Given the importance of Energy sector to the nation’s economy, the expectation of analysts from the government has been very high in that regard. In fact, to say that reform in this very critical sector of the nation’s economy has elicited a lot of interest among Nigerians is to state the obvious. This is despite the fact that the administration of President Goodluck Jonathan inherited it in a very bad state.
What was bequeathed on the government from the past administrations, according to the chairman of the Presidential taskforce on Power, Dr. Haliru Dikko, was characterised by low generation capacity, poor distribution network, and a fragile limited transmission network, while access to power supply is about 40% of the nation’s population system.
The industry was also faced with over 50,000 employees in the industry, poor maintenance culture, frequent power outages, lack of commercial orientation, not commercially viable and no audited financial statements. The implication was that huge funding is required over time to ensure an improved situation of power in the country.
Also speaking on the condition of the sector before now, at a workshop on power sector reforms for finance reporters, held in Abuja in 2010, the former director general of Bureau for Public Enterprises, BPE, Ms Bolanle Onagoruwa said “available information indicates that all the plants in the unbundled PHCN are in poor condition with several of the units and supporting services completely down”.
“There are also capacity constraints in the transmission and distribution networks requiring significant investments which only private sector involvement can guarantee through modern technology and management. It should be noted that despite the massive investment by the FGN, the transmission and distribution capacity is still below 4000MW. On the massive decay in the sector, industry experts estimate that the sum of USD 40 billion (N6 trillion) would be required to meet Nigeria’s electric power requirement between now and 2020”.
“It is against this background that the need to fast-track the reform programme becomes imperative to improve efficiency, reduce losses and cost. No doubt the reform will increase access to electricity, engender private sector investment, improve infrastructure, and generate employment for the growing population of graduates”.
It was against this backdrop that the Road Map for the Power Sector Reform was introduced to fast-track transformation agenda in power. Although, Nigerians demand for stable power supply has not been completely met, there is no doubt that much has been achieved in the last two years.
Speaking on the power reform transaction signing summit presided over by President Goodluck Jonathan, Ambassador Igali said that it was transparent, and that it demonstrated the political will of the government for Nigeria to put behind it the problem of power outage in the nearest future.
According to him, “We are also happy that those who participated in the process and the industry watchers confirmed that the whole process was transparent and was done with all due diligence and due process. Those who won and those who did not win were happy that the process will lead Nigeria to the time of availability of power as the key driver of the economy of the country”.
Igali added that though the government is bringing private investors to take over the power sector, it would not allow the investors to shortchange Nigerian consumers as there is going to be adequate regulatory framework to ensure that operators play by the rule.
“The good thing is that the operators will also be able to put in money into the system, and they will ensure that they provide services that are good enough to ensure that people keep them in business. And we in government will make sure that the profit does not go at the detriment of the public. We advocate reasonable profit, good and affordable services. He said.
Igali also said that most of the grey areas of disagreement between government and the Labour have been resolved.
According to him, “We have been discussing with the representatives of the Labour Union on behalf of the workers in the past one year. On 1st October, they brought a framework and it was agreed and the agreement was signed. What remains are just a few critical issues for us to resolve”.
He said that after the agreement with Labour on most of the issues, a technical committee on implementation was set up, which has the permanent secretary of the Ministry of Power as the chairman. It has other stakeholders such as BPE, Labour, etc as part of the committee.
The federal government also reiterated the determination of this administration to deliver 10,000 megawatts by December 2014. The minister of state for power, Hajiya Zinab Ibrahim Kuchi made it known while briefing journalists in Abuja. The minister said that government intends to achieve 10,000 megawatts by December 2014 through improved funding of transmission infrastructures.
She stated that government is doing its best to ensure that the current deliverable generation capacity of 4500mw will be maintained, while efforts are being made to deliver the available capacity that could not be delivered due to transmission and gas constraint this year.
According to her, “The ministry is trying to achieve winning power before the end of the year 2014. The preferred bidders who were fully aware of the status of the companies expressed total confidence in the privatisation programme and were particularly eager to take over the companies, having paid the initial 25% of the bid price”.
The reform programme commenced in 1999, when the Electric Power Implementation Committee (EPIC) was inaugurated, culminating in development of the National Electric Power Policy 2001; the enactment of the Electricity Power Sector Reform Act 2005; and establishment of Power Holding Company of Nigeria (PHCN) to reinforce the repeal of the now defunct NEPA Act.
The new Act gave rise to the creation of 18 successor companies in three categories, viz: Generation Six companies; Transmission, 1 company; and Distribution 11 companies. The reform also resulted in the establishment of three agencies to cater for various interests in tandem with the provisions of the Power Policy and the Power Act.
For instance, the Nigerian Electricity Regulatory Commission (NERC) was established to regulate the entry and operations of the private operators in terms of tariff and service delivery. Other agencies are the Nigerian Electricity Liability Management Company (NELMCO) established to manage stranded liabilities, pension liabilities and other assets of the PHCN. The BPE has also incorporated the Nigeria Bulk Electricity Trading Company which is saddled with the responsibility of procurement and sale of power in the sector, and thus alleviating the fears of prospective power vendors.