You were the House Committee Chairman on Power when the Power Holding Corporation of Nigeria was privatised, can you tell us more about the process and what transpired?
Yes, as the Chairman House of Representatives Committee on Power Sector, I warned against the privatisation of public enterprises in Nigeria, especially the Power Holding Company of Nigeria Plc, emphasising that privatisation process must be handled with the greatest caution in order ‘not to build on quicksand’. I could remember as the Chairman of the Committee, myself and other members visited the PHCN South-East zonal headquarters, Enugu, to inspect projects executed by the company to determine if the budget of the company was well implemented. The inspection was part of the oversight functions of the legislature as enshrined in the 1999 Constitution.
But for whatever reason, the privatisation process was done in a questionable manner. It could mean that the country would be building on quicksand.
Northern Governors greet Former President Goodluck Jonathan @63
I also remembered how I made my presentation to the government of day headed by President Goodluck Jonathan. But then privatisation was the issue. I recall many times I talked on this issue of privatisation, and I did mention that yes, given the greater analysis, that privatisation is a way out, but there is a caveat; it must be done with due diligence.
It must be executed with sufficient expertise. It must be handled with all the accuracies, otherwise, we will work on a quicksand, I warned President Jonathan who handled the privatization through the vice-president, Namadi Sambo. Although privatisation seemed to be the way out, it would amount to a crime against humanity if people showed interest in buying off public companies when they lacked the vital funds or technical know-how to run such enterprises.
We are talking of privatisation because we are expecting a better service delivery. So, it will amount to crime against humanity if people show interest or buy when they do not have the financial capability or technical know-how to manage the business.
Nigeria hands power assets to private buyers
Jonathan as the President then handed ownership of the bulk of the state electricity company to private buyers completing one of the final stages of a privatisation process meant to end decades of debilitating power shortages. But despite holding the world’s ninth largest gas reserves, Nigeria only produces a tenth of the amount of electricity as South Africa for a population three times the size.
The PHCN keeps the lights on for only a few hours a day, forcing those who can afford it to rely on expensive diesel generators that burn up billions of dollars from the Africa’s second largest economy.
Despite slow and costly progress, Jonathan’s effort to privatise the sector and draw in investment may be the best chance yet to unlock a major bottleneck to development. Improvements could be felt in 2-3 years but it was done hurriedly. I congratulated owners who have taken over the engines and cables that are expected to drive not just the electricity industry but also the socio-economic well-being of the nation. It was eight years after that a law was passed to enable the process.
Most bid winners were oligarchs connected to the political elite, like former military president, Abdulsalami Abubakar; former military governor of Kano State, Sani Bello, and business tycoon, Emeka Offor, but with some recognised technical partners like Siemens and Manila Electric.
Fixing electricity could reduce business costs by up to 40 per cent, add 3 per cent to Gross Domestic Product and cut the mass unemployment that fuels unrest seen in oil theft in the south and a bloody Islamist insurgency in the north, economists say.
Some $40billion have gone into several power reform drives in the last 20 years, much of them wasted. The PHCN was split into six generation and 11 distribution firms, all sold separately, for about $2.5 billion in total. Private buyers for five generation companies and 10 distribution firms collected their share certificates and operating licenses from then president Jonathan.
That only six of these plants have been completed since President Olusegun Obasanjo first unveiled plans for them in 2004 shows how slowly the electricity reforms are moving.
Obsolete equipment
You see, there was lack of investment in the transmission network, which remains in public hands. Poor gas supply and labour disputes still threaten the delay progress in boosting power output. Then Nigeria’s government agreed to pay off more than 14,000 workers at PHCN with a total of N384billion ($2.4 billion), about what it got from the privatisation.
Unbundling NEPA
Again, the issue of unbundling of National Electric Power Authority is part of a short- and medium-term strategic plan for its eventual privatisation. Ordinarily, there is nothing wrong with reforms in NEPA given the many decades of lack of maintenance; and such reforms ought to be operational, managerial, and technical. Without doubt, NEPA had been bedevilled with a myriad of problems and this made the reforms necessary.
But the crucial point, however, was what kind of reform was the government seeking for NEPA and where would it lead NEPA? Where would it put poor Nigerian citizens and the NEPA workers? This is where there was a disagreement between government and the Bureau of Public Enterprise (BPE) on one hand and National Union Electricity Employees (NUEE) and the Nigerian people on the other.
