Buhari: Experts differ on power sector privatisation review
Power sector stakeholders have expressed
divergent views about how the incoming administration of Maj.-Gen.
Muhammadu Buhari (retd) should handle the industry, especially the
privatisation of key power assets.
While some are calling for a review of the privatisation of the power sector, others see it as unnecessary and uncalled for.
According to some of the experts, a
review of the privatisation exercise is imperative because the supply of
electricity across the country has not improved despite the fact that
the sector has been in private hands for more than 16 months.
According
to them, the projection before the sector was privatised was that by
the end of 2014, Nigeria would have been generating over 10,000MW.
But official figures from the Federal
Ministry of Power on Monday showed that the country’s peak generation as
of April 12, 2015, was 3,263.6MW, while the energy sent out was
2,988.72MW.
The Chairman, Society of Exploration
Geophysicists, Nigeria, and former Head of Exploration, Nigerian
National Petroleum Corporation, Prof. Charles Ofoegbu, said despite the
inauguration of completed power plants by the present administration,
the sector had failed to deliver adequate electricity to the citizens.
He said, “The privatisation of the power
sector needs to be reviewed. The incoming government needs to do this
before it can get the issue of power supply right. We keep inaugurating
power generating plants, but I had warned in the past that power supply
would keep diminishing and we have discovered that we are not making
progress but rather retrogressing in the sector.
“This is beginning to happen because we
are getting shorter hours of power supply whereas we are inaugurating
many distribution and generation firms.”
Ofoegbu argued that an adequate gas
master plan was not implemented, a development that he noted had
rubbished the privatisation exercise.
He said, “The reason for this is because
we did not implement an adequate gas master plan. It has not been fully
implemented and you are beginning to put in place generating points on a
master plan that is not implemented. Gas supply is not there. We don’t
have adequate gas supply. There are some power stations that we have in
this country that don’t have pipes that take gas to them.
“Why should that be the case? Why should
we not plan? Why should we not do the first thing first? Then you
inaugurate these massive projects while there are no raw materials to
power them.”
When contacted, the Chairman/Chief
Executive Officer, Nigerian Electricity Regulatory Commission, Dr. Sam
Amadi, told our correspondent that the incoming government would have to
follow due process before it could review the privatised power sector.
Amadi said, “A government that comes into power has a responsibility of making policies.
“It can change policies, improve existing
ones or can more vigorously pursue existing policies. So, through due
process, the National Electric Power Policy, which also led to
privatisation, can be reviewed by the incoming government to meet
certain demands and improve the industry.”
Analysts at FBN Capital Research noted that addressing the power challenge was a priority for the incoming administration.
They said in a report, “One of the
priorities for the new administration will be the power sector. The
outgoing Federal Government broke up the former Power Holding Company of
Nigeria, privatised its generation and distribution arms, and indicated
that transmission could also have a future in the private sector
(rather than under private management).
“Successful transformation of the sector
could have proved a major vote-winner in the presidential elections but
remains far off. South Africa offers a salutary lesson in the cost of
neglecting the industry’s investment needs. It was often noted that it
generated substantially more power (than Nigeria) for less than one
third of the population.
“The new administration may care to look
at the consistency of tariff policy. The National Electricity Regulatory
Commission indicated in Abuja on March 16 that exchange rate weakness
could well lead to a rise in the tariff from mid-year, yet announced a
50 per cent reduction the following day. The cut did not apply to
residential users, who were granted a six-month reprieve from the
increase imposed on commercial and industrial consumers with effect from
January 1, 2015.”
The analysts also urged the incoming
government to resolve the impasse, which has prevented Geometric
Power/Aba Power from starting production at its $500m generating plant
in the capital of Abia State.
But the Chief Consulting Partner, Energy
Services International Limited, Mr. Akin Bada, argued that the
privatisation should not be reviewed; rather, the power sector should be
enabled to deliver.
He said, “PHCN was sold to people who
were adjudged to be the best buyers. It went through a long due process
before it was sold. So, these buyers need to have the chance to take
charge. They have not been given the chance to take charge.
“Secondly, there was no thorough due
diligence on the PHCN assets because the workers there were at war with
the Federal Government on the sale of the assets. During that period,
none of the buyers could actually go in to assess what they were going
to buy. So on getting there, they found a different thing and they must
tackle these issues before things will work well.
“Also, in through last three or four
months, every week we hear of the blowing up of gas pipelines, and gas
is our major source of fuel to power plants. And when there is no gas,
no energy will be sent. So, yes there are challenges but reviewing the
whole thing by going back to the drawing board may not solve any
problem. We have enough regulations and organs to take it to the next
level. They should be enabled and not reviewing the exercise.”
The managing director of a power
distribution company in the South West told our correspondent that
reviewing the privatisation depended on what the incoming administration
wanted to consider in the entire process.
The official, who spoke in confidence,
said, “I don’t think a total review of the whole exercise will mean well
for the sector. But reviewing some policies in the sector that will
allow power firms to perform better will make a whole lot of sense.
“There are some issues that we often
discuss with the regulator and such concerns can be looked into by the
incoming government. So, it depends on how they wish to go about it.”
Buhari: Experts differ on power sector privatisation review
Reviewed by Adegunju Uthman
on
April 15, 2015
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