Why a government will opt to liberalise its key economic sector, jeopardise the security of the nation, and push its economy to the brink beats my imagination!
When the substantial funds that the Nigerian government have expended since it submissively handed over our national treasures to private individual, alongside the significant loans provided by Nigerian banks to the electricity sector thus far, is juxtaposed against the revenue from the sale of these national monuments and the darkness generated, it begs the question: which parties have profited or incurred losses from these transactions?
Setting the Stage
In the sprawling and narrow streets of Nigeria, despair hangs heavy in the air, while in the labyrinth of the country's power sector, a tale of rapaciousness, savagery, and betrayal is unfolding, revealing the stark realities faced by 200 million Nigerians. Once a land of promise, Nigeria has become a landscape of broken dreams, where the hopes of millions are dashed against the rocks of corruption, incompetence, greed, neglect, and lack of patriotism. Nigeria's narrative is one of woes of SADISM, as those who 'foist' themselves on the country, with the constitution entrusting the nation's well-being in their hands, have instead driven it to the brink of collapse.
At the heart of this tragedy lies the contentious issue in the power sector - the unbundling of the former National Electric Power Authority (NEPA), and its subsequent pilfering - decisions made by short-sighted and naive leaders. Nigerians were sold a dummy - the dream of reliable electricity, with proclamations of improvement and advancement that would fuel economic growth and prosperity. Yet, this dream remains a mirage and painfully out of reach, as power outages, grid collapse, exorbitant tariffs, and thousands of excuses from power companies and government continue to plague the nation.
But the woes don't end there. The recent removal of fuel subsidies has sent 'electric waves' through an already fragile economy, leaving 200 million shocked and incapacitated Nigerians struggling to make ends meet. Inflation has run amuck, the naira/dollar exchange is on the yo-yo, and the cost of living is becoming a crushing burden on the average citizen. While, on the other hand, promises of relief have fallen flat in the face of reality, as palliatives meant to ease the burden of hardship are unstructured, withheld or siphoned off to cronies and beleaguered political allies. The much-touted salary increases offer little solace to those who remain employed, underemployed, or trapped in the precarious grip of the informal sector, not to talk of the lot of pensioners, the elderly and vulnerable. Yet, all the while, those astride the executive, legislative or judicial corridors of power are ensconced in hard-to-believe luxury, seemingly oblivious of the suffering of Nigerians.
Wired for Failure
The Nigeria Dams Authority (NDA) and Electricity Corporation of Nigeria (ECN) came into being in 1950 to generate and distribute electricity in the country. However, to promote efficiency, NDA and ECN became the National Electric Power Authority (NEPA) in 1972. This national assets/monuments took the country 46 years to set up (from the 1960s to 2007).
The National Council on Privatisation (NCP), led by the vice president, which handles the privatisation and commercialisation of public enterprises, with the Bureau of Public Enterprises (BPE) being its secretariat, undertook the process of unbundling NEPA in March 2005, when the Electric Power Sector Reform Act (EPSR) was signed into law, providing a legal framework for the 'auctioning of NEPA's assets' and to 'obliterate the footprints', leading to the formation of the Power Holding Company of Nigeria (PHCN).
A look at the TCN website shows the emergence of 18 companies, which include six power generation companies (GenCos): Egbin Electricity, with a 1,320 MW capacity; Kainji Hydro (with Kainji having 760 MW and Jebba, 578 MW); Shiroro Hydro - 600 MW; Delta/Ughelli Power - 972MW; Afam Power - 650 MW, Geregu Power - 435 MW; alongside the Transmission Company of Nigeria (TCN) and 11 power distribution companies (DisCos). These are: Abuja DisCo, Benin DisCo, Eko DisCo, Enugu DisCo, Ibadan DisCo, Ikeja DisCo, Jos DisCo, Kaduna DisCo, Kano DisCo, Port Harcourt DisCo, and Yola DisCo.
The BPE, tasked with the privatisation and commercialisation exercise, in a strategy akin to 'crony capitalism' and the 'pilfering' of our national assets and common patrimony, came into being during the era of the hurriedly packaged, thus clueless and tattered red umbrella civilian administration.
Nigerians were told that the unbundling of NEPA was due to:
- Nigeria's population, which was growing, hence the need to increase energy supply;
- The need for smaller units to improve the efficiency of electricity generation, transmission, and distribution;
- The necessity of modernising the power sector;
- The introduction of private sector participation and competition, which would lead to better service;
- The need to make the power sector financially sustainable.
A report by Business Day newspaper, captured the Chairman of the NCP, Technical Committee, at a special forum on financing the power sector reform for economic development, sponsored by Nigerian banks and supported by the CBN, saying that approximately the sum of $3.3 billion was expected to accrue to the Federal Government from the sale of the unbundled entities.
The foregoing are commendable but they actually constitute the pathway to the balkanisation of our national treasures.
Why a government will opt to liberalise its key economic sector, jeopardise the security of the nation, and push its economy to the brink beats my imagination!
The Power Cabal
The cost of building NEPA, which became the Power Holding Company of Nigeria (PHCN), is not explicitly documented in the available resources.
A report by Business Day newspaper, captured the Chairman of the NCP, Technical Committee, at a special forum on financing the power sector reform for economic development, sponsored by Nigerian banks and supported by the CBN, saying that approximately the sum of $3.3 billion was expected to accrue to the Federal Government from the sale of the unbundled entities.
How this figure was arrived at is a discourse for another day.
After all the partying, as you will imagine, the sum of $2.137 billion to $2.53 billion was received from the preferred bidders/core investors, with $1.27 billion for five GenCos and $1.26 billion for ten DisCos. Two core investors where to pay their fees at a later stage.
From the special forum organised by Nigerian banks, it can be gleaned that funding for the purchase actually came from local investors through short-tenored and costly facilities, thus highlighting the cold feet of foreign investors, who refused to participate in the privatisation exercise due to the country's history of inefficiency and endemic corruption.
Lest we forget, part of the reason for the unbundling was to attract foreign investors. But then, why collect payment in dollars while financiers are Nigerian banks? And, what happened to the proceeds?
In 2022, a report in Independent newspapers shows the several interventions of the Central Bank of Nigeria (CBN), which include the N300 billion Power and Aviation Intervention Fund (PAIF); the N213 billion Nigerian Electricity Market Stabilisation Facility (NEMSF); The N140 billion Solar Connection Intervention Facility; over N600 billion tariff shortfall interventions; as well as a recent N120 billion intervention designed for mass metering, among others.
After the pilfering of our national asset, Nigerians, through various clueless administrations, have funnelled fantastic sums in the name of subsidy, bailout, interventions, etc., to the inefficient electricity sector several times:
i. In a draft report, the Centre for the Study of the Economies of Africa (CSEA), Abuja, Nigeria, dated October, 2017 stated that CBN had extended a N213 billion facility to both GenCos, DisCos, gas suppliers and all service providers within the power value chain, through its Nigerian Electricity Market Stabilisation Facility (NEMSF), which is to be repaid through a first-line charge on their revenues over a 10-year period.
ii. In 2017, a The PUNCH news clip shows the Federal Government saying that it would commit about N702 billion through the Nigerian Bulk Electricity Trading to guarantee the payment of electricity generated and supplied by power generation and distribution companies.
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iii. In 2021, it was reported that government had spent N1.7 trillion so far in the form of interventions in the power sector, as stated by the African Development Bank President, while quoting an IMF report.
iv. In 2022, a report in Independent newspapers shows the several interventions of the Central Bank of Nigeria (CBN), which include the N300 billion Power and Aviation Intervention Fund (PAIF); the N213 billion Nigerian Electricity Market Stabilisation Facility (NEMSF); The N140 billion Solar Connection Intervention Facility; over N600 billion tariff shortfall interventions; as well as a recent N120 billion intervention designed for mass metering, among others. To sum it, in March 2022, the CBN through its governor, at a Bankers Committee Meeting, said it had disbursed over N1.3 trillion to support power supply to Nigerians.
v. In August 2022, a report from the CBN shows that GenCos and DisCos owe banks N836 billion.
vi. In July 2023, the Nigeria Gas Association disclosed that gas debts to producers who provide the gas required for power plants had hit over $1 billion.
In the "Electricity Report" released by the National Bureau of Statistics (NBS), revenue generation by electricity distribution companies in Nigeria has surged to N1.1 trillion within 12 months of 2023.
Amid all these huge sums of money Nigeria is still in darkness. This is so absurd!
When the substantial funds that the Nigerian government have expended since it submissively handed over our national treasures to private individual, alongside the significant loans provided by Nigerian banks to the electricity sector thus far, is juxtaposed against the revenue from the sale of these national monuments and the darkness generated, it begs the question: which parties have profited or incurred losses from these transactions?
Adamu Rabiu writes from Kaduna.
