REJECT RENEWAL OF POWER SECTOR LICENSE
REJECT RENEWAL OF POWER SECTOR LICENSE
- Demand Renationalisation of the Sector Under Democratic Control
By Fidel Davynovic
The federal government is set to review the licenses of the power companies (GENCOs and DISCOs) this year after it is due for renewal. In line with the neo-liberal agenda, it is most likely that the government will renew the licenses of the power company. Even if it revokes some or all the licenses it will only to re-issue to other private companies to continue the exploitation. In any case, continuing the privatization program amounts to rewarding failure given the monumental problems bedeviling the sector.
The power sector was largely privatized in November 2013 leaving only transmission under the ownership and management of the federal government. We now have 11 Distribution Companies (DISCOs) and six Generating Companies (GENCOs). Most of the power companies control 60% shares while government has 40% shares. The power companies only secured assets with no liability making it one of the most brazenly fraudulent privatization exercises ever in the world.
The reason the government gave before it privatized the power sector was that it would usher in efficiency, lower tariff and bring in massive investment. But more than 5 years down the line the crises have run deeper. Some of the features of the sector under the private owners have gone from bad to worse. A huge number of electricity consumers are forced to pay outrageous estimated bills; facilities and power infrastructure remain in deplorable state; there is lack of investment to turn around the sector and the working conditions for electricity workers are poor. The consequence is widespread darkness in many communities, load-shedding and epileptic power supply leading to a situation wherein the country a population of about 200 million people gets averagely 4000 MW.
In sustenance of the crude exploitation and gratification for inefficiency, government has given bailout to the power companies without which the whole privatization would have collapsed within a year. The federal government approved a bailout of about N200 billion through the Nigerian Electricity Market Stabilisation Fund (NEMSF), N158 billion were disbursed while only N19 billion has been paid back after 4 years. The DISCOs owe the federal government over N500 billion for power collected but not yet paid for. Under the Bulk purchase arrangement, the government guarantees and pays the GENCOs for electricity generated while the DISCOs are at liberty to remit whatever they like. The federal government set up the Nigeria Bulk Electricity Trading Company (NBET) Plc and capitalized it with $800 million aimed at guaranteeing maximum profit for the GENCOs and DISCOs. Hence, the federal government has squandered about N1 trillion to prop up the private companies much more than what the federal government gave to the sector in the previous 4 years before privatization. The privatization of the power sector has failed because the agenda was to guarantee massive profit for the power companies at the expense of affordable and uninterrupted electricity.
METERING AND TARIFF
It is far more profitable for the DISCOs to bill customers based on estimation than through actual consumption measured by meter. Currently, electricity bills are higher than rent and unaffordable for many people placed on estimated billing, which can be as high as between N10,000 and N15,000 for poor working people. Despite the fact that the current tariff regime is unaffordable for the vast majority, the Distribution Companies are currently demanding an upward review of tariff. Placing this side-by-side with the rising cost of living, the epileptic power supply in the current state will elude the vast majority. Since the last tariff hike of 45% in February 2016, the facilities/infrastructure remain obsolete and in poor state because as usual, the power companies have failed to invest leaving most communities in blackout. The power companies just want a tariff regime that will bring massive profit with little or no investment, something in line with the ruling class’s looting philosophy. Hence, if there is another tariff hike, it is going to add more burden to the people and is never a guarantee that the power companies will invest and provide regular electricity.
The newly introduced Meter Asset Provider Regulations (MAPR) is aimed at forcing electricity consumers to bear the cost of metering instead of the DISCOs. The federal government has licensed private companies known as Meter Asset Providers (MAP) to issue prepaid meters to consumers as a response to the failure of the Distribution Companies to issue meters to consumers. For over a year, this policy is yet to take off because of obvious disagreement over exploitation booty amongst the profiteers. The federal government has also earmarked N37 billion grants to the Meter Companies as take-off grant.
In line with MAP regulation, customers are to be charged metering service charge and expected to pay lower tariff than customers with legacy meters. The current electricity tariff being paid by customers includes a return on the investment on meter assets and yet the Distribution Companies fail to provide meters for most customers who need them. For instance, in a story published by Punch Newspaper of April 6, 2019, some Meter Asset Providers have been engaged by Abuja Electricity Distribution Company Plc and Jos Electricity Distribution Company Plc to supply thousands of meters to electricity consumers. The providers will charge electricity consumers N36,000 and N67,000 for single-phase meters and three-phase meters respectively. The correct situation is for the Distribution Companies providing the meters at no cost at all and no need for Meter Providers being engaged.
Coalition for Affordable and Regular Electricity (CARE) a coalition of socialist and community organizations and activists fighting against electricity exploitation and poor supply – rejects the MAPR policy and the plan to hike tariff. The failure of the privatization policy to revive the power sector calls for return of the power sector to public ownership. That is the renationalization of the power sector. However, to avert the debacle of the former NEPA and PHCN, the power sector if renationalized must be placed under democratic control of workers and consumers as a means of ensuring massive investment, prudent and transparent use of resources, efficiency, affordable tariff and uninterrupted power supply.
In response to the crises in the power sector, community people and electricity consumers have been protesting the exploitation and widespread darkness imposed on them by the private power companies in collaboration with the government. This struggle must be sustained and linked nationally with nationally coordinated days of actions supported by the trade unions. But to succeed, the movement must take up the demand for renationalization of the sector under public democratic control. CARE calls on the labour unions, community activists, pro-labour organisations to mobilise around the political demands of re-nationalisation of the power sector with concrete plan to reorganize the power sector.