Nigeria: Power Sector Inefficiency & How Privatisation Worsened Consumers Nightmare


The power sector is in a hurry to be listed  among the non-performing privatised assets of the Federal Government.

As at the last count, although over 400 public assets had been frittered away through privatisation. Unfortunately, less than 10 of these are functioning optimally. The power sector privatisation happens to be one of the sore points  of the Obasanjo and Yar’Adua/Jonathan administrations  for which Nigerians are still groaning in regret.

This is so because while countries like  Ghana (with a population of 30.10 million)  and South Africa (with a population of 58 million)    are  celebrating years of uninterrupted power supply with over 51,000MW,  Nigeria with a population of about 200 million, is boasting of producing  7,000MW and distributing  4,000MW of electricity. Worse still, consumers not only buying transformers and  electric poles by themselves,  they are forced to pay for power they did not consume through estimated billing system.

The privatisation programme was supposed to  improve  the sector and to ensure uninterrupted supply of electricity  to homes and industries. But so far all the Federal Government’s efforts  to  reform and  grow the power sector had come to naught  prompting Nigerians to agitate for a change or review of the entire system.

Under the Electric Power Sector Reform Act of 2005, Power Holding Company of Nigeria (PHCN) was established to take care of the functions, assets, liabilities and employees of the then National Electric Power Authority (NEPA).

But even by  2010, the power sector still yielded no tangible result, thereby prompting  another reform known as the power sector roadmap. This reform set the momentum for further privatisation and by September 30,  2013, the successor companies (six generation companies (GENCOs), 11 distribution companies (DISCOs) were privatised with a $2.5 billion transaction yield.

Consequently, the Nigerian Electricity Regulatory Commission (NERC) was set up  to   control  the power sector in a not-too-clear arrangement.

The Commission which was  supposed to be independent was unfortunately handed over to individual stakeholders, friends and relations of politicians making it difficult for the agency to operate.

Despite  the release of over N72 billion grant  to Discos and tariff hike of over 100 per cent  by government to improve efficiency of the sector,  the Nigerian Electricity Supply Industry (NESI) believes  it is still losing over  N1.5 billion monthly.” According to NESI,  the  loss is attributed to water, gas and transmission line constraints.

In view of the shady privatisation  arrangement of the sector which has brought untold hardship to consumers, Nigerians have been calling for a review of the arrangement at the end  of the  five-year privatisation window which terminated on  November 1,  2018. 

The National Leader of All Progressive Congress (APC), Alhaji Bola Tinubu, fired the first salvo.

Tinubu, at the 11th Bola Tinubu Colloquium in Abuja urged the government to revisit the privatisation of the sector, saying that the country could not afford to be too legalistic about it.

He also said the government should push for an end to the practice of estimated billing, adding that people were being forced to pay for the electricity they did not consume.

Tinubu described estimated billing as “a vestige of the past that should not accompany Nigerians into the future.”

Also,  denouncing the sector’s poor showing in power generation and distribution, Trade Union Congress of Nigeria  (TUC) called on the Federal Government to review the Power Sector Privatisation after the stipulated five (5) years window period which ended on November 1, 2018.

TUC in a communiqué at the  end of its National Executive Council (NEC)  meeting, said:  “This is with a view to removing lapses and enforcing associated sanctions” it said.

However, following an avalanche of the pressure mounted by stakeholders, Vice President Yemi Osinbajo on May 1, 2019  declared government’s intension to review the agreement.

But stakeholders are insisting that before the review, the Discos should be made to refund the N72 billion grant they collected from the Federal Government to improve their performance.

The co-ordinator, Human Rights Writers Association (HURIWA), Comrade Emmanuel Onwubiko, agreed that the agreement should be reviewed. But before then the Discos should  return the N72 billion granted  them to upgrade their services.

Onwubiko said that the poor performance of the  Discos has not only brought untold hardship to Nigerians, but that the loss to the economy is unquantifiable.  He  put the loss of the small scale enterprises to over N100 billion  daily.

“What I find difficult to understand is that on two different occasions a huge amount of money was given to them. I don’t know whether it was a kind of soft loan or is it a credit scheme or Christmas gift for them to upgrade the standard of services to the consumers. Yet the consumers are at the receiving end of erratic power supply.

“Most cities in Nigeria only see electricity two hours a day. Some don’t even see power for as long as three weeks, four weeks and still they pay for those days. There are places in Abuja where consumers install transformers by taxing themselves.

It is very difficult for anybody to pin down a specific figure or know how much the power sector has ruined our economy. This year alone, a lot of businesses in the private sector have lost over N100 billion. I am even talking of small scale businesses.

“As I speak to you, since morning we have been running on generator. How do you expect us to survive?

We support the review as a human rights organisation but the review must not go without demanding that every penny given to these companies by the Nigerian Government must be refunded to the coffers of the Federal Government,” he averred.

In his remarks, a professor of statistics who also oversees Laboratory For Interdisciplinary Statistical Analysis  (UI-USA), Department of Statistics, University of Statistics, Olusanya Elisa Olubusoye,  said that polices should be based on well-defined targets.

As a consumer, he said that lack of electricity impedes  progress and  does not encourage research and development.

“As a statistician, I would say that we put the cart before the horse in most of our policy initiatives. Any policy that is not driven by evidence cannot stand the test of time. So, if moving from public ownership to private ownership ab initio was not based on any empirical evidence other than the opinion of the leaders, you don’t really expect any positive change. If we see it now it shouldn’t be a surprise because from the word go, we didn’t subject it to empirical evidence. And that is the first thing that is lacking in our policy. The second thing is that even when we are putting in a policy change we don’t set goals; we don’t set targets. So, we have a situation where we initiate policy without being clear as to what precisely we want to achieve; without also being clear  to how we can measure our progress towards this target. That has been the bane of our policy-making process in Nigeria. I always give example of the global agenda. Look at the Millennium Development Goal (MDG).  Look at the Sustainable Development Goal (SDG). Those are global agendas. The SDG goals are further broken into targets. So, you have targets that are measurable; targets that are quantifiable. The summary is that moving from public ownership  to private ownership, to me as a statistician,  is not really the issue. The issue is that we seem not to have a well-defined target. It is like you don’t know where you are going but you are exploring all roads. 

If a country knows where to go, then what is left is how to get there.

So, if you need to review, you need to know the issues, you need to articulate the problems; you need to articulate the gaps and where you plan to be.

As a consumer of the product, I am not getting the service I deserve. As I am talking to you now, I am in the office in University of Ibadan (UI) where research is going on 24/7.  There is no  light. In any university any where in the world, there are basic things you take for granted. You don’t need to blink your eyes to have them.

One is electricity. In the university you are supposed to have uninterrupted electricity. Some people are doing experiment which requires 24 hours uninterrupted energy. That is why we are not making headway in research. In my statistics department, there are  programmes that you will write that can run for days. Computer programme  is supposed to be running uninterrupted on your computer. You will go home and when you come back you still see the system working. If you are asking me whether I am satisfied I would say that I am grossly not satisfied” he said.

While also calling for the urgent review of the privatisation arrangement, a  development economist, Mr Odilim Enwegbara, warned that the new handlers should have technical knowhow and should not be given to  political friends.

“My opinion is that the whole power sector needs to be reviewed and be given to the private sector operators with the capacity to invest in the sector and bring in technical knowhow. If you privatise the Discos without privatising the Gencos, then there will be a problem because the Gencos have no power over the Discos and the transmission company. The problem is that those who bought the discos wanted to scam the consumer. Even if they don’t supply power they will insist that power has been supplied. As a result they have to collect money from the people.

The review is urgent and the whole privatisation must involve the gencos, transmission company and the distribution companies. This is how it would work. This is how it works in the United States.

My opinion is that we have to privatise the whole sector but we don’t give it to political friends. Throw it open, let investors come from China, America and all over the world. It is not just reviewing. Why should we review and still give it to the old hands?” he asked.

A consumer and trader at Area 10, Garki,  Abuja, Mr Chinedu Okoilo, said  that the whole market is on generator which was installed  by the traders.

According to him, since electricity supply is unpredictable the whole market runs on one generator which is cheaper than estimated billing system.

Authored By: Isaac Anumihe



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