HomeNewsFG Moves To Review Power Sector Privatisation

    FG Moves To Review Power Sector Privatisation


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    There are strong indications that the Federal Government might revisit the privatisation of the power sector that led to the emergence of the subsisting 11 distribution companies (Discos) as well as the generating companies, according to investigations.

    The pending review of the privatisation of the sector midwifed by the Bureau of Public Enterprises (BPE), is to address the continued poor performance of the sector in over three years the assets of the defunct Power Holding Company of Nigeria (PHCN) were handed over to the companies.

    Federal Government in order to shore up its image and rejig the dwindling fortunes of the economy is looking on to the power industry to restructure it for optimal performance.

    The privatisation of the PHCN was “dubiously” done, as the firms that emerged from that exercise were owned by the political elite who did not have the technical know-how and the financial muscle to make any difference in power generation and distribution.

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    So far, the 11 Distribution Companies (Discos) created from the unbundling of PHCN, which started operations in November 2013 have apparently not yielded the desired result expected from Nigerians.

    Although, the Bureau of Public Enterprises (BPE) projected that the successful privatisation of the PHCN would increase electricity generation capacity to 20,000 megawatts by 2018, Nigeria’s decades-long electricity problems have rather worsened in recent years.

    Stakeholders say the way the privatisation was handled was fraught with irregularities, which stymied progress in the sector. They claimed that the first things were done last while the last mile of the exercise, the distribution companies were done first, creating problems of service delivery.

    The gas sub-sector, which produces the raw material for production of electricity, was and yet to be privatised, which has created problems in the supply of gas to generating companies and ultimately the supply of power by the distribution companies.

    A source in the distribution sub-sector, who spoke on the issue, said the exercise put the distribution companies at the mercy of consumers since they can hardly wheel power to them as they can only give what they get from the generating and transmission value chain.

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    However, other respondents put the blame on the distribution companies for not investing in the business, that most of them could hardly provide meters to consumers and upgrade their networks, which has resulted to crazy bills and tension between the companies and consumers as well as continued power outages.

    Some of the Discos are also accused of refusing to take their total power allocation from the market operator (MO), preferring to take little which is served to industries and commercial entities considered as paying customers and leaving most residential homes in darkness.

    On the part of the Discos, the blame game is on the consumers who they claimed do not pay for power consumed, which has led to high debts in the industry.

    The Association of Nigerian Electricity Distributors (ANED) specifically says the revenue shortfall of the Discos in Nigeria has hit over N300 billion, it therefore urged all power consumers, including government agencies, to pay up their debts.

    Sunday Oduntan, Executive Director of the Association, has said that the revenue shortfalls adversely impacted the ability of the Discos to make capital investment in metering, network expansion, equipment rehabilitation and replacement that are critical for service delivery improvement.

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    “This is a cash liquidity crisis that threatens to completely undermine the electricity value chain and its ability to continue to serve its consumers,” he said recently.

    Following this development, the Federal Government felt the need to revisit the privatisation exercise with a view to revoking licenses issued to power distribution companies, generating companies and their transmission counterparts in the interest of the country.

    Some Nigerians, especially the electricity union, had equally demanded for a thorough review of the privatisation of PHCN, alleging that it was fraught with irregularities.

    According to them, the privatisation exercise had made electricity generation and consumption in the country ineffective, insisting that the payment of intervention funds of over N200 billion to the companies by the Federal Government after the privatisation was a clear indication that something was actually wrong with the exercise.

    They argued that if after many months of the privatisation of electricity in the country and the power firms failed to bring positive impact on electricity, then there is the need for the Buhari-led presidency to revisit the programme.

    An official of the electricity union said: “We want to say, as a union, that the sham called privatisation should be revisited. If privatisation, as we were told, was to bring us heaven-on-earth and it has not done that, why should we insist on it?

    “Even with the so-called privatisation, they have given the private sector over N200 billion. So, why fund them if you say the electricity is in the hands of the private sector? That brings you to the point of the fraud on who owns them. Why would you sell your house to somebody and you still give him money to maintain it? So, it is a fraud.”

    The Federal Government has also been advised to look into the possibility of amending the law that limits states to the generation of power only without distributing it to consumers in their respective states.

    An entrepreneur, Yakub Gobir, supports the Federal Government to review the privatisation policy in the power sector.

    Gobir said that the government decision to hand over the sector to private individuals was not sustainable.

    According to him, most of the electricity generating companies are indebted to banks and thus cannot guarantee their effectiveness in providing stable electricity in the country.

    He identified stable electricity and quality infrastructure as major ingredients to stimulate economic growth in the country.

    Gobir explained that Nigeria was undergoing a very critical time, adding that the situation had become very challenging for entrepreneurs as well as investors willing to invest in the country.

    The Gobir stated that the scarcity of forex at official rate had made it difficult to run business profitably.

    He warned that the ongoing efforts to revive the moribund economy would be futile if the power sector as well as infrastructure were not critically addressed.


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