Let There Be Light, Except In Nigeria, By Owei Lakemfa
The DISCOs and GENCOs, from all appearances, are bankrupt companies which need to be taken over; pouring huge sums of money into them is like pouring water into a basket, since privatisation has not resulted in improved power generation, distribution or better efficiency in the sector.
When God created the world, according to the Bible, it was dark. God said ‘Let there be light, and there was light’. The probable exception has been Nigeria, where for over fifty years, the people have been subjected to almost eternal darkness. The senior staff of the power sector complained in 1988 that the country was neither maintaining its power plants nor were there solid plans to expand ther capacities. Over these, they went on strike. The Babangida regime saw this as an affront, rounded up eleven of the workers leaders and put them on trial for treason, demanding the death penalty. They eleven were sentenced to life imprisonment.
The Obasanjo administration spent $15 billion purchasing darkness for the country. The Jonathan administration thought it had a brilliant idea; privatise the power sector, thereby save the country funds and simultaneously improve power generation and supply in the country. In 2012, it carried out genetic engineering on the Power Holding Company of Nigeria (PHCN). It cloned from it, eleven Distribution Companies (DISCOs), six Generating Companies (GENCOs) and one Transition Company. With fanfare, it auctioned the DISCOs and GENCOs to private companies, while government retained the Transmission component to relay power from the GENCOs to the DISCOs. So, the single bureaucracy of the PHCN gave way to eighteen others, just to generate and distribute a meagre 4,500MW of electricity to 183 million people!
The sale was controversial and some of the private companies, like the one in Yola, did not pay up before the power sector was handed over to them. The foreign direct investment (FDI) the country was told would flow in from the purchases did not materialise; rather, the money was sourced locally. With privatisation, there is no known value added; new transformers were not bought and the pre-paid meters the new companies promised, have largely not materialised. The DISCOs preferred to do estimated billing of consumers, meaning that even when they have been supplying darkness, consumers have still been forced to pay. There are also complaints that the DISCOs sometimes refuse to pick power from the GENCOs in order not to pay the latter. In fact, some of the companies were accused of asset-stripping. The 10 percent shares in the privatised companies reserved for workers under the law were not given. Rather, the new employers turned permanent work into casual work and most denied the staff the constitutionally guaranteed right to unionise.
Rather than the sector improving, it has become ever more unreliable. Some communities have protested not being supplied electricity for one to two years!
While it was thought that with privatisation, public funds would no longer be expended on the sector, the Jonathan administration through the Central Bank coupled N213 billion for the private companies in the name of an Electricity Market Stabilisation Fund. If it is a loan, it is not known whether the companies are paying back or will ever pay back.
With the new administration, not a few of us called for the review of the sector’s privatisation as we were convinced that the country was short-changed and that almost all the new owners were incompetent and incapable of running the industry. As if to prove our point, power generation, which in the pre-privatisation period sometimes hit 4,500 MW, came to as low as 2,200MW before attaining its current average of 3,400MW.
Given the marked incompetence and bankruptcy of the companies, it makes no sense for us to continue using scarce public funds to bottle feed them. We need to cut our losses and build a power sector that can bring results. There is no alternative than for us to revert the power sector to public ownership…
To worsen our plight as a people, all that the new owners sing is; increase the tariff. In this they are backed by the Nigeria Electricity Regulatory Commission (NERC), a ‘regulator’ which is actually the mouth piece of those it was established to regulate. When Nigerians protested arbitrary tariff increases and won their case in court, the NERC vowed not to obey our courts.
Four years after privatisation, officials of the Ministry of Power paint a pitiful picture of the power sector, describing it as a disaster. However, they do so, not in a critical manner but as a way of making excuses for the failure of the GENCOs and DISCOs, and making a case for an amount as huge as N702 billion to be taken out of the country’s lean purse to shore up the failed or failing private companies. In addition, they made a case for an additional N495 billion debt owed by the companies to be paid or written off by government.
On how the country can raise such huge funds, they propose a $10.2 billion ‘facility’ from the World Bank. That means, they want to further bloat our foreign debts, thereby complicating the country’s budget deficit. To push government to bailout the companies, the Ministry officials proclaim that the debt of these seventeen private companies could bring down the banking sector!
Our officials lament that while the DISCOs expected to collect an average of N71 billion monthly, they collect only N33 billion, and that as a result, they only pay one quarter of the costs owed the GENCOs. They also campaign that the GENCOs are having to pay high costs for gas and to use water and dam facilities. I wonder whether these private companies that were touted as high flying, did not do market surveys or have business plans before bidding.
The DISCOs and GENCOs, from all appearances, are bankrupt companies which need to be taken over; pouring huge sums of money into them is like pouring water into a basket, since privatisation has not resulted in improved power generation, distribution or better efficiency in the sector. Given the marked incompetence and bankruptcy of the companies, it makes no sense for us to continue using scarce public funds to bottle feed them. We need to cut our losses and build a power sector that can bring results. There is no alternative than for us to revert the power sector to public ownership; that way the overall interest of the country will be better served.
Owei Lakemfa, former Secretary General of African Workers is a Human Rights activist, journalist and author.