…the buyers are the same people since 10 years ago
Nigeria is a very funny place. A lot of things happen to suggest that our public officers care less about the citizens they are supposed to serve and protect.
Can you imagine that despite the hues and cries of Nigerians over the dismal and epileptic performance of electricity companies in the country some people at the presidency in collaboration with officials of the Nigerian Electricity Regulatory Commission NERC felt the huge extortion supper imposed on Nigerians by these companies does not matter to them and they decided to by rewarding their inefficiencies through the extension of their licenses by another five.
The licenses expire today, November 1, 2023.
Mr. Sharffudeen Mahmoud, General Manager, Market Competition and Rates, NERC, who represented the chairman of the commission dropped the hint that the licenses have been extended by five years.
He did not give the reasons why such action was taken by NERC. I say NERC because whoever approved them must have acted based on the advice of NERC.
The NERC official dropped the information at the three-day inaugural Nigerian Electricity Supply Industry (NESI), Market Participants and Stakeholders Roundtable, NMPSR in Abuja.
I am sure he would have seen the reactions on the faces of most of the participants at the conference. It was obvious that was not the kind of information Nigerians bargained for at this material time.
The minister of Power Adebayo Adelabu was sitting at the conference when the information was dropped. He allegedly denied that no request for license renewal had been brought to his notice. He even acknowledged the fact that the performance of the companies was far from being good after 10 years of privatization.
He said: “In terms of achievements of the power sector in the last 10 years, he explained that if it has to do with the objectives and intentions of government that led to privatisation, which is, increasing energy access to various households, small businesses, and to industries, not much had been achieved.
The minister, who blamed the failure on the entire value chain, stated that major stakeholders have not fulfilled their part of the bargain.”
“It is not the fault of one set of stakeholders; it is the fault of everybody. For the private sector stakeholders, I will say that a lot of them have not kept to the terms and conditions of the privatisation. There’s also the technical capacity of the majority of operators in the industry,” he stated
“I will also say that there are very important investments in improving the infrastructure for the power sector. We also agreed on the possibility of reducing the ATC&C losses by the sector distribution companies.
“We have not seen this come to what we agreed. In terms of the metering gap, we have not been able to close the metering gap for households, businesses and industries.
“Today, we still have close to 8 million metering gap and if you don’t meter, you cannot measure, if you don’t measure, you cannot bill, if you don’t bill, you cannot collect and collection has been very poor. But the name of this game is liquidity,” he argued.
Again the minister was reported to have said at the same venue that the Federal Government will not renew licensing agreements for under-performing electricity distribution and generation companies in Nigeria.
The licenses were supposed to be for 5 years after when the performance of the privatised companies would have been reviewed and a clear assessment of how they performed after privatization of the sector would have been made. But they extended it to 10 years.
In the same breath, he is asking for more time to deal with the issues in the sector saying that making decisions in haste would not solve the challenges in the sector.
According to him, all stakeholders would have to come together to decide on the future of the sector. Adelabu said many actions had been taken on the sector in the past with elusive results, adding new approaches needed to be taken with enough time for consultation.
Today marks the 10th year that the sector was privatized and the public has been expecting that the government would take some drastic action that would salvage the sector from the hands of the investors who were there to cash out and not to invest in the sector.
Since the privatisation, everything has been going south as the nation’s electricity grid, which was projected to hit 40,000 megawatts in 2020 with an investment of $3.5 billion yearly, remained at an average of 4,000MW as of yesterday.
Over $7.5 billion has been spent on transmission lines. Another N7 trillion was also spent to avert a collapse of the generation and distribution end and yet nothing much is been witnessed.
The total amount of electricity that can be wheeled through the national grid has remained relatively flat in the last 10 years. The grid capacity has increased from just over 3000MW to typically just over 4,000MW today as against the 40,000MW target by 2020 that the Federal Government had set pre-privatization.
Director General of BPE, Alex Okoh admitted that the sector is not where it should be going by the original intention and vision of the reforms.
He said there were years of mutual non-performance by both the private sector and public entities, huge market and tariff shortfalls, creating a huge liquidity problem and an imposing debt profile in the market, and other issues such as a severe lack of investments, invariably creating a complex web of challenges which now face the sector.
Energy stakeholder, Dan D. Kunle in his reaction to all these, said it is not clear if Tinubu is prepared to solve the problem of the power sector. He said going by Tinubu’s utterances and statements, it looks like that the administration would address the issues in the sector but that he has not seen anything put together that could show that the power challenges would be addressed.
Also, the President, of Nigeria Consumer Protection Network and member National Technical Investigative Panel on Power System Collapses, Kunle Olubiyo said the privatisation exercise, instead of creating a competitive electricity market, has succeeded in entrenching private sector-driven market monopoly.
He said while the power companies were supposed to be publicly quoted, none of the companies have been duly quoted or formally listed on the floor of the Nigerian Capital Market in the last 10 years.
Olubiyo said the sector is crippled by metering challenges, monopoly, lack of data, and regulatory weaknesses as the players fail to live up to expectations.
The Managing Director of Mainstream Energy, which oversees the operations of Jebba, Kainji and Zungeru Dams, Lamu Audu said the primary issue plaguing Nigeria’s power sector is liquidity, stressing that the issue permeates all aspects of the industry, including generation, transmission and distribution.
He said: “Given the financial constraints of the government, I recommend that the new administration considers the liberalisation of the power sector. While this transition may be painful, akin to the removal of subsidies, it is necessary to attract private investment and enable companies to charge tariffs that would allow them to recoup their investments.” He disclosed that prevailing economic challenges in the sector, especially the foreign exchange issue, would deter foreign investment.