HIGH ELECTRICITY TARIFF LEADS TO HUGE DEBT AND MASS DISCONNECTION
Trade Unions and Community People Should Demand End to Electricity Privatisation
Since the advent of civil rule in 1999, the Nigerian self-serving ruling elite have religiously implemented neo-liberal and anti-people policies. This includes privatisation policy which has led to public corporations being stolen from the people. This agenda led to the plunder and destruction of NITEL and the privatization of the power sector amongst others. The motive is to entrench the market economy such that a privileged few amass super profit at the expense the vast majority
By Chinedu Bosah
To concretize the plundering of the power sector, 51% of the PHCN, with asset worth more than 5 trillion, was sold for a rock-bottom price of about N500 billion to members of the robber elite. Worse still, the owners of these 15 private power companies only acquired assets and no liability. In fact, the N500 billion procced was not enough for the government to pay workers severance package. Yet, these private companies surreptitiously acquired the debt on electricity bills running into over N100 billion which owed to old NEPA and PHCN. The fact is that the so-called private sector investors do not have capital or capacity for an efficient power sector. They just secured loans from their banker friends, which they have been unable to repay and thereby creating toxic debt in the banking sector
Since November 2013 when power sector was privatized, private power companies have only preoccupied themselves with tariff hikes without improving power supply. In nine years the tariff has been hiked several times from an average of N13kwh to reach N50kwh on average as of April 2023, something which is about 285% rise under privatization regime.
Despite the privatization, the government has continued to use public resources to bail out the private sector, an act that has gulped over 2 trillion Naira. The bailout was supposed to be invested into the power sector for expansion but some of the owners of the private companies looted these funds. Due to the massive corruption and mismanagement, the federal government some months ago 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).
For instance, before the final takeover of the 4 DISCOS recently, some of the top management staff of some of these DISCOS have been indicted for massive corruption and insider abuse. For instance, from the funds released to Ibadan DISCO by CBN for the purpose of improving the distribution network, Ibadan DISCO 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 hereby 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. Besides, the collapse of Ibadan and Yola Distribution Companies are linked to the collapse of Skye Bank, 3 companies with the same owners and involved in insider abuse and mismanagement.
The reality is that power companies lack the capital 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 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) or the subsidy regime that sustains huge profit for the oil marketers. Despite the sustained bailout and high electricity tariff, the power companies had not added a single megawatt of electricity nor have they expanded the grid to communities out of the grid. 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 are unable to transmit adequately while the DISCOS cannot distribute the electricity wheeled to them properly for lack of basic facilities and infrastructure.
Another area of exploitation is the refusal by the distribution companies to issue prepaid meters to consumers, subjecting many consumers to unjustifiable and estimated “crazy billing”. The high tariff in addition to the fraudulent estimated billing has put many consumers in huge debt while many have been disconnected leading to mass community agitation and protest in Ajegunle recently. The Tolu axis of Ajegunle protested high billing in February this year while Eko Distribution Company sponsored armed policemen from the Tolu Police Station to arrest and detain 10 protesters and activists aimed at intimidating and harassing the community people. Mass public outcry and continued protest of the community people forced the police to free the detained protesters.
Though there is some improvement in electricity supply in recent weeks in some towns and cities, it comes with a price of mass disconnection and ever-growing “debt” hanging on many electricity consumers. There is no plan to expand the grid supply to cover 44% that are without grid electricity, many rural communities are either without electricity or subjected to an epileptic power supply. Besides, the little improvement recorded for some weeks now is not sustainable because the infrastructure is either fragile or poor and susceptible to incessant failures or system collapse.
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 that can guarantee massive investment, efficiency, affordable and regular electricity.
The trade union movement and pro-labour organizations must lead a mass struggle to resist high tariff and to reverse privatization policy together with the democratic management of the new public electricity company.