Prior to the enactment of the Electric Power Sector Reform"/>

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IWIN Editorials

Manitoba Hydro International (MHI), TCN, and the Power Sector: New wine in an old bottle

Admin
Monday, 06 August 2018

Prior to the enactment of the Electric Power Sector Reform Act (EPSRA) of 2005, the Federal Government (FG) was responsible for policy formulation, regulation, management and operation of the Nigerian power sector. These were carried out by the Federal Ministry of Power and the National Electricity Power Authority (NEPA).

 

     Following several years of dismal performance by NEPA, occasioned by both lack of will and limitations on available resources to revamp and optimally manage the system, the FG amended the laws through EPSRA to allow private sector participation in the power sector. Consequently, this led to the establishment of Power Holding Company of Nigeria (PHCN), and the subsequent unbundling of PHCN into 18 successor companies. This move was expected to commercialise the operations of the unbundled entities and hence alleviate the burden of the development of the power sector on the government.

     Full privatisation of the generation and distribution sub-sector of the power delivery system occurred on the 1st of November 2013, leaving only the transmission subsector under the management and control of the government. In anticipation of the improved performances arising from the privatisation of the generation and distribution sub-sectors, and to ensure that TCN does not constitute a bottleneck in the delivery of the anticipated improved power supply, the federal government sought and acquired a management contract for TCN. This ostensibly was to boost performance and transfer skill and knowledge.

     In April 2012, Manitoba Hydro International (MHI) won the bid that led to a three-year contract to assume the management responsibility and control of the Transmission Company of Nigeria (TCN). The nature of the contract was such that MHI was supposed to ensure improved processes within the duration of the contract and also to train the local staff so they can continue operations at the expiry of the contract. On the assumption of the management duties, Nigerians were appointed as immediate deputies to the foreign managers under the MHI contract to understudy them and hence be able to assume control at the end of the contract. This was not to be due to the rancorous relationship between MHI and the Nigerian counterparts on one hand, and the labour unions within the sub-sector on the other hand. These deputies were not appointed by MHI but rather imposed on them and could account for the sour relation between them. Also, the frequent interference by government in the operations of TCN meant that the MHI did not have a free hand in the operations and management of TCN.

     The MHI contract expired on the last working day of July 2016 after a one-year extension. MHI has since handed over to their Nigerian counterparts,

     The MHI management contract has come and gone; the question Nigerians would be asking is about the lessons learnt from this exercise. The federal government should take stock of the management of TCN by MHI in a holistic and pragmatic manner: this is regarding the objective of the contract vis-à-vis the outcome. If Manitoba Hydro International did not leave the Transmission Company of Nigeria in a better performing state, then how can we expect TCN, the nerve centre of the power delivery system, to deliver the much anticipated improved power? We need to take stock of the MHI sojourn in the Nigerian power sector to ascertain If the four years of the contract has been a waste regarding value for money and the opportunity cost associated with the contract.

     Now that Manitoba Hydro International contract has come and gone.

     Now that scarce resources have been utilised to pay for the services of MHI for four years

     Now that Nigeria has taken over the management of the TCN back from MHI.

     The question that is begging for an answer is that of value addition. Have we taken one step forward and two steps backwards? The minister of power and indeed Mr President need to evaluate critically the experiences garnered in the implementation of the MHI/TCN management contract, not just for the sake of the power sector but from the perspective of replicating this type contract in other sectors in Nigeria.

     The federal government should treat the Nigerian transmission sub-sector with all seriousness, considering the strategic role it plays in the power delivery system, in order to deliver the promise of Mr President to provide power to Nigerians.

     Nigerians are increasingly questioning the rationale behind the privatisation in the power sector; this is given the seeming lacklustre performance of the industry. The performance of the power sector in Nigeria appears to be ownership or management neutral: government or privately owned, the performance remains the same. In fact, under the new private management, Nigerians have had to pay higher for the same quality of power. The culture of repeated non-performance is not a government thing, but rather, a Nigerian thing. The fact that the new private owners of the generations and distribution assets are Nigerians buttresses this point. Private or government, the common denominator is the Nigeria factor. It is increasingly becoming questionable whether the core investors in the power sector privatisation are truly whom there said they were.

     In the new dispensation, there seems to be a heightened consideration for cost reflectivity of the electric power supplied without due attention to the quality of service. The new owners have vigorously pushed their agenda of profit while government, through the regulatory agency, have fail

About IWIN

The Independent Energy Watch Initiative (I-WIN), an enterprise of Energy ConServ and the Roundtable for the Growth and Development of Power (RODEP), is an online/web based power sector portal that strives to engage stakeholders and the Nigerian public on topical issues in the power sector.

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