POWER SITUATION CONTINUES TO WORSEN AFTER PRIVATISATION
POWER SITUATION CONTINUES TO WORSEN AFTER PRIVATISATION
- For Renationalisation of power sector under democratic control
By Chinedu Bosah
It is no news that electricity supply has worsened since the power sector was privatized in November 2013.. The government and its spokespersons have continued to lay the blame on vandals and insufficient gas to the power sector. Despite degenerating power supply, the Nigerian Electricity Regulatory Commission (NERC) has increased electricity tariff by between N1 and N5 with effect from June 1 2014. The irony is that the more the private companies underperform, the more government gives them incentives. There is no justification for the hike of electricity tariff. It has only further shown that this government is pro-rich and anti-working masses.
The power sector is one sector that is heavily capital intensive and requires planned coordination and synergy amongst the different component (generation, transmission and distribution) of the power sector. Many communities have protested the continuous degeneration of power supply as load-shedding has been intensified. Power is so erratic that some communities get light for not more than 60 hours for a whole month and yet outrageous estimated bills are issued to Nigerians while some are cut off for weeks. But electricity is not a luxury, it is essential for modern life and its absence hampers development.
The failure and then virtual collapse of NEPA/PHCN allowed the government to claim that nationalisation was the obstacle to providing electricity and that privatization was the answer. But it was not nationalisation itself which was a failure, NEPA failed because it was looted from within and from without. As with NITEL and other state owned enterprises, outside contractors made millions from contracts which often were never implemented while elements within NEPA looted it for themselves. But despite many promises privatization has not improved supply but it has quickly brought price hikes.
Privatisation will not electrify the country for the masses. The private companies lack the capital base, technical knowledge, history/experience and the will to turn around the sector. Virtually all the private companies that bought the power sector borrowed a large chunk of money used in acquiring Power Holding Company of Nigeria (PHCN) subsidiaries in what is seen as one of the biggest scam perpetuated in Nigeria. These private sharks first hurriedly registered companies for the purpose of bidding for the distorted and balkanized power sector, got some international energy company to agree as their technical partners and secured loans from the banks. It is very doubtful if these private companies will steadily improve power supply to Nigerians let alone guaranteeing uninterrupted power. The failure of privatisation policy is so obvious that the Director General of Bureau of Public Enterprises (BPE) publicly stated in 2010 that only 10 out of 400 privatised companies were found to be relatively on sound footing.
However, the major interest of these privileged private companies is to come and rake in as much profit as possible while the mass of Nigerians are forced to pay so much for erratic power supply. First these companies in collaboration with NERC sacked more than half of the entire workforce in order to reduce cost and to increase profit, many of whom had acquired the required experience to move the sector forward. At the present moment, the number of experienced workers in the sector is grossly inadequate. In fact, the pre-privatisation era wherein there were about 40,000 workers wasn’t even enough. Apart from privatizing at a ridiculous price, the “investors” only bought assets of PHCN leaving out the liabilities to be borne by the government. Government retains 40% shares in the Distribution Companies, 49% in some power plants like Gerugu and 30% in Egbin, yet the public does not share in the profit leaving out the investors to share all.
In early December 2014, only 3 out of 11 Distribution Companies remitted N2 billion out of the N12 billion expected to be remitted to Nigerian Electricity Market (ONEM) as cost of energy for the month of November 2014. NERC was forced to cry out in May 2014 that 8 Distribution Companies had failed to file its reports and submit data that will require it to do proper network assessment in line with Part 10, Section 94(2) of Electricity Power Sector Reform Act (2005). On one hand, proper assessment cannot be done where just one integral part of the system is being looked into while on another hand these companies can easily falsify the report just to suit their profit-first interest, which can make nonsense of any assessment.
The illusion Nigerians had on the private sector becoming the messiah is fast waning as more people are calling on the government to renationalize the power sector. But, government and the companies have been appealing for patience. The government’s promise that the power supply will be improved by June 2014 has failed, though the private companies disassociated themselves from the promise. Many Nigerians bought the bogey sold to them by the government that what will salvage the power sector is for it to be privatized citing the telecom sector as a proof. Government has always been on the offensive with its propaganda machine that gives the impression that public companies cannot work. Hence, most Nigerians saw workers in the power sector as the problem. Whereas government was in control of the sector having constantly appointed the management staff who were mostly appointed for reasons of patronage and have run PHCN with the sole aim of defending private interest at the expense of the public. NITEL was run aground by government in the same manner. The telecom companies that came with improved service compared to the services in the 1980s was only able to do that because the technology associated with telecommunication service vis-Å•-vis GSM is far more advanced in terms of effectiveness and efficiency, which also come with relatively lower tariff. Also, the competition we have seen in the telecom sector cannot be replicated in the power sector which can only be a natural monopoly.
According to Punch of February 11, 2014 Dr. Alex Otti, the Group Managing Director/Chief Executive Officer of Diamond Bank Plc, Dr. Alex Otti claimed that the Banking sector has invested N750 billion as of December 2013. Out of this money invested by the local banks, about N500 billion was used to acquire the privatised assets of PHCN. “â€¦a number of the banks that financed the acquisition of the privatised assets of the Power Holding Company of Nigeria (PHCN)”, Former Managing Director, Access Bank Plc, Mr. Aigbojie Aig-Imoukhuede alarmed, “risk losing their funds” (Business News March 11, 2014).
But as reported in the Guardian of May 21, 2014, Minister of Power, Prof. Chinedu Nebo assured investors that none of the investors would lose their investments in the power sector. The ruling elite will definitely work out a bailout for the investors as was done in the banking sector wherein over N3 trillion were given as bailout through AMCOM. More so, government has continued to invest public resources in the sector despite privatizing the sector as well as guaranteeing foreign loans for these private companies. Shortly after privatization, government secured N160 billion loan to enhance distribution of gas to power stations and went ahead in January 2014 to approve a N1.9 billion contract to re-conduct the Onitsha-New Haven 330KV power line and the funding is from the $135 million Eurobond issued by the government. In similar vein, government directed the Ministry of Finance to secure a N28 billion loan from the French government to boost power infrastructure in Abuja.
Gas supply to generating companies is still a major problem. Gas being flared in the Niger Delta is enough to serve the whole of Africa and yet gas cannot be adequately supplied to the plants because the generating companies cannot pay for gas. While the supply facilities and network are poor the suppliers are demanding further hike in price of gas to make it more profitable. Two years ago, price of gas was increased from $0.1 to $1 per 1,000 standard cubic feet for the purpose of encouraging suppliers to sell to power plants. The price has been hiked again to $1.5 and like Oliver Twist, they are agitating that gas should be hiked to $2 in the same way fuel and other petroleum products should be sold at international profitable price irrespective of the purchasing power of Nigerians.
The transmission of electricity is another major problem as the very low electricity generated cannot be fully transmitted. Similar to the privatization of the generating and distribution aspects of the sector, transmission was contracted to a Canadian firm, Manitoba Hydro International in 2012 to manage for 3 years at a $23 million (N3.6 billion) fee. In January 2014, the government was forced to publicly condemn the obvious failure of Manitoba and threatened to revoke the contract. It took the intervention of some imperialist bodies like the World Bank and the Department of International Development (DFID) of the United Kingdom to force the government to retain Manitoba. The company was accused of administering many outages and several system collapse and failures. Part of the contract was for Manitoba to bring about direct knowledge transfer to Nigerian workers through training but was discovered that the so called experts were in actual fact learning from Nigerian workers.
While the government continuously defended the interest of the privileged class, the leadership of trade union movement has done little or nothing in posing the working class alternative to neo-liberal agenda during the mismanagement of PHCN and until it was sold at rock bottom price to the same ruinous ruling elite. The leadership of the Nigerian Union of Electricity Employees (NUEE) initially opposed the privatization but lacked a clear alternative and was not adequately supported by the leadership of Nigeria Labour Congress and Trade Union Congress, the two labour centres. The NLC only intervention for instance was to pave way for negotiation of the severance pay for most of the workers. Presently, some of the retirees are yet to be paid. It is however commendable that the Nigeria Labour Congress (NLC) recently picketed virtually all the Distribution Companies for anti-labour practice and we hope it will be consolidated. However, the picket was enforced by workers from other unions and pro-working people organizations while workers who worked in the sector looked on like spectators. This tactics show clear limitation that must be corrected. In as much as solidarity is necessary, the workers directly affected must be fully mobilized into the struggle. Furthermore, NUEE, NLC and the Trade Union Congress (TUC) must go beyond condemning electricity tariff hike but must employ all mass actions that will force government to reverse tariff hike and also pose a working people alternative aimed at defeating this ruinous anti-people government.
The only way out is for the power sector to be renationalized and placed under democratic control of workers and the communities as a way of ushering in transparency to block looting and effective management as well as publicly investing in the power sector. This should go side by side with nationalization of other key sectors (banking, energy, steel etc) of the economy under democratic control of the working masses.