• Monday, March 04, 2024
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BPE: Beyond privatisation


In a sense, the Nigerian power sector reform can be summed up as a reaction to the unsustainability of inadequate power availability for the country’s teeming population. Speaking of the programme and its overall goals at the August 26 2010 launch of the Roadmap for Power Sector Reform, President Goodluck Jonathan said: “Our commitment is to bring an end to our nation’s stunted growth and usher in the fresh air of prosperity by pursuing a new era of sector-wide reform which is driven by improved service delivery to every class of customers in the Nigerian electricity sector.”

So the reform of the Nigerian power sector – through the privatisation of 17 of the firms carved out of the defunct Power Holding Company of Nigeria (PHCN) – must not be seen as an end it itself but as a means to an end. That end includes turning the industry from a government-run concern to one sustained by the private sector. It also entails making it efficient, self-sustaining, profitable to investors, and most importantly a driver of industrial productivity that would stimulate job creation enough to reverse what President Jonathan has described as “our nation’s stunted growth” and “usher in the fresh air of prosperity” for the nation and its people.

It is clear that not much of these positive goals can be realised unless more is done in the post privatisation era to ensure the survival of the new status quo and its delivery of efficient service as the fulcrum around which everything else must revolve.

As part of its justification for the privatisation, the government had repeatedly stated that it cannot afford the over $10 billion required as annual sector-wide investment in the next ten years to make the power sector efficient. This justification implies the expectation that the new owners of the PHCN successor companies will have the financial and other means to invest in their development. This explains why the Bureau of Public Enterprises (BPE), the government agency that oversees the privatisation process, required companies that bided for the PHCN successor companies to present a technical bid as well as a financial bid, and why both bids must meet certain criteria to qualify and for the presenters to be considered the preferred bidders and be invited to pay for the companies and take over their operations.

There are signs that the new owners are awake to their responsibility to invest in the newly acquired power companies. This is apparent from the recent statement credited to the Director General of the BPE, Mr. Benjamin Ezra Dikki, while speaking at the Regional Conference for Financing Infrastructure for Sustainable Development in West Africa held in Lagos on November 5, 2013. According to the report, published in This Day of November 6, 2013: “The 10 private investors that acquired the 11 electricity distribution companies unbundled from the defunct Power Holding Company of Nigeria (PHCN) have expressed their commitment to invest a total of $1.8 billion in the companies at an average of $357.663 million yearly over the next five years.”

The report also quoted Mr. Dikki as having “listed the new investors and their commitment to include Kann Consortium Utility Company Limited, which plans to invest $183.03 million in Abuja Disco from 2013 to 2017; Vigeo Holdings, $121 million in Benin Disco; Interstate Electrics, $136 million in Enugu Disco; Integrated Energy Distribution and Marketing Limited, $219 million in Ibadan Disco and $65 million in Yola Disco; Aura Energy Limited, $113 million in Jos Disco and Sahelian Power SPV Limited, $151 million in Kano Disco.”

The report, quoting Mr. Dikki, also says that West Power & Gas Limited will invest $225 million in Eko Disco, KEPCO/NEDC Consortium $293 million in Ikeja Disco, and 4Power Consortium $127 million in Port Harcourt Disco, while an investment of $149 million would be made in Kaduna Disco, which then had Northwest Power Consortium as the preferred bidder. Incidentally, Northwest Power Consortium signed the Shape Purchase Agreement (SPA) as the preferred bidder with the Bureau of Public Enterprises (BPE) on December 23, 2013.

As Mr. Dikki rightly notes after these optimistic forecasts: “One of the largest challenges in any privatisation is ensuring that necessary investments are made by the private sector.” He also notes, as perhaps a peculiar challenge in the Nigerian situation, that transmission is considered by some as a “weak link” between generation and distribution, adding: “We also will need to be sure that the transmission sector is adequately supported by the government through funding so that it can make the investments to be able to wheel the increased generation capacity.”

All this indicates that there is still a lot to do beyond the privatisation of the Nigerian power sector to ensure that the exercise yields the expected results sustainably, and that the BPE is aware of that and is willing the give the necessary guidance and support to ensure it is done.

However, since there are multiple stakeholders in the power sector and many agencies have been involved in realising the goal of privatising the sector, it follows that the type of post-privatisation commitment being shown by the BPE to sustaining the reform and developing the sector should be pursued by all the relevant agencies behind the reform. For instance, an agency like the Nigerian Electricity Regulatory Commission (NERC) may need to double its commitment to providing regulatory support for the sector while the National Power Training Institute (NAPTIN) may need to work harder at developing the new, efficient manpower required in the privatised sector.

There are signs that, beyond privatisation, the BPE and all such agencies are taking on their challenging tasks bravely. But there can be no harm in reminding them that the goals of efficient service and reliable electricity to Nigerians have yet to be realised, and that it is only by working ever harder and never resting on their laurels that it would be realised.

By: Daniel Sobowale