With revenue shortfall in the nation’s power sector hitting N800 billion, there is no doubt that the sector is still enmeshed in liquidity crisis, with its failure to deliver uninterrupted power supply four years after its change of ownership. There were recent suggestions by Alhaji Aliko Dangote and other stakeholders in the sector to cancel the privatization of the power sector and allow genuine investors who understand the sector to come in and turn it around for good.
They wondered why the Federal Government still deemed it necessary to consider intervention fund for operators in the sector after buying the successor companies of the defunct Power Holding Company of Nigeria (PHCN) at undervalued prices.
Recently, the FG had considered the idea of securing bond of N309bn to finance the shortfall in the nation’s electricity market but same was vehemently opposed by stakeholders in the sector. In a memorandum submitted to the House of Representatives Joint Committee on Power by the Senior Staff Association of Electricity and Allied Companies (SSEAC), the union described the attempt as ill-conceived, ill motivated, unwarranted and unsustainable.
The union said since the handover of the generation and distribution companies to the private sector, Nigerians have seen deceptions through the failure in promises or commitments of these companies who concoct excuses to justify failed expectations. It said the distribution companies have shown total capacity to generate revenue by operating in the neighborhood of 30percent as against 60-70percent before privatization and at lower tariffs.
“Distribution Companies which collected revenues failed to remit in full to other market participants without any disciplinary measure by the Nigerian Electricity Regulatory Commission (NERC) to block the leakages. The commission is mandated to carry out the monitoring and regulation of the electricity industry, issuance of licences to market participants and ensuring compliance with market rules and operating guidelines.”
“However, NERC is not doing much; it sought for bailout from the federal government, in favour of Discos and more or less acted as their advocate.” But the government was reportedly said to have threatened to escrow the accounts of the Discos to ensure that money realised from the power sector is paid to all the stakeholders in the value chain – gas suppliers, generation companies, distribution companies, Transmission Company of Nigeria and the regulators. The development followed the unveiling of the N701bn intervention fund to tackle liquidity challenge in the power sector.
Executive Director Association of Nigeria Electricity Distributors (ANED), Sunday Oduntan, faulted the decision of the federal government to escrow revenue accounts of distribution companies, saying the development is tantamount to nationalization or expropriation of the DisCos. He noted that the government had backslided in the N100bn subsidy payment and other privatization requirements.
He noted that “To date, the government has not met the privatization transaction foundational requirements of providing N100bn in subsidy to the sector.
“Indeed, any act escrowing our accounts runs counter to the objectives of the National Electricity Power Policy, 2001 (NEPP) and the Electric Power Sector Reform Act, 2005 (2005), of a private sector-owned and managed electricity sector.
According to him, the plan to escrow the account of Discos would also send very wrong signals to domestic and international investors that Nigeria is not fully open for private sector investment and that Nigeria is still partial to the old habits of nationalization, preventing the injection of the cheap and sorely needed capital that is critical to the rehabilitation and improvement of electricity infrastructure.
He added, “You cannot have a, supposedly, private sector-owned and managed business in which the government now seizes control of its revenues. It is a contradiction in terms and practice. The same principle applies to any consideration of regulations or government action that intrudes into corporate responsibilities of procurement, financial management or personnel management.”
President of Senior Staff of Electricity and Allied Companies (SSEAC), Comrade Chris Okonkwo, told our correspondent that the decision of the Federal Government to access the accounts of power distribution companies was in order. According to him, the power distribution companies have since privatization of the sector been defaulting in remitting shares of revenue to other stakeholders in the value chain.
He recalled that before privatization of the sector, all stakeholders in the power value chain get their share of the revenue and wondered why the current power distribution engaged in unnecessary campaign to deceive Nigerians with a view to cumulating profit. He added that the current efforts to escrow the discos’ account would activate the right mechanism to put in place a sustainable policy for the power sector.
Managing Director of PowerCap Limited, Mr Abiodun Ogunleye, told our correspondent that the federal government was simply pursuing the real path to ensure the growth of the value chain in the power sector.
He advised that the government needed time to carry out the planned action with a view to adding value to the growth and development of the nation’s power sector.
To a public affair analyst, Mr Gbenga Albert, the controversy between the federal government and the power distribution companies over escrow account reflects another grey area in the privatization of the power assets. He said it is unfortunate that liquidity issue is still at the front burner of the sector almost four years after the private sector took control.
According to him, what should be of paramount importance now is how to deliver Nigerians from epileptic power supply through multi-modal means.
Above all, stakeholders are of the opinion that resolving the lingering liquidity challenge plaguing the power sector would set the pace for a stable enduring sector and genuine industrialization of Nigeria.