Revisit Power Sector Privatization

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The debate on the Senate floor last week on the messy state of electricity supply and distribution in the country and the controversial billing policies of power distribution companies drove home the point that it is time to take another look at the privatization of the power sector that was concluded four years ago.

Comments by the Chairman of the Committee on Privatisation Senator Ben Murray Bruce (PDP, Bayelsa) were particularly noteworthy. He said, “They [power distribution companies] are technically bankrupt. Unless we revisit the entire privatization process, unless we understand and dissect what went wrong, we will still get estimated billing. We have a catastrophe in our hands. There will be no light in Nigeria under the current structure…” Vice Chairman of the Senate Committee on Power, Senator Bukar Mustapha [APC, Katsina] added, “The privatization model we have used has not worked. We are sitting on an emergency. Something has to be done drastically to address the situation.”

No doubt Nigerians who lambasted the government-controlled NEPA and PHCN for the poor state of power and subsequently hailed former President Goodluck Jonathan for summoning the courage to unbundle the powerful institution, have lost their voices as power supply all across the country is still epileptic while the bills for epileptic while consumers are paying through their noses for unavailable power. Power distribution companies are accused of being reluctance to install pre-paid metres in most houses and instead resort to extortionist “estimated billing” of premises without pre-paid metres. Ironically, Nigerians pay more for darkness.

We agree with the senators’ position on the need to revisit the privatization of the power sector in Nigeria. Re-nationalisation is however not an option.  In spite of the apparent failure of the companies who bought into the power sector, privatization is still the best approach to ensuring constant power supply in the country. Evidence from advanced countries has proved this to be the right thing to do. However, it is vital to review the privatization process and embark on corrective measures.

From all indications, the power generation and distribution companies need urgent recapitalization. This fact was not lost on the Jonathan administration, which even gave a N230 billion financial bailout to the power companies in 2014, few months before the 2015 elections. The injection of tax payers’ money into the privatized power sector did not achieve the desired results. Not even the coming of the Buhari administration and the power sector coming under hardworking Babatunde Fashola did the situation change. Rather, the power situation got worse.

It has become imperative to evolve a new funding strategy, a definite paradigm shift, to overhaul this sector. The idea of milking the poor masses to keep the companies afloat is not just unreasonable, but a cheat, close to a scam, which government should not encourage. The options available could include allowing these distribution companies to bring in capital from abroad through partnership with successful and experienced power supply companies. Nigeria is an untapped virgin land for power business, which should be attractive to serious foreign investors. It is now clear that some of the partners that local businessmen who bought up the sector got are not financially strong enough to move the business forward. Government should mandate them to partner with competent investors or quit. The capital market is another option. Owners of these power distribution companies could go to the stock market to raise funds to effectively run the companies, instead of exploiting poor Nigerians.

Power companies cannot continue to hold the nation to ransom. Utilities – water, power, rail, telephone, etc – are not supposed to fail, whether they are under the control of government or in the hands of private investors. This is because the success of the economy and the quality of life in any civilized society depends largely on these utilities. The power sector in Nigeria needs a paradigm shift now.

Source: Daily Trust

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