Chinedu Nebo, minister of power, on Wednesday said that the Federal Government has approved N384 billion as severance package to Power Holding Company of Nigeria (PHCN) staff.
According to him, the money will be sourced from the sale of the successor companies of the unbundled PHCN.
BusinessDay had on April 22, 2013 exclusively reported that under a deal with the workers, the Federal Government had accepted to pay a total of N384 billion to the staff of PHCN, representing about 97.5 percent of the power privatisation proceeds.
Nebo, who said this at a news conference in Abuja, however, added that N45 billion was actually what was budgeted in this year’s budget for the purpose.
Last week, the Federal Government promised that all issues concerning labour severance settlement in the power sector will be resolved before the end of June 2013.
However, the new owners of the companies, speaking while receiving certificates of payment for their initial 25 percent deposits, have hinged their 75 percent balance payments on the government settling all labour issues. Notably, the outstanding 75 percent balance on the companies, which include 10 distribution companies (DisCos) and five generation companies (GenCos) is to be paid after 90 working days.
“Federal Government has earmarked N384 billion for pay-off for the staff and provided N45 billion in this year’s budget. Then the proceeds of the sales of these companies will fund the rest. Already, Federal Government has taken that bold step. The only unfortunate thing is that almost all the proceeds will go into paying off workers and nothing or very little will be left for developing the transmission and distribution networks”, Nebo said.
Meanwhile, the minister noted that Nigerian banks were not competitive enough to provide the nation’s transmission sector with the enormous investment it needs to upgrade and expand.
Nebo was reacting to earlier remarks by foremost industry captain, Tony Elumelu, who lamented the fact that Nigerian banks had been left out of the current thrust to fund the ailing electricity transmission network, fingered as the weak link in the power reform process.
A total capital outlay of $3.4 billion for a 765MVA super grid is required in the next three years in order to evacuate all the generated power.
“Because of the level of capitalisation and the funds that are required unless they (Nigerian banks) work as a consortium they are not going to be able to give the amount of billions of dollars needed over a long stretch of time. Some of the loans people are telling us that they would give to Nigeria for transmission line are to be paid back in 20 to 30 to 40 years. And I do not think any Nigerian bank will be very willing to do that. And the interest rates are low and these banks may not have the facilities to give us the low interest rate that we need”, the minister said.
Nebo adds, “We need to infuse a lot of resources and thankfully there are international organisations that are ready to partner with Nigeria. We are working on perfecting the blue print and very soon we are going to have that. In fact there are people who are ready to come into transmission with billions of dollars and we are hoping that the ministry of finance and ministry of power with the president and vice president will be able to work out the details”.
AMETO AKPE, Abuja
