Revamping the Power Sector in Nigeria
The performance agreement for all the electricity distribution companies has hindered President Buhari’s efforts in revamping the power sector in Nigeria. The terms of the performance agreement provide for a five-year tenure during which the core investors in the Discos are required to achieve far-reaching efficiency and improvement targets.
President Buhari’s government has no definite road map to untangle the mess of 2013 power privatisation because of the dubious associated performance agreements signed in August 2013 which was based on political patronage. President Buhari is sidelined by the performance agreement which provided among other things performance indices that the core investors covenanted to achieve, agreed reduction targets of aggregate technical, commercial and collection losses. This means that operating licenses of the incompetent Discos would not be cancelled based on this agreement. This agreement treats so well Discos that lack track record, technical and managerial expertise, financial capacity and transparency. Those that drafted and signed the power privatisation agreement are also accusing President Buhari of inaction in the power sector. The Discos that got billions of naira as bailout fund have accused President Buhari of not putting much investment to improve power supply.
Privatisation was meant to attract foreign and local investments, create jobs, stimulate every other sector of the economy, transfer skills and technology and make local products competitive. Former President Jonathan dealt Nigeria a deadly blow on power privatisation, but President Buhari is prevented and sidelined by the associated performance agreements.
Power supply today is an admission that the Goodluck Jonathan administration that superintended over the power sector privatisation dealt so selfishly and so cavalierly with the issue. Shamsuddeen Usman, a former National Planning Minister, confirmed recently that politicians and officials circumvented safeguards as they scrambled to corner stakes in the unbundled Discos and Gencos. Usman, a former director-general of the TCPC, forerunner of the Bureau of Public Enterprises, recalled how transaction principles were “side-stepped and the outcome, therefore, influenced by political considerations as against economic and technical capacities of the eventual preferred bidders.”
BPE recently sets December 2019 for final performance review of Discos as those that sold NEPA bought NEPA. NEPA was sold by the then PDP-led federal government and bought by the business men within the then ruling party. They gave Nigerians fixed charge to pay whether you have power supply or not. The Discos have created a dedicated line of power supply to serve the rich people and leave the poor people in darkness. Exactly four years since 11 power distribution and six generating firms were handed over to some “private investors,” it is a bleak anniversary, rendered gloomier still for Nigerians and businesses by the missteps and disarticulation of the power privatisation. President Buhari government does not know what to do with the mess it inherited.
President Buhari government is considering reviewing the controversial power privatisation of 2013. The Bureau of Public Enterprises (BPE) has announced December 31, 2019 as the final performance review date of 10 of the 11 electricity distribution companies with the exception of Kaduna Disco. The BPE Director General, Mr. Alex Okoh, who made the disclosure, said the relevant agencies of government are conducting a periodic review of the performance of the Discos under the management of the core investors with a view to evaluating the achievement of the terms of covenants agreed with the federal government well ahead of the December 2019 dateline.
Okoh noted that due to lack of adequate technical information relating to the state of the infrastructure at the time of concluding the transaction, the base level of losses in the utilities imputed in the performance agreements were based on provisional estimates. The terms of the performance agreements, he stressed, provide for a five-year tenor during which the core investors in the Discos were required to fully achieve far-reaching efficiency improvement targets.