Nigeria’s Power Privatization is an Economic Dead-end
Nigeria’s Power Privatization is an Economic Dead-end
For democratic public ownership and management, and massive state funding of the power sector
By Kola Ibrahim
Despite all attempts by the capitalist ruling class in Nigeria and its big business town criers, to portray the privatization of the electricity sub-sector in Nigeria in good light, the reality has continued to show that it is nothing but sheer fraud and deceit. It is an attempt to rob the public in the interest of the few rich in Nigeria and globally, albeit using the general disillusionment in the current state of nation’s power sector, vis-Å•-vis erratic power supply and exploitation of people through the dubious bills. More than this, the current attempt at auctioning the state utility corporation, Power Holding Corporation of Nigeria (PHCN), again reflects the bankruptcy of the rent-seeking, predatory and clearly unproductive capitalist class in Nigeria â€“ both in politics and big business.
The virtual collapse of electricity infrastructures is caused by the deliberate plundering and sabotaging of the corporation by the capitalist class in both big business and politics. The privatization of the electricity has nothing to do with solving the horrifying experience Nigerians have been made to go through. It is on the contrary, a means by which big businesses across the board, both local and foreign, plan to profit from the misery and frustration of the generality of Nigerians. But this does not prevent the government for cynically exploiting its own utter failure to provide electricity, mainly due to almost unprecedented looting of federal funds meant to boost the power supply, as an argument in favour of selling off the industry to its cronies and paymasters.
As the Nigerian government’s organized electricity privatization is being further enmeshed in chronic fraud and deceit, the labour movement especially must take a clear revolutionary stand against this corruption-ridden policy. This privatization if allowed, will lead to massive catastrophe for the nation’s economy and cause untold hardship for the working and poor people who are already living on the fringe of poverty. While government may seem to be having its ways for now in the power privatization madness, the impending catastrophe and misery it will ultimately bring will make the necessity for mass struggle against privatization necessary.
Indeed, PHCN privatisation is a dead-end as recent revelations of sleaze already shows. Even if before now illusion in privatisation of power could be understood from the stand point of people’ s frustration with erratic or non- supply of electricity, the current revelations that corrupt former military and civilian leaders like Babangida, Abukakar and Obasanjo have vested interests in some companies participating in the bid already compromises the whole process and makes any further illusion in privatisation by labour leaders completely impermissible.
This is why the working class movement and its leadership must get the perspective right, and start in earnest to mobilize vigorously and aggressively to stop this policy. Therefore, as an immediate task, we call on workers and labour activists to agitate for declaration of a 48-hour warning strike and mass protest by labour unions as part of a sustained mass campaign to defeat this anti-poor policy. This should also include mass production of educative materials to enlighten and mobilize the support of mass of the working people.
We believe that one of the major weaknesses of previous attempt by National Union of Electricity Employees (NUEE) to fight the PHCN’s sale was the inability of the union to aggressively propose an alternative that can make power generation and supply work, namely through the public ownership of the PHCN under workers’ and consumers’ democratic control and management. The ruling class exploited this loophole in NUEE’s opposition to present the union to the public as only being selfish about the interests of just its members as opposed to the interests of other Nigerians. By proposing a real and workable pro-masses’ alternative to privatisation, the labour movement will not only be able to begin to neutralize government propaganda, but also begin to win the support of the public by exposing the lies being told that privatisation is the only way out.
We therefore call on Labour leadership, both in the electricity sector and central unions, to always mobilize to demand democratic public ownership. More important is the need for the working class movement to begin the process of building a working class political platform as a counterweight to parties of corruption and privatization in place today.
Fraud is the Name of Power Reform
The Nigerian capitalist governments, led by the Goodluck Jonathan/PDP regime, have not hidden their bias for this fraudulent process. This explains why the privatization has been dogged by monumental fraud and rip-off of Nigeria as an entity by the capitalist government and its big business partners. This is clearly reflected in the manner the generating corporations have been sold off. The six electricity generating firms were sold off at the rock-bottom price of around N107 billion (around $710 million), meanwhile between 2007 and 2012, over N600 billion was spent on power generation and distribution by both the Jonathan and the Yar’Adua governments. In fact, the two main hydropower plants, Kainji and Shiroro, upon which billions of dollars have been spent to refurbish and expand, were sold for meager $760 million and $354 million respectively on a 15 year-lease. These are plants with properties and facilities worth billions of dollars including the expansive cum expensive dams. Indeed, in the 2012 budget, more than a billion naira was budgeted for the refurbishment of one of Shiroro hydropower plants.
In addition, the 60 percent of government shares in 10 of the 11 distribution companies are to be sold at total price of N196 billion. Reflecting the bankruptcy of government’s own process, NERC, the regulatory agency in the power sector, had earlier valued the 11 distribution companies at a rock bottom price of N328.75 billion; yet 10 (90.1 percent) of the 11 companies were being sold for N196 billion (about 60 percent)! Interestingly, according to Joe Ajaero, the General Secretary of National Union of Electricity Employees (NUEE), land property of the distribution companies alone is worth more than a trillion naira. This means that all the transformers and distribution facilities worth several billions of dollars are being grossly undervalued and auctioned out.
Even, the newly completed state funded IPPs, upon which billions of dollars have been looted, are already being prepared for auctioning, notwithstanding the fact that they are new. According to James Olotu, the Managing Director of Niger Delta Power Holding Company (NDPHC), a subsidiary of PHCN, over $8 billion (over N1.24 trillion) was used to build 10 new power stations. However, three of the new power plants (Geregu, Ughelli, Sapele), contributing about a quarter of the expected power generation, and costing about $2 billion (N300 billion) were sold for less than N100 billion. Assuming without conceding the puerile excuse for the sale of already existing electricity firms (i.e. they need private investments to put them back on track), what excuse will the capitalist government use to justify the auction of new power plants, built with public funds. The remaining power plants, currently under construction are being prepared for auctioning too.
While government set up a liability management company, NELMCO, to shield the private buyers from the N392 billion debt incurred by PHCN, there is no explanation of who will collect the over N600 billion owed to it by government agencies and private businesses. The debt incurred by PHCN included N149.5 billion owed to Power Purchase Agreements with private power (IPP) producers. The reality however is that, while PHCN purchased power from these private power producers at market rates (i.e. far higher than its own tariff); private companies, including big corporations, pay subsidized tariffs (guaranteed with public funds) for electricity generated from PHCN plants. The private IPP producers do not market their products directly to consumers, instead the government subsidizes their profits. This is clearly a double standard meant to serve the interests of big businesses.
In spite of this subsidy, many a private big business (possibly including the current buyers of PHCN parts) owes the corporation billions of naira in debt. On the other hand, at the slightest opportunity, poor and small businesses are cut off from power supply over unpaid bills. Worse still, the same government that was in hurry to auction the utility company, refused to pay up the over N400 billion it owes PHCN let alone compelling the private sector debtors to pay up their debts to the ailing company. What can be inferred from this is that starving the corporation of fund, coupled with looting of its allocation, is a good tool in stifling life out of the corporation in order to sell it for a little token.
Indeed, between 1999 and 2007, the Obasanjo government was reported, by the House of Representative Committee on Power, to have spent over $16 billion (more than N2.4 trillion) on power sector, with over 30 percent of this spent on existing PHCN power plants, without any tangible result. This amount, $16 billion, is more than a quarter of the $60.9 billion estimated by IEA in its 2008World Energy Outlook, needed to provide universal access to all Nigerian households. Yet, more than 60 percent of Nigerians have no access to electricity (with less than 10 percent of the rural dwellers having access), while those who have hardly enjoy its benefits due to erratic supply, itself occasioned by dilapidated infrastructures and out-dated equipment. Worse still, those who have contributed severally and collectively to this ridiculous state are the ones now bidding to take over the carcass of PHCN. For instance, firms with links to ex-generals like GeneralsAbdulsalamiAbubakar, Ibrahim Babangida, Olusegun Obasanjo, etc.; and big businessmen and women associated with looting of public funds under the guise of privatization (like Transcorps, Otedola’s Forte Oil, Arumemi’sRockson, and several other consortia of big businesses) have won bids to take over the nation’s electricity infrastructures.
Moreover, the Nigerian governments in order to guarantee continuous profit making for the private businesses hiked electricity tariff by up to 100 percent. This is meant to make PHCN profitable for the private big businesses, while Nigerians are groaning under costly electricity tariffs. This hike has not led and will not lead to better and constant supply of electricity. Rather than ameliorate the financial costs of procuring electricity, it will add to it. The simple implication of this is that private businesses are being subsidized with public suffering. One of the grand plans to make PHCN a cash cow for private investors is the organized attacks on the workers of the corporation by the government. These attacks, heightened by the disgraced former minister, Barth Nnaji (himself a private bidder for one of the PHCN firms), are meant to not only retrench the workforce and consequently reduce the labour cost (by making fewer workers do the work of other sacked workers, even when the corporation is already inadequately staffed), but to deny workers of their entitlements as a way of making the privatized firms profitable for their buyers.
Private Involvement will never resolve power problem
The central and puerile argument of the government for these shenanigans is that the firms must be made profitable for private investors to invest their capital in the expansion and maximum functioning of the firms. The reality and facts on ground however have torn this argument to shreds. In the first instance, the so-called investors are mere predators with no interest in any serious investment.
As said earlier, most of the private bidders are the same set of people associated with various crises in different sectors of the economy e.g. the banking crises. More than this, most of the bidding companies are mere venture capitalists, with little or no previous investment in power generation. The few with serious investment in power generation like Oando, only generate a few megawatts mainly for their business uses. Also, the Edo State governor, Adams Oshiomhole, in protesting the side-lining of the company he and three other governors promoted (Southern Electricity Distribution Company), claimed that, Vigeo Power Consortium, the company that won the bid for Benin Distribution Company, only have a geographical operation capacity of merely 500 square kilometers, but it won the bid to run a distribution company with coverage of over 57, 000 square kilometers! Therefore, it is clearly absurd to hand over huge and important organ of the economy to this set of people.
Of course, they (the bidders) claim to have foreign technical partners, but this is just a faÃ§ade. The reality is that most of the technical partners are only invited as technical operators of the companies, not as owners. What this mean is that it is the venture capitalists decide which areas to concentrate operations on in order to maximize profit. Meanwhile, the technical partners will be paid fees based on their international profit level, with the cost of operation and fees denominated in hard currencies. This, aside leading to further pressures on the exchange rate (and attendant economic problems expected in an importing economy like Nigeria’s), will mean pricing the power supply out of the reach of the working and poor people. Therefore, the privatization is nothing short of handing over of PHCN to shylocks to make big bucks and not to expand and guarantee supply to all Nigerian; not in the distant future.
This is further underscored by the fact that many of the so-called investors have no capital even to pay up the rock-bottom prices of these auctioned firms. Showing the bankruptcy of the government, and its desperation to serve the interests of the predatory capitalists, all the bidders need to show their readiness to buy the firms is Letter of Credit from banks. This simply means that, there are no fundamental criteria for buying off the nation’s patrimony, possibly except your connection to the corridors of power. The so-called criteria, including the purported Average Technical, Commercial and Collection (ATCC) loss criterion, for distribution companies, are nothing but mere guesswork, that have no connection with reality, as revealed by Oshiomhole in his reported protest conference. With this, the nation’s power sector will be controlled by financial capitalists and banks, whose sole task is the predatory extraction of profits. It is important to note that it was through this same process (of using letter of credit from banks) that fuel importation and subsequent subsidy scams were perpetrated. Trust Nigerian capitalists, they never learn new lessons â€“ and they could not have, as their desperation for profits always blind their sense of judgment.
Indeed, the process is so ridiculous that many shameless bank debtors, who owe government and thus the public, through AMCON, of over N2 trillion even rushed to banks to get letters of credit. It was so embarrassing that the Central Bank had to issue directive to stop further loans to the 419 (number of people on the debtors’ list) debtors. Possibly, this little effort might have saved banks from another immediate crisis; however, on the long-term basis, this will lead to monumental crises. For instance, one of the debtors, Femi Otedola, who owes AMCON over N149 billion in debts was able to wriggle himself out through a clearly fraudulent process, and was able to buy one of the power generating firms! Surely, as general as CBN’s directive may sound, there will be several sacred Otedolas among the buyers, who will have to be given preferences. This is aside the fact that the privatization will lead to a cul-de-sac in the nearest future.
Foreign Investors as a way out
Even in cases where foreign investors directly own the privatized firms, this does not translate to improved or expanded power supply to Nigerians. On the contrary, with the virtual collapse of basic infrastructures and the precarious state of global capitalist economy, this will mean that they would be assured of their investment returns through hike of electricity tariff to average global level before thinking of any investment. Even, the cost of maintenance of the existing power plants is enough to throw any plan of investment in expansion to the last rung of the priority ladder. For instance, the cost of importing parts and equipment for maintenance will be denominated in dollar, which will lead to hike in cost of production, and subsequently higher prices for generated electricity. Also, the cost of procuring gas for gas-fired plants is enough to weigh down on such foreign investor to think of any serious investment in expansion.
A case in point is the privatization of the Ugandan electricity utility company, Uganda Electricity Board, to a British private equity and investment company, Actis. According to David Hall of the PSIRU (Public Service International Research Institute), “It was privatized in 2005â€¦but the privatization has proved to be a disaster. An official report in 2009 concluded that Umeme (the new company â€“ K.I) had ‘defrauded the government of Uganda to the tune of Shs 452 billion (USD $197 million) over the last four years by over-declaring losses’; 2,000 consumers have brought a lawsuit against Umeme for over-charging, and blame privatisation: ‘consumers are being exploited more since the Uganda Electricity Board (UEB â€“ the former public utility) was disbanded in 2001’; Umeme was rated as one of the most corrupt institutions in the country by a Transparency International survey; and the regulator has said that Umeme’s contract ‘would have been terminated a long time ago’, but a punitive compensation clause in the contract means that Ugandan consumers ‘are stuck with Umeme for the next 15 years since the 20-year contract was signed only five years ago!'” Yet, Actis declared Nigeria’s power reform as ‘fantastic’!
What this will imply is that: (1) there will be hike in cost of production and hike in tariff, (2) in case the companies face financial problems in this process and the power sector is to collapse, government will come in by using public fund to bail out private businesses, just as over N3 trillion, that could not be invested in infrastructures, was used to bail out handful of banks and their owners. In fact, since 2006 World Bank had given a credit support of over $781 million for investment in power generation, transmission and distribution, and gas supply. This credit, which is being guaranteed by the Nigerian government, is expected to ensure at least 25 percent profit for private investors. This means that if the investments fail, government will bear the cost with public fund i.e. while the public insure the business of private sector, the profit made is cornered by the private sector. Even at this, the so-called credit facilities will at best allow private investors, both local and foreign to continue operations at current level, and not expand the facilities.
Of course, there are reported plans to use part of the Pension fund, estimated at close to N3 trillion, or bank loans to fund the power sector. The reality is that, this can only be a mirage; and if it comes to reality, it will never resolve the power problem as it will be mere a drop in the ocean. Even, if it is used, the catastrophe it will generate can only be imagined. In the first instance, the use of pension fund, which itself is extortion from workers, shows the weakness and the predatory character of capitalism, and capitalist big business. Secondly, according to WEO report, close to a trillion naira (N9.2 billion) is needed yearly in investment for the next ten years to provide universal access to all households. This means N9.2 trillion will be needed to provide universal access for all Nigerians in the next ten years. This is more than three times of the total pension fund. Removing just one tenth of this amount from the Pension fund, will lead to serious problems for not only the pension system but also Nigeria’s economy. For instance, majority of Nigerians are considered poor (over 70 percent), which will make recouping of investment from consumers highly difficult. Meanwhile, the debts will be accumulating, leading to hike in tariff cost and negative spiral effects on consumption. Added to this is the fact that pension fund is not a fixed capital; population of pensioners will continue to rise, leading to increase in claims. This will even add to hike in cost of borrowing for not only the power ‘investors’ but also for manufacturing sector, and other sectors of the economy thus crowding out other sectors of the economy from accessing funds,. Failure to recoup the investment will therefore lead to the deflation of the economy across all sectors. The so-called foreign investors, in this circumstance, will abandon such investments or partnerships, leading to total collapse of the not only the power sector, but also other sectors of the economy, particularly the already ailing manufacturing sector.
The failure of Previous Privatizations and Deregulation
This has been the lot of several privatized public enterprises â€“ NITEL, MMIA 2, Nigerian Airways, the concessioned Lagos-Ibadan expressway, Steel Plants, etc. In these examples, the banking sector, itself bedeviled with crises, could not lend to investors because of the high risk of losing investment. In areas where loans were accessed like the MMIA, and Nigerian Airways, the investors could not recoup investments with the rising interests; therefore, there was either unraveling of the privatized firms (Nigeria Airways, later Virgin Nigeria/Air Nigeria) or hike in cost of service (MMIA). In many cases, the private buyers of many state enterprises only abandon these firms, only to use them as collateral for other business. An example is the Osogbo Steel Rolling Company, bought by Dangote, which has been left idle for more than six years. The company is now used as offloading depot for Dangote products like cement. Thus, it is no accident that more than eighty percent of the privatized firms have been declared to have failed by no other person than Namadi Sambo, Nigeria’s vice president and chair of the National Council on Privatization (NCP), the highest decision making in the privatization racket. Yet, Nigerian government wants to hand over such strategic aspect of Nigerian economy, the power sector, to venture capitalists.
The main example used to justify privatization and other neo-liberal policies is the assumed ‘successes’ of the privatization of telecommunication sector. Of course, there has been liberalization of telecommunication services with estimated over 100 million active mobile lines and several mobile phone companies in existence. In addition, many Nigerians now have access to various communication services including internet access. This is against the experience when the state was in monopoly control of the sector through NITEL that provided just 450,000 lines, most of which did regularly not work. However, this is just one side of the story. The so-called 100 million lines mask the real percentage of Nigerians having access to mobile telecommunication. In reality, only less than half of this number is the actual population of Nigerians having mobile lines, as most users, based on the erratic nature of telecommunication services keep more than one (sometimes more than two) lines.
This means, in a population of over 160 million, just around 60 million Nigerians, constituting just 38 percent of Nigerians. If it takes thirteen years for mobile telecommunication to get to less than 40 percent of Nigerians, despite huge government’s concessions (e.g. five year tax breaks), it will be going to eternity for the so-called private investors in the power sector (a much bigger and more capital intensive sector) to provide electricity for every household in Nigeria? This is coming on the heel of the fact that telecommunication service in Nigeria is one of the costliest in the world. Of course, there have been complaints by service providers that cost of operation is high, especially energy cost; however, this has not stopped them (the service providers) from amassing unprecedented profits. For instance, one of them was reported to have made revenue of over a trillion naira, with at least 30 percent of this being the profit. Indeed, the leading telecommunication service company in Nigeria, MTN (a South African company with close to 40 percent of investment in Nigeria) has the highest share price in Africa, yet millions of helpless Nigerians continue to groan under high cost and poor service. However it is easier to provide a mobile phone service than to guarantee electricity to every Nigerian, plus the mobile phones’ pricing system means that most users pay in advance and can be easily cut off if they do not pay.
It is worth stating that the state telecommunication company, NITEL was run down by politicians, big bureaucrats and big business people, many of whom are currently playing one role or the other (as investors, technical partners, etc) in private companies succeeding it. In January 1983 arsonists set fire to the NITEL Building in Lagos in a crude attempt to burn evidence. It is not for nothing that Fela wrote ITT, International Thief Thief, in response to the former US phone company ITT’s corrupt practices in Nigeria. While NITEL was supposedly public-owned, it was run, more or less like private fiefdom of these big bureaucrats and politicians, who use their appointments to serve the private interests of their patrons in the corridors of power and big business. Indeed, MTEL the mobile telecommunication of NITEL was deliberately run aground by these people, while the private companies were given many mouth-watery perks. By 2006, Pentascope, a foreign private company that was contracted to manage NITEL had ruined both NITEL and MTEL with billions of naira looted from the companies, coupled with accumulated debts. The company was able to get away because it has as partners, elements in governments and big business. Indeed, many private companies were, in a Senate Communication Committee Hearing on NITEL in 2009, reportedly involved in duping NITEL of billions of naira, by manipulating its facilities, in collusion with some officials of NITEL. Indeed, the telecommunication service providers were reported to have owed the company of over N80 billion of unpaid fees for using its infrastructures and services.
In cement production, the so-called privatization and involvement of private investors have not led to access to cement for millions of working class and even middle class, as the price of the product is more than 4 times the price in the international market (N400). This is despite the huge concessions including favourable trade policies like tax holidays, reduction/removal of tariffs and duties, and privatization, at rock bottom prices, of state owned cement companies to private investors. Currently, there is overcapacity in the cement industry as the cost of cement is simply inaccessible to vast majority of the population; meanwhile, there is 15 million housing deficit.
Privatization and the Crisis of Global Capitalism
These realities are products of the precarious stage of world capitalism in its neo-liberal phase. Thus, it is not accidental that private investments in the power sector have not led to improved access. In fact, according to World Bank, less than 10 percent of the investments in power generation in Africa come from private sector, with most of the private investments being in small-sized IPPs (independent Power Projects), which in many cases are used for their (private companies’) internal operations. More than this, many of the IPPs are gas-fired, which makes them very expensive and environmentally unfriendly unlike hydropower and other choices; hence the exorbitant tariffs charged by the private investors.
This failure of private investment, and indeed privatization itself is a manifestation of the precariousness of capitalist neo-liberalism. With the unleashing of neo-liberalism as the latest phase of capitalism since the mid-1980s, global capitalist investors have sought super-profits to recover the losses during the welfare state era. Consequently, there has been increased drive to extract more profits from the working masses. This has meant takeover of the global economy, including the productive sectors, by venture/financial capitalists, who use their finance capitals (through stocks, equities, bonds and loans) to demand for increasing profits. While this may work for sometimes, it has accentuated the boom-bust cycle of capitalism, as reflected in the current global economic depression, which started in 2007, and has refused to go away. Thus, as capitalism is in greater risk than ever, investors will seek for quick profits and increased exploitation, as a way of guaranteeing their capital.
On this basis, capitalist investors, both local and foreign, are basically not interested in developing any economy, especially a third world economy, where huge capital investments requiring longer gestation periods are needed for genuine sustainable development. Their aim is to feed predatorily on the miseries of the people, and the carcass of mismanaged state economies. Meanwhile, at the slightest instance of risk, they withdraw their capital as reflected in 2008 when foreign portfolio investors, in response to global meltdown, withdrew their investments worth over $4 billion in the Nigerian capital market within months, triggering the collapse of the already unstable cum ballooned stock market, and subsequently the banking system. It is therefore funny at best the expectation of bourgeois pundits that private capitalist investors will develop the economy, even when reality starkly stare them in the face.
Governments, having bought into the neo-liberal ideology, have become slaves to global capitalist big business. This is exacerbated by the weak and rent-seeking nature of Nigerian nay, African ruling and capitalist classes, who are not productive, but live on the rents and royalties gotten from multinational corporations who technically control the local economies. It is thus not accidental that the Nigerian power sector is seen as a cash cow and easy source of wealth by all sections of Nigerian capitalist class â€“ both in the politics and big business. For instance, various elements in governments had to embark on bitter struggles in order to get part of the PHCN cake, which led to the disgraceful removal of the power minister, Barth Nnaji, whose company, Geometric Power, was part of a bidding consortium for one of the power plants. While, he was supposedly removed because of clash of interests (as he sat on the board that superintend over the auction of the power plants), there are newspapers’ reports suggesting he was removed because other politicians felt betrayed by his attempt to short change their own companies from the juicy auctions. For instance, the vice president, Namadi Sambo, who chairs privatization of state assets, has his company also involved in the PHCN companies. Indeed, the peak of the struggle was when four state governors (Edo, Delta, Ekiti and Ondo) openly rejected the privatization of one of the distribution companies â€“ Edo Distribution Company. The governors claimed that the company they floated, Southern Electricity Distribution Company, was short changed by the BPE (the agency that organizes state auctions) in the sale of the distribution company. In the real sense, these governors are only fronting for private investors, as the four states only collectively control minority shares in the company, with little or no managerial power. Surely, Nigerians should prepare for monumental catastrophe with the privatization of the nation’s power sector.
Implication of power privatization for the working and poor people
To those who have illusion in power privatization, one can only sympathize. Privatization means turning power to business commodity not a national developmental policy. The private investors will, on the basis of the operation of global capitalism first cannibalize PHCN properties to pay off immediate debts and loans to reduce interests and indebtedness, and give immediate profits to venture capitalists to sustain their confidence. The government is already simplifying this for them by undervaluing PHCN properties, worth hundreds of billions of dollars. Then, they will scale back operations to profitable ventures. This will mean our villages, streets, communities, businesses; etc. may be cut off from the grid if supplying them will not generate enough profits. This is necessary to build investors’ confidence and hike rate of return.
This arrangement will then be used to hike the tariff so high that only a few can dare to have power for long even with the electronic meters. This will reflect in cost of running businesses and cost of living. The argument is simple: if you cannot afford the cost, try generator (remember the clichÃ© “if education is costly, try ignorance”?). Meanwhile, under the current arrangement, although supply is poor, you can still relatively afford it. Under privatized arrangement, you either pay or live in permanent darkness. With this, many communities and businesses will be cut off. Moreover, unlike PHCN under public ownership, where repair and provision of electricity facilities is seen as public responsibility, with government held accountable; the main policy of the private investors will be profit maximization, and the operating mechanism will be demand-and-supply. The reality in the telecom sector is only a child’s play.
The social and economic consequence of privatization can only be imagined. For instance, many private businesses will collapse based on hiked cost of power leading to further job losses. This is aside the high cost of living that hiked tariff will mean for teeming millions of working class and poor families, and small business owners. On the contrary, the supposed money to be saved by the state will not trickle down to the poor people, as hundreds of billion dollars amassed by the country from fossil fuel sale have not meant improved living for the working and poor people. This will lead to rise in poverty rate, which will further drive down any effort at developing the economy. Added to this is frustration and social tension this will generate, as unemployment will be rifer.
Even for those that will be able to access the electricity, it can only mean more quagmires. For example, unlike in the telecom sector where you can switch from one service provider to another, if the customer services including repairs are poor; in the power sector privatization, each private owner of the generating and distributing companies will be the local monopoly (or at best all of them forming an oligopoly), with no right to choose, which is against the much-touted free market ideology. With this, consumers are trapped, as the government and the society will be at the mercies of these monopolies; even far worse than what is currently witnessed in the telecommunication sector, where options even exist.
Moreover, under privatization, supply will be decentralized, so you may not even know the company supplying you (whether the distributing, transmission or generating companies), and if you know, the process of complaining will be too cumbersome. This will give easy excuses for these private companies to shirk their responsibilities, even with the existence of regulator. For instance, despite billions being ripped off from Nigerians by telecom service providers, the Nigerian Communication Commission (NCC) that regulate their activities only take actions that are at best a slap in the wrist for these telecom companies, which rather than curtailing the frauds only whitewash them. This is because these frauds have been institutionalized with the privatization itself.
Labour Movement Responses
These realities should be related to Nigerians by the leaderships of electricity workers’ unions and labour centres, instead of limiting the demands to disengagement entitlement alone. It is only when electricity workers oppose privatization on a principled basis that they can win any concession. Indeed, privatization, with its attendant mass retrenchment will not only lead to suffering for thousands of working class families, but will further lead to problem of manpower in the power sector. Already, there are huge shortfalls of technical staff for the power plants in the country, which can only be resolved by massive government investment in building capacity, based on long-term plans. However, on the basis of private ownership, this can be used to limit cost of operation, as the fewer the workers, the lower the cost of operation, and consequently, the higher the rate of profit. Even when the private investors employ more workers, it will not be with the aim of long-term development of neither the sector nor the country; but to ensure continuous operation to gain more profits. Thus, when there is shortfall in profit, the reverse policy will operate â€“ retrenchment.
Unfortunately, the labour leaders believe that there is nothing fundamentally wrong in privatization, inasmuch as the process is transparent. Of course, the in-house unions in the sector opposed privatization initially, and even committed themselves to organizing against it; because of lack of clear-cut alternative needed and lack of consistent approach to resist the policy, they settled for collecting entitlements of their disengaged members!
However, the biggest obstacle to defeating privatization of the power sector itself came from the leadership of the central labour unions â€“ NLC and TUC. Despite the enormous potential to mobilize the working people to defeat this fraud, the leaderships undertook a piecemeal policy of defending only the severance disengagement of electricity workers. From the start, the central labour leaders did not oppose privatization of PHCN. Indeed, in its several positions, it was building false hope in privatization. For instance, at the Senate hearing to review privatization last year, the vice president of the NLC, Issa Aremu, was quoted to have openly supported privatization and even defended private buyers, even when over 80 percent of privatized firms were officially declared as failure. Moreover, the NLC president himself was quoted in a recent conference of one of the NLC’s affiliate unions, that the labour movement traded its opposition to privatization of PHCN for the payment of the entitlement of electricity workers! This reflects the fact that the labour leadership is not opposed in principle to privatization and its accompanying fraud. This is not unexpected as the labour movement itself is a ‘stakeholder’ (according to the NLC) in the privatization process, having membership in the National Council on Privatization (NCP)! All this exposes the pro-capitalist orientation of the labour leaders. Only a revolutionary leadership of working class can lead a successful campaign and opposition against privatization.
The failure of the electricity workers’ unions to organized mass actions and popular enlightenments and campaigns against hike in tariff, looting in the power sector, collapse of infrastructures, among other made many Nigerians to believe that their current struggle is aimed at their members’ interests alone. This is even coming at a time when electricity workers are seen as part of the failure of the power sector, which the government even used as propaganda against the electricity workers to force privatization down their throats. Of course, there is some corrupt tendency within the corporation’s workforce just like in every facet of the polity, which is condemnable and inexcusable as it seeks to resolve societal problem individualistically. But this, aside being just a drop in the ocean of gargantuan corruption at the top echelon of the decision-making structures, is a product of mismanagement and corruption at the top echelon of government, which only percolate the lower rung of the ladder. For instance, in the past five years, over N4 billion has been budgeted for fuelling and servicing generators by federal government. The contracts for this obviously bizarre arrangement are not given to workers but members of the ruling class. The members of the ruling class are the ones gaining from the rots in the power sector and its privatization as analyzed earlier, not workers. More important is the fact that most Nigerians do not know that there are thousands of workers in installations, transmissions, etc., who you hardly see but spent hours they should be spending with their families to improvise on the rotten cum dilapidated facilities in order to provide the little electricity we currently ‘enjoy’.
Therefore, only through a well-coordinated, organized campaigns and mass actions, along with central labour unions, and other sister unions and pro-labour organizations, can the privatization fraud be defeated. The possibility of victory against privatization is shown in the little industrial actions taken by electricity workers, which slowed down the privatization for several months. Had the labour movement stepped this up in a more organized manner, at least with the same energy initially committed to the struggle against fuel prices hike, surely Nigerian government would have been forced to make a U-turn.
For Democratic Public Ownership, Control and Management
While we recognize the current failure of PHCN to function and provide electricity for Nigerians, we hold that this is a product of the deliberate rundown of the corporation by major politicians and big businesses. While PHCN (NEPA before it), was funded from public resources, its management and running were already privatized, as those who were bureaucratically appointed to run it, only use it to serve the interests of their patrons in politics and big businesses. This undemocratic and corrupt management of PHCN is the main reason for its collapse, and indeed collapse of many public owned entities.
Therefore, in place of privatization, working class movement should demand for public ownership of the power sector under democratic control of workers, communities and consumers. This is a clear alternative to the current corrupt arrangement where running of the power sector is put in the hands of political patrons and big business people, who use the sector to advance their profit interests and those of their business partners. This will mean putting running of PHCN facilities and resources, including funds under democratic control, scrutiny and planning of workers and consumers in communities. Working people must also demand for the immediate arrest and prosecution of looters of power sector funds, and public takeover of private companies (including banks) involved in the monumental frauds and looting. Such companies should be put under the direct democratic control and management of the workers in such companies, and elected representatives of host communities, consumers, etc. Labour must campaign to capture the imagination of and inspire the vast mass of Nigerians that a better future is possible and show how a publically owned and controlled electricity supply can be a lever in transforming everyday life.
With democratic control from grassroots to the national level, PHCN, and of course, other public entities can be made to serve the country effectively. Public ownership also means economic development can be properly planned with power being made an integral part of this. For instance, based on democratic planning, we can determine how much electric power we need to sustain development of other sectors of the economy â€“ steel, manufacturing, social services, etc. From this, the resources needed for an integrated, and environmentally safe, development of the power sector can then be democratically drawn out. In the power sector, with public ownership, it can be possible to determine how many graduates, technicians and technologists are needed, and this can be integrated into the education policy. By mobilizing the huge mineral wealth of the country, and recouping looted funds, Nigeria can conveniently provide universal access to electricity to every Nigerian, and provide adequate electricity to power massive economic and social development.
For instance, the N3 trillion of public funds used to bail out handful of bankers will provide more than 30 percent of what is needed to provide universal access. Indeed, just 6.7 percent of the oil wealth in the past ten years will conveniently provide electricity for all Nigerians. But this will mean blocking all the major loopholes from which corrupt politicians, their big business partners and multinational corporation loot the enormous resources of the country. It will mean putting the mainstay of the economy under democratic public ownership. For example, instead of spending public fund to bail out private banks, such banks and the businesses of their fraudulent debtors can be nationalized. From this, the economy can be mobilized to resolve the immediate needs of the country â€“ power generation, infrastructural development, massive support for small businesses, etc. This is the surest means of making electricity serve the people, and not vice versa.
The bankruptcy of the Nigerian political class in the privatization process is not accidental, but a product of the inability of capitalism to move society forward. All the highlighted democratic planning and ownership of the power sector can never be implemented by the current set of politicians in power, as they are merely the political section of the neo-colonial, neo-liberal capitalist class in Nigeria, representing global imperialist capitalism. This is clearly reflected in every facet of Nigerian economy and polity. Despite over $900 billion, realized from crude oil in the past ten years, Nigeria has remained a backward outpost of capitalism, with more than 70 percent living in penury while over 50 percent of the educated youth population is unemployed. Education, health, mass housing are still inaccessible to vast majority of the population, while millions are malnourished and starving. Only a democratic socialist government that is built on the foundation of revolutionary movements of the working and oppressed people can develop the power sector as part of the integrated development of the economy, society and humanity as a whole. Therefore, a genuine working class leadership will see the need to link the opposition to privatization with to the political alternative of the working masses.
This will mean that the labour movement will see the need to build a political party of the working people with clear democratic, revolutionary socialist programmes of public and democratic ownership of the mainstay of the economy, and massive investment in social and public infrastructures and services (education, health, housing, food, etc.). This is the ultimate alternative for the working people.
It is unfortunate that the Labour Party, established by a section of the labour leadership, has been handed over to clearly bourgeois politicians and big business people, who are using it to feather their own political and economic and political nests. The party has now become the dumping ground for all manners of politicians, who fail to get power in traditional bourgeois parties. More ridiculous is the fact that the labour leadership, have continued to mobilize for these politicians, using workers name, and mobilizing workers under the banner of these capitalist politicians a la Mimiko. With this direction, the Labour Party cannot develop ideological and political programmes to capture and oppose anti-poor policies. Working people must demand for the immediate rebuilding of a genuine working people’s party based on clearly anti-capitalist, revolutionary programmes and ideas. Such a party, built as a fighting platform of the oppressed, will easily become a pole of attraction for millions of working class people and youths who are seeking political alternative to the rot created by capitalist politicians. Only a party built as a fortress of mass struggle against all capitalist anti-poor policies can provide genuine alternative to the rot symbolized by all capitalist political parties in Nigeria today.