A former Minister of Power, Prof. Bart Nnaji, has stated that the power privatisation process that led to the handing over of Nigeria’s power assets to the private investors, in line with the Electricity Power Sector Reform Act of 2005, was scuttled by vested interests of the programme.
Speaking last night on Arise Television, a sister broadcast station of THISDAY Newspapers, Nnaji noted that the two criteria set out under the privatisation programme to determine qualified investors were financial capacity and technical competence.
Nnaji, however, alleged that at a certain stage of the process, these two requirements were scuttled, stressing that some of the investors who bought the assets do not have the capacity to raise funds.
“Some of them have financial capacity but not all. The distribution companies were not sold based on the highest price but to those who will reduce the losses. So, you have to invest money. But many of the distribution companies do not have the capacity to raise funds,” he explained.
Nnaji also debunked the allegation by some of the investors that the workers of the defunct Power Holding Company of Nigeria (PHCN), who were opposed to the privatisation of PHCN assets did not allow the investors access to the assets for the purpose of due diligence.
According to him, the federal government deployed soldiers to guard PHCN assets and also ensure that investors were allowed access to the assets slated for privatisation.
The former minister argued that there was no investor who wanted to gain access to the assets but was denied access by the workers.
“The unions were opposed to the privatisation but there was no investor that wanted to go into the assets and conduct due diligence but was not allowed to go because we deployed soldiers. The issue is simply that they don’t have the money to invest,” he said.
Nnaji noted that another major constraint facing the investors is inadequate gas, adding that the International Oil Companies (IOCs) have failed to meet their obligations on the supply of gas to the domestic market.
According to him, if the country does not invest in gas supply to power the electricity infrastructure, the country will continue to repeat the same story of inadequate electricity supply even in the next five years.
“It is an important decision we have to take. When you are going to invest in asset, you have to be sure where your fuel will come from. That is due diligence. But there are serious constraints in gas in Nigeria. The amount of gas that has to go into the domestic market has to be established. The international oil companies are not meeting their obligations,” he said.
Nnaji also blamed weak transmission infrastructure for the erratic power supply in the country, saying that the transmission facility cannot transmit up to 6,000 megawatts.
“We have two major constraints. We have the gas constraint and the transmission challenge. As of now, we can’t transmit 6,000 megawatts. It is about investment,” he added.
To address the country’s power deficit, Nnaji called for the introduction of cost-reflective tariffs and the concessioning of the Transmision Company of Nigeria (TCN) to a number of companies.
“One way to solve the problem is to concession TCN to a number of companies. There should also be cost-reflective tariffs to allow producers to recover their costs,” he added.
According to him, having small distribution networks with embedded generation similar to the system in Aba, Abia State, is also one of the ways to move the country’s power sector forward.
“There is nothing that stops a system fashioned that way from delivering world class power,” he said.
Nnaji also blamed politics and those who benefit from the current poor power situation for the failure of successive administrations to solve the problem of inadequate power supply in the country.