Vanguard (Lagos)

Nigeria: 2012 - Electricity Sector in Retrospect

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The electricity sector was characterized by a pot pouri of events in 2012. As the privatisation of the sector was fine-tuned for a smooth sail, the labour unions in the sector continued with their agitations for the Federal Government to do the needful with regard to workers welfare and other issues bordering on the privatisation process.

Meanwhile, the sector regulator, the Nigerian Electricity Regulatory Commission, NERC, took further steps to support the privatisation process by reviewing electricity tariff. This, according to NERC was to woo private investors to the sector.

While President Goodluck Jonathan was celebrating its greatest achievement in the history of the power sector, (Power generation hit a peak capacity of 4,237 megawatts), the man behind the success, Prof. Barth Nnaji was axed for ethical reasons.

In an attempt to open up the power sector for active private participation, the Bureau of Private Enterprise, BPE, opened bids for 11 distribution companies. So sooner did the BPE announce winners for the bid, was a battle drawn between agency and governors from the Southern part of the country.

There was yet another exchange of baton in leadership in the power sector as Mr. Darius Ishaku was drafted to the Ministry of Niger Delta from Power, while the Minister of State for Niger Delta Affairs, Hajiya Zainab Ibrahim Kuchi, was moved to the Ministry of Power in the same capacity.

Even though the long battle between the Federal Government and the electricity unions was supposedly resolved last month, the unions disagreed with the terms of resolution, based mainly on the severance package the workers were entitled to.

Below are the highlights of the issues that trailed the sector in the period under review:

FG/Labour issues

Talks between the Federal Government and the Labour unions over some outstanding issues in the power sector on several occasions ended in a deadlock as the two parties refused to shift grounds.

When the two parties met in the office of the Secretary to the Government of the Federation (SGF), Chief Anyim Pius Anyim ,with other representatives of the government including the management of Power Holding Company of Nigeria (PHCN); Bureau of Public Enterprises (BPE); Nigeria Labour Congress (NLC); Trade Union Congress (TUC); and the Nigeria Union of Electricity Employees (NUEE); in attendance, the President General of the TUC, Mr. Peter Esele, said labour has shifted a little ground on its demands that electricity workers be paid the 25 percent contribution to the pension scheme, which it had earlier insisted upon.

President-General and General Secretary of Senior Staff Association of Electricity and Allied Companies, SSAEAC, Bede Opara and Abiodun Ogunsegha, respectively, in a seven-page petition to the Chairman of the Senate Committee on Power as well as that of the House of Representatives counterpart, read in part: "The issues of pension, gratuity and super annuation fund must be addressed conclusively. Government should pay gratuity to all in accordance with provision of the Staff Condition of Service reviewed in 2010."

On December 11, the parties finally "agreed" on a severance package, which had remained one of the major hurdles to the power sector privatisation. The agreement would mean the total accrued pension of PHCN staff as at June 30, 2007 shall be paid in accordance with the PHCN 2010 conditions of service. It was also agreed that 25 percent is payable to exiting PHCN staff while 75 percent shall be paid into the Retirement Savings Accounts (RSAs) with the severance paid as 20 percent of total accrued benefits, amongst others.

But no sooner was the announcement on the agreements made than the unions, once again insisted that government was trying to fool the workers by deliberately under calculating the total entitlements.

New Electricity Tariff

Year 2012 also witnessed an increase in electricity tariff by the NERC, which kicked off on June 1.

This meant that middle income consumers began to pay between N11 and N12/Kwh. The highest rates were paid by consumers living in high brow areas of the country such as Maitama, Asokoro in Abuja, Ikoyi, Victoria Island, and Banana Island in Lagos. Consumers in these areas grouped as R3 and R4, pay as much as N23.71/kwh with fixed meter charges of N21,256.30 and N118,830.56 respectively.

The NERC Chairman, Dr. Sam Amadi, explained that the new tariff is established to ensure steady power supply and guarantee efficient customer delivery in Nigeria.

The Nigeria Labour Congress, NLC, kicked against the hike in tariff and declared that tariff hike without improved power supply in the country is not only uncalled for, but insensitive to the plight of workers and the Nigerian people.

Power supply

Shortly after the hike in electricity tariff, the power sector recorded the highest generation output in the history of the country, as capacity hit a peak of 4,237 megawatts excluding spinning reserves.

The erstwhile Minister of Power, Prof. Bart Nnaji, described the feat as the highest power output ever generated and supplied in Nigeria to date, and attributed the sharp increase to gas availability.

But capacity had dropped again, and as usual, government cited gas supply shortages.

Manitoba takes over TCN

Another issue was the official handing over of Transmission Company of Nigeria to Manitoba Hydro International of Canada. The deal is reported to cost Manitoba about $ 23.7million or N 3.7billion. The company was expected to have formally assumed control of the TCN operations on Monday, July 30.

The agreements were signed to hand over the management of the TCN to Manitoba for a period of three years, during which local workers will understudy their operations and a transfer of skills was expected to take place.

The new management was to assume control with all the eight key personnel and the associated staff.

However, more than three months after the signing of the contract, the Federal Government terminated the N3.79billion management contract awarded to Manitoba, citing lack of due process in the award of the contract. Meanwhile the company said it did not receive any official termination notice from the Federal Government.

But in a dramatic twist, President Jonathan in a media chat said Manitoba's contract was still intact.

Barth Nnaji sacked

While still celebrating his achievement as the Minister of Power that witnessed the highest generation of power in the country's history, Nnaji was on the 28th of August, relieved of his job following the acceptance of his resignation with immediate effect by President Goodluck Ebele Jonathan.

His resignation was attributed to the intrigues that have overshadowed the Federal Government's bid to privatise the electricity sector. It was reported that Nnaji admitted that companies linked to him had submitted bids for one of the successor companies created from the unbundling of the Power Holding Company of Nigeria (PHCN).

Nnaji was replaced by the Minister of State for Power, Darius Ishaku, who, in turn was later replaced by Hajiya Zainab Ibrahim Kuchi.

BPE announces bid winners

To wind up the privatisation process of the power sector, BPE announced the bid winners for the 11 distribution companies.

Some of the bidders that participated in the process included a company linked to former Head of State, Gen. Abdusalam Abubakar; Business mogul and PDP stalwart, Sir Emeka Offor, and other notable businessmen including, Oba Otudeko and Wale Tinubu.

Among the companies that bided were Aura Energy Limited for Jos Distribution Company, Sahelian Power SPV Limited for Kano DISCO; 4Power Consortium for Port Harcourt DISCO; Integrated Energy Distribution & Marketing Limited for Yola DISCO and Interstate Electric Limited/KANN Consortium Utility Company Limited for Abuja DISCO.

Others include Southern Electric Distribution Company/Vigeo Power Consortium for Benin DISCO; Eastern Electric Nigeria Limited/Interstate Electric Limited for Enugu DISCO; and Integrated Energy Distribution & Marketing Limited/KEPCO/NEDCO/Western Consortium for Ibadan DISCO.

However, the bidding process did not go down well with four state governors, who rose against the award of Benin Electricity Distribution Company to Vigeo, because of its Indian affiliation, and described it as a total fraud and unacceptable.

Governors Adams Oshiomhole of Edo State, Emmanuel Uduaghan of Delta State; Kayode Fayemi of Ekiti State, and Olusegun Mimiko of Ondo State, insisted that the privatisation was a racket.

BPE on its part cleared the air and in fact pointed out that the governors flouted the rules in the first place by submitting two bids for the same company instead of one, and the governors could not defend themselves thereafter.

Cabinet reshuffle

Another major decision from the Presidency that affected the power sector was the minor cabinet reshuffle announced during the weekly Federal Executive Council (FEC) meeting at the State House, Abuja.

The Minister of State for Niger Delta Affairs, Hajiya Zainab Ibrahim Kuchi, was moved to the Ministry of Power while Mr. Darius Dickson Ishaku, the Minister of State for Power replaced Kuchi in the Niger Delta Affairs.

More NIPP projects commissioned

2012 also witnessed the commissioning of National Integrated Power Projects across the country. The NIPP said it installed about 22,500 new power transformers across the country in 2012.

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