Power crisis: What next, Fashola?


Finally, Babatunde Fashola, Minister of Power, Works and Housing, now knows, with all doubts erased and all illusions vaporised, that Nigerians were treacherously herded into the proverbial cul-de-sac  ‘one chance’ bus when power sector assets were snapped up by unprepared adventurers in a rigged privatisation exercise in 2013. Welcome to reality, minister; since it is now clear as crystal that the power distribution companies cannot deliver, the next logical step is to take drastic decisions to rescue the country from darkness and place it on the path to achieving adequate and regular power supply.

The choices before Fashola and the Federal Government are not easy, but countries rise or falter based on the leadership’s courage in taking tough but necessary decisions. Fashola and President Muhammadu Buhari have been tardy in doing the needful in the messy power sector they inherited. This government still has two years left of its four-year mandate to set the power sector on the right track or share in the ignominy of its predecessors. Confronted by their blackmail and disingenuous propaganda, Fashola came out smoking at the 15th monthly power sector stakeholders’ meeting that the DisCos allegedly sought to sabotage. 

They had, he said, formed an association to frustrate government and failed to invest in feeders and distribution equipment, “failed to provide meters, making false allegations and remitting very poor revenue to the market.”  He also blamed the recent electrocution of seven persons at a football viewing centre in Calabar, Cross River State, on the “man-made errors” of the DisCos.

The Punch has been vindicated by the minister’s perceptive puncturing of the balloon of  lies, obfuscations, incompetence and sharp practices of the DisCos, which we have pointed out repeatedly.  However, we are more anxious for an urgent resolution of the quagmire. Problems in the generation and transmission have been bad enough, resulting in a meagre 3,871 and 4,293 megawatts available for use early this month. However, the DisCos are so dysfunctional that they routinely decline to take up the quantum of power on offer. Even if the 6,056MW available generating output is wheeled, the GenCos lack the capacity to take them. Fashola’s furious takedown of the DisCos at the forum only confirms the long-running agonised complaints of consumers which, curiously, the minister and Vice-President Yemi Osinbajo had repeatedly glossed over in the forlorn hope that the lame DisCos could be helped to become sprightly operators.

But no one can give what he does not possess. The blackmail that the government suffered at the hands of the DisCos had been repeatedly visited on Nigerians and the business community. Nigerians are actually ready and willing to pay for electricity, contrary to the lie sold to Fashola and Osinbajo. They spend fortunes daily on alternatives. DisCos have failed to come forward with evidence of the N52bn allegedly owed by public agencies, the same way they cannot justify the arbitrary bills imposed on other customers. The government should compel them to provide pre-paid meters instead of lamentations and futile deadlines.

A recent arrangement by the government to provide a facility of N702bn to the bulk trader to guarantee payment to GenCos attracted the ire of the DisCos. The Nigerian Electricity Regulatory Commission insists that the accounts of the firms should henceforth be centralised to guarantee payment to power and gas suppliers and save the sector from collapse.

We encourage the government to fast-track the promise to take appropriate measures on the corrupt practices in the award of contracts at the DisCos as alleged by the minister. It should stop tolerating the failure of DisCos to file annual financial reports in violation of Nigerian laws. Fashola also highlighted other falsehoods peddled by the DisCos, including an exclusivity period, interference in its operations and loan guarantees.

Nigeria should stop going round in circles: the power sector privatisations were rigged and went largely to the wrong hands. Instead of reputable global firms with name recognition, financial, technical and managerial competence, emergency consortia put together by the politically connected grabbed the DisCos and GenCos. Fashola admitted that the DisCos had failed to invest in new equipment despite knowing that the sector had been denied investment and equipment upgrade for over three decades. The lies over alleged low tariffs have also been exposed as mere excuses for cluelessness.

Privatisation in Hungary, however, delivered 50 per cent of the generation and 70 per cent of distribution to competent foreign investors and facilitated foreign direct investment.

Now is the time to review the power sector privatisation. A government cannot be helpless when the survival of the country is at stake. With just over 4,000MW available at peak, our position as Africa’s second biggest economy is hollow, rendering over 60 per cent of the people poor. Hopes raised by news that investors are offering $5.6bn for generating plants of the National Independent Power Projects are premature, as the over 8,000MW they bring to the table will flounder with an incompetent distribution sub-sector.

The government should review the privatisation and exert the leverage offered by its 40 per cent stake in them. One way is to offer to raise its stake by buying out the current majority equity owners for resale. It should encourage the banks through the Central Bank of Nigeria and AMCON, the “bad bank”, to foreclose on the non-performing loans of the DisCos. As the minister reminded them, no one forced them to purchase the firms; if they are unable to run the DisCos profitably, they should cut their losses and run to make way for efficient owners.

Our government should never again allow corruption to get in the way of the objectives of privatisation, which are to free government from the burden of running commercial activities; attract FDI; create jobs and stimulate domestic industry. The NIPPs should be sold through targeted, negotiated arrangements with reputable foreign investors with substantial and ongoing track records in the power sector. The era of highest bidder auctions that leave us the poorer should end.


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