KEEP PHCN PUBLIC!
KEEP PHCN PUBLIC!
Segun Sango, General Secretary, Democratic Socialist Movement (DSM)
President Goodluck Jonathan recently launched a ‘Road map on power sector reform’, the aim of which is to privatize the Power Holding Company of Nigeria (PHCN) â€“ formerly National Electric Power Authority (NEPA). As a condition for this, the government has increased electricity tariff from about N4. 00 per kilowatt â€“ hour (pkwh) to N18 per kilowatt â€“hour (pkwh).
This is a cynical ploy to exploit NEPA’s/PHCN’s failure to provide electricity as a cover for an anti-poor agenda to transfer public enterprises into the hands of local and foreign capitalists for profit-making at the expense of economic needs and service delivery. This is really a change in the robbers’ tactics, moving away from looting NEPA/PHCN the ruling elite, along with their corrupt foreign allies, are seeking a new way to make easy money. Accordingly, while private sector buys 51% equity in the PHCN, which includes the 6 state-owned generation companies and 11 distribution companies, private sector will also be asked to manage the transmission grid “under a five-year management contract”.
To further underscore the anti-poor character of the “power sector reform” the government has brazenly announced that 50, 000 workers will be laid off by 2011 consequent upon the privatisation of the PHCN. This figure, though already alarming, could be at best a conservative estimate as the eventual privatisation of PHCN could claim far more than that. According to the Presidential Adviser on Power, Prof. Barth Nnaji, “There is a high operating cost in the company, gulping over N8 billion annually, in which staff salaries and pension take 80 per cent of it, while 70 per cent of the cost of running the sector is incurred at the distribution business level and it is the thinking of the task force to cut a good deal for the workers for a more efficient power output for the country. When the workers would have been laid off, we would enter into an agreement with the new owners of the companies to absorb them”. This is a lie. Most of the workers will never be re-absorbed and the N135billion severance package promised will take years to be paid as the experience of NITEL workers and pensioners in Nigeria clearly demonstrate.
The truth is that government is fond of the blackmail that workers’ salary is a huge burden on public revenue when the reality tells the opposite. In reality, the cost of maintaining political office holders is far more than that of the entire civil service. For instance, just 17, 474 executive and legislative members at federal, state and local government levels cost the country more than N1.3 trillion annually. Professor Itse Sagay in a more detailed study in Punch, August 8, 2010, has shown that five per cent of Nigeria’s annual budget is spent on 109 senators and 360 House of Representative members.
In other words, 469 Nigerians gulp five per cent of budget leaving the remaining 150 million to N1, 000 each. He reveals further that, “In 2009, a senator earned N240m in salaries and allowances, while his House of Representatives counterpart earned N203.76m. In other words, a senator earned about $1.7m and the member of the House earned $1.45m annually. By contrast, a US senator earned $174,000, and in the UK, a parliamentarian earned about 64,000 pounds, annually”.
Besides, the government is trying to criminalize the annual salary of PHCN workers put at N8billion as if the pay package is responsible for the inability of the government to provide adequate electricity for the populace. We hold strongly that it is the corrupt practices by the government top functionaries, PHCN management who are composed of the appointees of the government and government contractors like Barth Nnaji which are responsible for the inefficiency and inadequacy of public power supply. It should be recalled that the Obasanjo government reportedly invested whopping sum of $16billion on the power sector, yet there has been no single watt of electricity to show for this. Indeed, the $16billion (N2,400billion) which has gone down the drain could pay the salary of the PHCN workers for 300 years at the rate of N8billion per annum! It is high time that Labour exposed what happened to this $16 billion and demanded severe action against the thieves involved.
It is important to stress that the real reason why public enterprises are not performing is the absence of democracy in the management of these enterprises and the brazen corruption of the top layers of the management who are political appointees of successive regimes in power. As Socialists have always argued, only public ownership and democratic control and management of public enterprises by elected committees of workers and consumers can make them work efficiently and to the satisfaction of the people.
In a situation where absolute power rests only with some bureaucrats at the top to make decisions on how to run public enterprises, there is no way mismanagement and corruption will not occur. For instance during the 1970s and 1980s, public enterprises were performing relatively efficiently. However with the continuous absence of democracy in the running of these public concerns, it was only a matter of time before politically-appointed bureaucrats who were in charge of the management of these public enterprises wrecked them through mismanagement and looting of their assets and finances.
Secondly, the experience of similar privatisation in other sectors of the economy confirms the utter failure of privatisation as a means of providing efficient, cheap and accessible public infrastructures. For instance, as socialists predicted, most of the 400 privatised public enterprises all of which were sold at give away prices to local and foreign companies (some of which are fronts for many corrupt politicians) are not working today. Instead, most of them have all been reduced to carcasses with scandalous tales of mismanagement by the private sector. Christopher Anyanwu, the erstwhile Director General of the Bureau for Public Enterprises (BPE) in a rare case of self-confession from a public official claimed in September 2009 that only 10% of the 400 privatised firms are functioning at optimal level. NITEL for instance has been dormant since it was privatised with thousands of its staff dying away as a result of several months’ salary owed them by the new management.
Particularly in the power sector, privatisation has proved right from the beginning to be a disastrous venture. Since 2005 when the PHCN was unbundled into 18 autonomous companies, about 20 private power companies issued licences to generate and distribute electricity have not generated a single megawatt! The reality is that the Nigerian capitalist ruling class and their foreign counterparts who own these private companies have no faith in the economy. As such, they will be much eager to invest in speculative business or stash their money in banks abroad than tie up their money in investment in such a capital intensive sector as the power sector; instead they wish to buy off the 3000 megawatts already generated by the PHCN so they can distribute this at high tariff rates to consumers thus making easy profit with limited capital expense.
If at all they invest, they will like to do so with public resources as the assurance of President Goodluck Jonathan and his Special Adviser on Power, Professor Barth Nnaji that “Government will provide the credit enhancement that will enable them invest in the construction of the power plants” and that “the Central Bank of Nigeria, CBN, has established a N300 billion fund that could be assessed by prospective investors in the power sector” clearly shows. This ensures that they are amply protected should the investment turn unprofitable as only the government will lose its money!
In plain language, what this means is that government wants to use public resources to assist private individual and companies which are accountable to no one but themselves to take-over the PHCN. This was the same thing that was done in 2009 when N620 billion of public funds was used by the Central Bank of Nigeria (CBN) to bail-out 8 banks which were on the verge of collapse due to sharp practices, corruption of the management and unprincipled loans and investment in risky stocks. It is one thing to support the banks’ ordinary customers, but something completely different to bail out the bank owners. The question is if private sectors are so efficient in management such that public enterprises have to be sold to them, why does government have to always come to their rescue with public money in frantic bail-outs? The on-going scandalous trials of some bank executives over allegation of looting, corruption and sharp practices clearly shows that the private sector cannot be relied upon to manage public enterprises.
In any case, the primary objective of private investors is to make profit and not service delivery. Therefore, even if in the highly unlikely situation the power sector is reinvigorated after successful privatisation with improved generation and stable power supply, the vast working masses, artisans, traders, small and medium scale business owners should expect that the tariff will be increased to the level that only a minority of the population will be able to afford it.
We hold strongly that the PHCN can be efficient if it is kept public. This will however require placing it under the democratic control and management of elected committees of workers, consumers and representatives of the government in order to ensure that public resources spent to improve the power sector is not mismanaged or looted as happened to previous government attempt to revamp the power sector. This is also necessary to avoid the debacle of the former Soviet Union and the states of Eastern Europe where bureaucratic strangulation undermined their nationalised economies. What this means is that instead of a few bureaucrats appointed by the government dictating the workings of public enterprises, decisions must be taken among rank-and-file workers and consumers elected into management committees at local government, state and national levels with the mandate to oversee the affairs of the power sector in compliance with the needs of the people.
But such a system could not survive for long in isolation from the rest of the country, something which is especially true in Nigeria where the elite’s main aim is to be in a position where they can loot. This is why a social revolution is needed to change the system as a capitalist government will not willingly hand over the running of the economy to workers and the mass of the people. Only a democratic socialist government of workers and poor people can place the running of the commanding heights of the economy in the hands of the people. With a workers and poor peoples’ government, it would be possible to use society’s resources to research, develop and discover new, efficient and more environment-friendly means of generating electricity such as wind, solar and wave power while phasing out gas, coal, fossil fuel, nuclear etc., which are the only source of energy accepted by the capitalist ruling class today without concern for the safety of the environment and energy needs of society.
Unfortunately, there is no political party running in next year’s elections that stands for a programme like this. Therefore, whoever is the victor next year; there will be no fundamental change in Nigeria’s situation or the lives of most of us. This is why the DSM, alongside supporting struggles like that of the PHCN workers, canvasses the building of a political movement of working people to remove the thieving capitalist elite wrecking the country and establish a workers and poor peoples’ government that will rule in the interests of working peoples’ needs and not the profits of the ruling class.
Most of this article was also published in the Guardian (Lagos) newspaper on November 2.