9 December 2012

Nigeria: The Private Sector Can Play Better Role in Power Reforms

One of the key areas of the transformation agenda of President Goodluck Jonathan is provision of adequate electricity.

On assumption of office on 29 May 2011, the president inherited epileptic power supply which impacted negatively on the overall growth of Nigeria's economy.

The total power generation was far below 3,000 kilowatts which was barely enough for an industrial city like Lagos. And to compare it with an African country like South Africa, it is a shameful development.

When the president assumed office, he made a pledge to reverse the situation and in one year appreciable progress has been made. That progress is still not good enough to cope with Nigerians' consumption index coupled with the fear that there may be a drop in power supply in dry season.

It has become a notorious fact that government alone cannot shoulder this responsibility, which explain why the Power Holding Company of Nigeria had to be unbundled. By that singular event, government is taking a decision to open up the space and allow private concerns to invest in power.

In recent years, state governments like Akwa-Ibom, Rivers and Kaduna have built independent power plants but are yet to have the power purchase agreement signed so as to have the power generated to be fed to the national grid.

That again slows down the president's power reform agenda because the electricity generated by these plants is not being evacuated and consequently leaves the plants in the hands of the inefficient PHCN.

The impact therefore is insignificant. The revolution in the power sector will not be complete without a holistic approach by government agencies in signing power purchase agreements with independent power producers. For instance the private sector should be encouraged to be fully involved. The government will need to evolve both economic and legal framework as well as develop the political will to achieve the desired goals.

There are certain individuals who have completed power projects but these plants have not become operational because of certain legal impediments. We can draw attention to the Dadin Kowa hydro-electric power project in Gombe State, by a wholly indigenous company Mabon Energy Limited in which over $40 million has been expended. This plant has the capacity to generate 40 megawatts of electricity which can be fed into the national grid and can meet the power supply needs of the North-East region comprising Gombe, Bauchi, Borno, Yobe and Taraba States. The Mabon plant can also power the main industrial concern of that region, the Ashaka Cement Company.

Besides, when completed, the Dadin Kowa project is capable of irrigating over 44,000 hectares of agricultural lands and fisheries that could create millions of jobs for the youths.

But alas, this project is yet to begin operation for reasons that the government is unwilling to conclude the necessary agreement with Mabon Energy Limited. Certainly, there could have been other private indigenous investors if the encouragement exists. This is one area President Jonathan should be interested in and ensure that all the encumbrances are removed.

Another area is the legal framework as provided in the schedule to the constitution. Power is in the exclusive list which confers the prerogative on the Federal Government to administer. There is a need to untie this monopoly.

For instance, the Gombe State government indicated interest in acquiring about 15 per cent equity of the Dadin Kowa power project. This also cannot be put into effect because of the imposed circumstances which have stalled its operations.

It should not really matter who is providing any infrastructure as long as the interest of the majority of the people is served. The unbundling of the PHCN is a welcome development but the efforts of government can be more wholesome in the power sector if private concerns are fully integrated and adequately encouraged.

Christian Ogodo wrote this letter from Abuja

Copyright © 2012 Daily Trust. 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.