This Day (Lagos)

1 December 2012

Nigeria: TCN Manitoba Controversy, Indictment On Power Sector Managers

interview

Chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi, tells Chineme Okaforthat the recent controversy over the management contract on the Transmission Company of Nigeria (TCN) by Canadian firm, Manitoba Hydro International (MHI), suggests that managers of Nigeria's power sector may not be abreast with workings of the Electricity Power Sector Reform (EPSR) Act 2005.

There was this allegation that officials of the Ministry of Power sought to manipulate provisions in the contract, like taking off the system and market operations from Manitoba; this and other unwholesome practices attracted media interest?

Well, I will say that from day one, I had always made my stand known that Manitoba would do a good job at TCN because I believe they have the capacity to turn around the operations of TCN. I already had a meeting today with the Manitoba official in charge of market operation and he showed me his plans which are fantastic.

All that is needed is for Nigerians and the government to hold Manitoba to commit to its contract which is signed and ensure that it delivers all that is expected of it while we fulfill our part of the agreement rather than the controversy we are witnessing or the tendency to seek for its failure in managing the TCN for the period it is expected to. Don't forget that Manitoba will also provide expert training to indigenous TCN workers, so I think it should be a win-win approach in the whole exercise.

Will you specifically explain the involvement of BPE in this process?

Actually, the process of procurement in the sector is solely a responsibility of NERC as stipulated in its Act but we chose to allow this to pass for now considering the work that BPE is doing and all that; the BPE and BPP do not have rights to procurement in the power sector and this goes to show that managers of the power reform are not actually acquainted with provisions in the EPSR Act 2005 upon which the reform exercise is hinged. Like I told you earlier, I think the BPE and BPP were involved in unnecessary political fisticuff where each one chose to interpret its powers and actions according to its favour but in actual fact; both of them should not be procuring for the power sector because the Act mandates NERC to do that.

What do you make of the recent controversy on TCN management contract?

I think it was a storm in the tea cup that was unnecessarily blown away by the media. With all due respect to the Nigeria media especially for its patriotism and intention to see that reforms in this sector come out good, I believe the media hype over the contract issue was not right because the issues were not as alarming as they were reported in the media; the media didn't have full details to the whole issue and consistently reported without all the details, this in my opinion created some division amongst managers of the sector reform by labeling some as anti and pro privatisation elements when I don't think such exists.

I think the media was alert to its responsibilities...Can you explain how the media overplayed the issue?

Yes, I also believe the media was living out its role and obligations but like I said earlier, details of what obtained in the process were not reported in the media and government memos that should have been undisclosed were flying around. For instance, the media didn't take into consideration that the government was actually been responsible in asking for a review of the contract in alignment with extant laws of the country; all that the government wanted was for the contract to go through due process as stipulated in the laws of the federation because in all fairness, the Bureau of Public Enterprises (BPE) did over-stepped its bounds by not involving the Bureau of Public Procurement (BPP) in the processes of procuring a management contractor for TCN.

Nigerians are fixated on privatisation alone but what is actually going on in the sector is reform, which includes privatisation and others. Setting up the NERC is also part of the reform. And so procuring a management contractor for TCN is not privatisation but a procurement exercise. The Federal Government was not divesting its shares in TCN but employing a management contractor to help it manage the transmission company. So the Public Procurement Act, which also restricted its coverage on the Privatisation and Commercialisation Act actually has a clause in this regard, which says except for sale of government shares, agencies involved in government procurement should inform it; government was not selling off shares in TCN and so BPE should have got BPP involved.

I also take exception to the circulation of government memo by some people in government. Government memo should be its exclusive property and not for public consumption except in cases where it decides to share with the public. You cannot run government without certain security measures in place and I would believe that if such happens in western countries, it would have been investigated by security agencies.

How do you mean that managers of the sector are not abreast with the reform Act?

If by this time we are still experiencing this kind of issues, it then shows that they have not really understood the reform Act which they are operating within; the process of drawing up this Act began in 2001 and it came into effect in 2005 which means that it has been operational for seven years and if within this seven years, they do not thoroughly understand the provisions of the Act; then it means that something is wrong and should be corrected now rather than these fisticuffs where each agency choose to interpret its Act to its favour, if NERC gets up one day and interpret its Act to its favour, there will obviously be issues raised by other agencies.

Do you think that this would have dented the confidence of investors in the sector?

No, I don't think so but I think that it would have strengthened their confidence in the Nigerian law to protect the sanctity of contracts entered into with regard to adherence to the country's laws.

Look, what happened was an issue of reverting to the tenets of due process; the government noticed an anomaly and decided to correct it now before it becomes a burden on the country in future. And so I believe investors will consider us serious and not joking with our laws; what these means is that their confidence on the ability of our laws to uphold the sanctity of contracts is further boosted because you cannot have a law that allows just anything to pass.

So, where are we now with the reform, are we back on track?

Yes, we are back on track from the momentary diversion and I think we are back on track for good now. Going forward, I expect to see Manitoba take charge of proceedings in TCN and deliver on its contractual terms, all issues seem settled now, I have always advocated for Manitoba to take over because I believe it has got the capacity to manage TCN well, that is what we should expect going forward, I don't think there is anybody in this government bent on frustrating the reform exercise, it has got to an irreversible position and would be allowed to go all the way except for the labour issues which should be sorted out as soon as possible.

What is the status of government's negotiation with labour, everyone seem silent now?

Negotiation has moved up to the office of the Secretary to the Government of the Federation and when that happens, you should expect that government is serious about tidying up this last aspect of the PHCN privatisation.

Labour issues are usually a make or break aspect of such exercise but I would suggest in my experience as a civil society advocate that labour should expand its horizon on this, they should rather than the usual fight and resistance to the exercise engage their members on how best they can make the most of whatever benefits they get from the process.

There are a couple of investment opportunities that they can help their members to access; they should move from resisting the process to getting involved in a win-win position for the sector, they should seek for better ways to help their members put their benefits to good use.

How is it that electricity consumers still complain of unwholesome estimated billing methodology by Discos despite NERC's introduction of a new methodology?

I must really apologise to electricity consumers in the country for this; I still get mails from consumers all over the country complaining of unwholesome practices in estimated billing system irrespective of our directives, sitting down here and knowing that this exists makes it look like we are not aware but we are and I total feel the pains of Nigerians.

We discovered that the CEOs of the Discos had kept the directives away from their marketing departments and in that way, they didn't tell them of the new development with which they were expected to work out the new estimated tariff but what we did was to order that all the Discos hold a sensitisation workshop for its officials and educate them on the workings of the new tariff before the end of November; two have concluded that now and we are expecting that the others will follow suit.

What we want to do going forward is to ensure that first; we educate them on the new development, monitor their implementation of the new tariff and then enforce its adherence before we begin to take punitive actions. The truth is that you cannot implement what you don't have good knowledge of and so we want to make sure that they are abreast with the new development and then we can hold them responsible for its failure.

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