September 22, 2017

Power Sector Privatisation was Deceptively Delivered

Power Sector Privatisation was Deceptively Delivered

After applauding Nigeria’s power sector privatisation which was concluded in 2013 by the immediate past administration of Dr. Goodluck Jonathan, as well as asking Nigerians to support the exercise as the only way out of the sector’s challenges, the Minister of Power, Works and Housing, Mr. Babatunde Fashola, thursday changed course and said the exercise was deceptively executed.

Speaking at the 2017 public lecture of the Department of Economics of the University of Lagos, Fashola, stated that the Jonathan government deceptively delivered the exercise with the expectation of some political profit, although he claimed to support privatisation as an economic exercise.

The minister also accused the last government of interfering in the regulation of the power sector and implementation of a cost reflective tariff regime in the sector, adding that such interventions left the sector with a lot of problems.

“While I fully support privatisation, I believe what took place in 2013 in the heat of politics was a privatisation that was well intentioned since 2005 but delivered with some deception in 2013 with the expectation of political profit,” said Fashola, in his paper titled “Power sector reforms – challenges and the way forward.”

Fashola, further stated: “It led many uninformed Nigerians to believe that once the privatisation was concluded, the assets sold to the Distribution companies (Discos) and the Generation companies (Gencos) there was immediately going to be power. I cautioned then that people’s expectations were being unduly raised without telling them that there was a lot of work to do.”

He said he believed the government of President Muhammadu Buhari, will do a better job in the sector, but noted that he did not expect that the government would inherit the kind of problems it has in the sector today.
The minister stated that the impact of government’s interference in power regulation was huge, and claimed that power consumers in oil producing communities do not pay for electricity they consume.

“Government must also not interfere with the power of the regulator when it fixes tariff in the way the last administration ordered a reversal of tariff in order to win electoral votes in 2014.

“It created a massive debt for Nigeria, because while the government ordered a reversal of tariff, it did not reduce exchange rate, interest rate, cost of wages or cost of gas and other inputs necessary to produce power. Why should Nigeria carry a debt created by an individual’s electoral ambition? This is what the Buhari administration has to contend with,” he said.

According to him: “It might interest members of the public to know that most if not all the oil & gas producing communities where there is electricity connection do not pay for power, somebody is carrying that cost.
“It is worsened by the fact that the light bulbs are on during the day and I am told in some communities that they are never switched off. This is waste. What is wasted will never be enough.”

He also informed that the government had paid over N930 million to retrieve 387 out of the 800 containers of equipment imported for the National Integrated Power Projects (NIPPs), which he claimed were trapped at the port for 10 years.

“At the time of preparing this speech, we have paid N930, 229, 418, and resultantly 387 containers have now been recovered and handed to the contractors for deployment to their site.

“Some of those sites whose projects have been held back were: design and construction of 2×60 MVA 132/33KV transmission substations at Kachia Kaduna State; Ganmo-Ogbomosho 132KV transmission Line Project (45KM) Kwara-Oyo; supply of aluminum conductor composite core for re-conducting of Onitsha New Haven 330KV transmission line; construction of 132KV DC TRX line Yola-Song-Little Gombe-Mubi- Gulak; construction of Onitsha Oba-Nnewi-Ideato Okigwe 132KV double circuit transmission; even the completion of the 215 MW Kaduna plant was held back because some of those equipment were previously trapped in the port,” he noted.

 

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