Democratic Socialist Movement

For Struggle, Solidarity and Socialism in Nigeria

By - DSM

ONE YEAR OF POWER PRIVATISATION: Epileptic Power Indicates Failure of Privatisation

ONE YEAR OF POWER PRIVATISATION: Epileptic Power Indicates Failure of Privatisation

Renationalisation of the Power, Oil and Banking Sectors Under Workers Democratic Control can Guarantee Affordable and Uninterrupted Power.

By Chinedu Bosah

The scorecard of the one year of power privatization is epileptic power supply, constant unwarranted tariff hike and bailout for clueless private companies while the working masses groin in darkness. Federal Government’s promise to improve electricity supply by June 2014 turned out to be one of those political grandstanding while the target to generate 6,000 MW has turned out to be a mirage. For some Nigerians who had illusions in the private companies had expected massive investment, development in the sector, guaranteeing steady improvement in power supply and affordable electricity in the long run, but the reverse is presently the case. Many communities continue to suffer load shedding and epileptic power supply.

The 18 private companies (11 Distribution companies and 6 generating Companies) are helpless and clueless. Some of the industry’s players claimed that they invested in the power sector without really knowing the depth of the challenges until the public utility was handed over to them. This is a lame excuse for failing to improve power supply. The reality is that the so-called private sectors are parts and parcel of the ruling elite and it explains why the Federal Government gave them assurance that no investment will be lost even before Power Holding Company of Nigeria (PHCN) was privatised.

In furtherance of the policy thrust of throwing Nigerians into the voracious exploitative net of the private companies, tariff is hiked every year unwarrantedly, government continue to bailout these private companies, 50% of the workers were sacked by the private companies in connivance with Nigerian Electricity Regulation Commission (NERC) to further the exploitation etc. Hence, privatization gave an opportunity for the so-called private sector to make easy profit through continued government intervention and not by investment and growth of the sector.

The bailout of the private companies to the tune of N213 billion did not come as a surprise to members of the Democratic Socialist Movement (DSM). The June/July Edition of DSM’s bi-monthly newspaper had predicted a bailout 3 months before the federal government doled out N213 billion to the private power companies: “The ruling elite will definitely work out a bailout for the so-called investors as was done in the banking sector wherein over N3 trillion were given as bailout through AMCOM.” This support for these private companies using public funds will continue despite the obvious failure. This is so because the owners of these private companies are linked to the ruling elite through business and political interest. No wonder public investment in education, health etc., get little or no attention compared to privileged private interest.

Besides, not only are the Distribution Companies (DISCOS) and Generating Companies (GENCOS) getting bailing out to cancel out some of debt owed to the banks and gas producers, they will perpetually get subsidy from the government. According to the private companies, there is a shortfall in revenue received through tariff compared to the supply of electricity. Electricity supply is still epileptic, load-shedding and electricity rationing is widely implemented, tariff is hiked yearly and estimated high bills are consciously imposed on many customers. Many consumers are yearning for prepaid meters as a means of ending unwarranted estimated high bills but it will not be supplied even when some consumers had paid for it because the DISCOS are making more money through imposition of estimated billing and refusal to read meters to ascertain the true consumption.

Going by the monumental exploitation associated with fuel pricing, Nigerians will be forced to pay outrageous electricity tariff in order to guarantee huge profit for multinational gas producers, the GENCOS and DISCOS despite the obvious darkness whereas the purchasing power of the working masses is low. It is either consumers are to pay directly or government will dole out tax payers’ money to subsidize these private companies. Subsidy is mainly associated with importation of petroleum products, the private energy companies are now being subsidized as well. Nigerians are made to pay more for fuel and gas because the sector is dominated by multinational and local private profit interest. Some of the plants are currently lying idle for lack of gas supply, gas supply infrastructure is very poor and the gas producers want to sell at the rising international price despite Nigeria being an oil producing nation.

The major oil companies will not sell to the GENCOS at $1.50 since they can sell at over $3per MMbtu in the international market. And the federal government has said that rising cost of gas will be accommodated through corresponding hike in electricity tariff. The big oil companies still flare gas costing the economy billions of dollars every year. Aside the problems associated with gas to plants, there is water shortage in the dams, inadequate transmission and distribution facilities/infrastructure and inadequate skilled manpower.

Energy generation hovers between 2500 and 3500 MW with 48% of Nigerians connected to electricity. There is a need to diversify into clean energy generation from gas fired plants to hydro, solar and wind. The operational hydro dams (Kainji, Shiroro and Jebba) have a combined capacity of 2,000 MW- though the capacity is lower currently, are considered as small or medium size dams while much more investment on a single big dam can generate over 10,000 MW. Hydro has longer life span and is economically more viable.

Despite investing over $20 billion into Independent Power Projects (IPP) and other public investment and bailout of DISCOS and GENCOS, the generating capacity is still low while energy generated is not fully transmitted and distributed. For instance, The Three Georges Dam in China generates 22,500 MW and cost $37 billion whereas with $20 billion Nigeria power generation hasn’t gone beyond 4,000 MW. It would have been better to spend $20 billion to build a big dam that can generate say about 10,000 MW and save us greenhouse emission with its attendant damaging effect on the environment. But for the capitalist ruling elite and the big multinational companies, it is more profitable to venture into gas fired plants for the purpose of exploiting Nigerians through the sales of gas at international price than to invest in hydro dams or other clean energy.

The former publicly run power sector equally failed because it was run bureaucratically/undemocratically with the aim of protecting privileged private interest, including the widespread looting of what was meant to be invested, as against public interest. There is no way the market approach via private sector driven approach can resolve this problem even if government continually intervenes through bail-out. The private companies did not set out to supply Nigerians uninterrupted power, their agenda was originally to make profit. The profit interest and the electricity need of the working masses and economic development are irreconcilable. Despite huge assistance from government, the private companies are still begging for more interventions. Not only that the private companies lack capital to sustainably develop the power sector, they are unable to pay back N750 billion borrowed from banks. About 70% of the loan was used to acquire PHCN assets. Except government interventions, no significant investment has been carried out by these private companies on private sector. Since the problem will largely remain unresolved because government through the private companies is incapable of resolving the above highlighted problems, electricity supply will continue to remain epileptic today and in the future. Only a renationalized power sector as well as the oil industry and Banks, and placed under workers and consumer’s democratic control will ensure massive investment and sustainable improvement as well as guarantee uninterrupted power supply.

However, the leadership of the National Union of Electricity Employees (NUEE), Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) must lead the campaigns and struggle for renationalization of the power sector under democratic control of the working class and massive investment in renewable energy as well as other basic infrastructural development.