires about $10 billion each year for the next few years to help the country meet the dream of joining the club of the world's 20 biggest economies in 2020.

While some have hailed the decision of the government at privatising the ailing power sector, others have said, the government has to be sincere and transparent towards achieving meaningful progress.

Recently, The Chairman of the House Committee on Power, Mr. Patrick Ikhariale raised concern that the country might be thrown in the further darkness because no budgetary provision was made for the transmission companies in the 2013 budget by the Federal Government.

Ikhariale said government's reasoning for not budgeting for the plants was that since they were being privatised, there was no need to spend money on them in 2013.

The lawmaker warned that should a bidder pull out of the transaction midway, the government would run the risk of throwing the country into darkness because it had failed to budget for the companies' operations in 2013.

Copyright © 2012 Leadership. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.