Democratic Socialist Movement

For Struggle, Solidarity and Socialism in Nigeria

By - DSM


  • Renationalisation of the Power Companies Under Workers and Consumers’ Democratic Control is the Way Out

The fact that four Electricity Distribution Companies (DISCOs) failed and others are being kept afloat by the incessant bailout and public intervention funds clearly prove the futility and failure of the privatization program. The federal government and banks recently took over Kano DISCO, Kaduna DISCO, Port Harcourt DISCO, and Ibadan DISCO because these DISCOS could no longer meet their obligations to creditors (Banks and FG). Typical of the ruling elite, the federal government’s agenda is to renationalize the distressed power companies, invest in them and resell them at rock-bottom prices to self-serving capitalist hawks similar to how the privatization was conducted.

By Chinedu Bosah

The federal government gave the impression that the so-called shortfall in tariff was responsible for the power sector crises. This is a big lie. The reality is that power companies lack the financial and technical capacity to adequately develop the power sector. Hence, the creation of the Electricity Liability Management Company (NELMCO) and the constitution of its board recently is with the agenda to sustain the bailout of the power companies similar to the bailout of failed banks through the Asset Management Corporation of Nigeria (AMCON).

Before the final takeover of the four DISCOS recently, some of their top management staff had been indicted for massive corruption and insider abuse. For instance, from the funds released to Ibadan DISCO by the Central Bank of Nigeria (CBN) for the purpose of improving the distribution network, it awarded an inappropriate shareholders’ loan of N6 billion to Integrated Energy Distribution and Marketing Group (IEDMG) Ltd. Whereas, IEDMG is the core investor in Ibadan DISCO following the privatization of the power sector and thereby diverting public funds for personal enrichment. Put sharply, Ibadan DISCO and IEDMG are the same and it amounts to stealing the money meant for the development of the power sector.

The history of the power sector in Nigeria is the story of a country in decay and degeneration. During public ownership of the power sector, the bourgeois ruling elite ran the sector like a captured colony in a reckless manner devoid of any genuine plan to improve electricity and guarantee affordability other than to steal, loot and suffocate the sector. The top-down approach entailed that the ‘commander in chief’ appointed ministers and board members who in turn were not responsible to workers and the Nigerian people; these supposed managers displayed so much incompetence to the extent that NEPA was jocularly renamed “Never Expect Power Always” (NEPA).

It is simply the reckless bourgeois elite that failed the Nigerian people and not because the power sector just like other sectors of the economy was publicly owned. For instance, you cannot have an economy that appropriates N1,000,000 to achieve a purpose but end up spending N50,000 and the rest is stolen and expect it to work! Public corporations and ministries became a means for self-enrichment, a ‘national cake’ that must be shared, eaten up and converted to private property. Hence, the lack of democratic control by workers was responsible for the continued failure of public corporations.

There is no logic in privatizing public corporations if the problem is about bad management, it is like throwing the baby away with the bathwater. It would have been fool proof to privatize public corporations if all private companies are doing well, but this is not the case. In the same manner, the capitalist ruling elite ran aground public corporations, it has also run aground many private companies despite repeated bailouts, something which reveals a systemic problem.

In 2009, the then “privatizer-in-chief”, the Director General of the Bureau for Public Enterprises (BPE), Dr. Christopher Anyawu said that only 10 of the 400 privatised companies were on relative sound footing- a massive failure of 97.5 per cent. According to the same Guardian newspaper of September 27, 2009, “Indeed, the nation may have been at the crossroads over the way forward for the economy, as the private investors that took over the hitherto government-owned companies have virtually run many of the outfits ground.” The assets of these privatized companies were stripped, the companies run aground and there were massive job losses. The collapse of Skye Bank is largely linked to the purchase of Ibadan and Yola Distribution Companies considering how Tunde Ayeni (the Chairman) and other Bank Managing Directors mismanaged the bank; Tunde Ayeni is standing trial over an alleged fraud of N4.5 billion. Tunde Ayeni’s Ibadan DISCO is also benefiting from tariff hike while AMCON is busy spending billions of Naira of public fund to bailout Ibadan DISCO and Skye/Polaris Bank. This is a living example of a private entity whose profit was privatized but its losses are being nationalized and socialized.

The power privatization is one of its kind wherein assets were sold without any liability as the ruling elite began bailing out the power companies right from the very beginning as all liabilities including workers’ disengagement entitlements of about N500 billion were settled from the public purse which made it possible for private owners to have bought 51% of a big corporation worth over N5 trillion at rock bottom price of about N500 billion. The ruling elite did not stop at that, it has sustainably ‘invested’ huge sums to prop up and keep these power companies afloat, all to no avail. According to the Senate, the government had spent N1.7 trillion on privatized power companies since 2015 and there is nothing to show for it.

What is to show for privatization policy are darkness, incessant tariff hikes and rip-off of electricity consumers through fraudulent estimated billing and sale of prepaid meters at exorbitant prices. The issue at hand does not need debate, it is self-evident, particularly when compared to what was expended on other electricity projects around the world and their output. The Three Gorges Dam in China, the biggest hydro-electric dam in the world was built for $32 billion with an installed capacity of 22,500 MW of electricity; the construction cost of the Grand Ethiopian Renaissance Dam is $4.8 billion and it generates 6,000 MW annually while Nigeria has expended over $20 billion since 2005 and only added just about 3,000 MW of electricity. Yet according to World Bank, only 56% of Nigeria’s population has access to electricity, a scorecard that indicts the ruling elite and privatization programme. The GENCOS have no capacity to generate enough electricity, the Transmission Company is unable to transmit adequately while the DISCOS cannot distribute the electricity wheeled to them properly for lack of basic facilities and infrastructure.

As long as capitalism reigns supreme in the affairs of Nigeria, there will always be hikes in petrol and electricity prices just like other essential commodities. The bourgeois elements in government and their private collaborators usually clamour for higher rates and prices to match global prices but could not provide global wages and infrastructure for the working masses. If tariff hike alone was going to improve the power sector, we would have witnessed a remarkable improvement since June 2012 with the advent of Multi-Year Tariff Order (MYTO) 2012 and subsequent tariff hikes. Hence, between May 2012 and April 2022, the electricity tariff has been increased by over 500 per cent.

It appears that the more tariff is hiked, the more power companies are motivated to fail. Why would any business be encouraged to invest when the harvest is bountiful without investment?  In the same vein, why would the ruling elite and private power companies be encouraged to improve electricity supply when profit without investment is assured?

Electricity is a major factor in production costing. According to Energy for Growth Hub, the cost of generating electricity for businesses is 40 per cent of production cost. This huge electricity cost and poor infrastructure vis-a-vis high energy cost has forced many companies to collapse and many others to relocate to other countries.

The crises in the power sector cannot be resolved by bailing out the power companies or sustaining the privatization policies, it can only be resolved by reversing the privatisation policies, and placing the power sector under public and collective ownership. Hence, it is only public ownership under workers and consumers’ transparent and democratic control and management that can usher in massive investment, efficiency, affordable and regular electricity. Nonetheless, the struggle of community people against poor power supply, outrageous tariff hike and exploitative billing system must not only be sustained but also supported by the labour movement and pro-masses organisations. However, such struggle has to be linked with the agitation for return of power sector to the public under democratic control of elected representative of workers and consumers.