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The Bureau of Public Enterprises and Distribution Companies criticises Aliko Dangote’s call for a reversal of the power privatisation in Nigeria
| By Anayo Ezugwu | Nov 14, 2016 @ 01:00 GMT |
THE Bureau of Public Enterprises, BPE, and electricity distribution companies have kicked against the call on the federal government by Aliko Dangote, president, Dangote Group, to reverse the privatisation of the power sector in the country. The distribution companies, Discos, through their network, the Association of Nigerian Electricity Distributors, ANED, described the call for a reversal of the privatised power sector by the Dangote as reckless.
Sunday Oduntan, executive director, research and advocacy, ANED, who condemned Dangote’s suggestion in a telephone interview with the News Agency of Nigeria, NAN, on Tuesday, November 1, said it was too early for Dangote to conclude that the privatisation of the sector was a failure.
He noted that the sector was just three years post–privatisation. He said the decades of decay in the sector could not have been eradicated in just three years, adding that the entire value chain was committed to improving electricity in spite of the challenges. Oduntan said Dangote’s call was hinged on his earlier unsuccessful bid in 2013 to become a major player in the privatised sector.
According to Oduntan, Dangote had been a major beneficiary of government’s privatisation policy over the years. “Dangote wanted to take over this business but he failed in 2013. He is a good man, but it is surprising that someone like Dangote is calling for re-privatisation of the power sector; he is a product of privatisation. He is what he is today because of privatisation because he bought government properties. If the power sector receives half of the backing Dangote has gotten from government in this country, there would be light.”
Similarly, the BPE, said it was too early to condemn the process as a failure. Vincent Akpotaire, acting director general, BPE, said Dangote’s call for a reversal of the privatisation exercise was unnecessary.
He said the agreement signed with the investors upon their acquisition of the power assets allows that they take at least five years to invest in and stabilise their networks. He explained that based on that, Dangote’s claim that the exercise has failed was not factual.
“My take is that we need to evaluate statements before we make them. That is the point I think we should put across to Nigerians. We have put only about three years since the handover of the power sector to private investors. Before that, the power sector had existed for well over 50 years and in those 50 years, hardly much was achieved due to several factors and the decision to privatised was a well thought-out decision.
“In three years, the measurement of their performance is based on a five-year index which is under their agreements and that measurement is not dependent only on the activities of the private investors alone but also on the tariff structure. You are all aware of controversies the tariff has thrown up and because of that, there is now a scale back in reviewing of the tariffs, one segment of the review has just been lost and for every review not done, there is a gap in the funding.”
Dangote had on Thursday, October 27, at the National Institute of Policy and Strategic Studies, NIPSS, programme in Kuru Plateau State, suggested that the privatisation of the sector should be reversed. He said the problem in the power sector has persisted despite privatisation because the buyers lack understanding of the complexities of the sector.
He said because of lack of understanding of the sector, the generating and distribution companies are now holding the country to ransom. The African richest man said unless the federal government quickly decides on taking back the assets and giving them to people who have the capacity to inject money, the country may not be able to deliver on power.
“What government did was to privatise but the privatisation was done wrongly. People who wanted to buy all these plants, the generating and distribution companies, thought that this was another opportunity like mobile phones, where we have moved from 500,000 lines in 2000 and in 10 years we now have 120 million lines. Yes, it would have been so but these guys, what they did when they bought these power plants were that they borrowed 90 percent of the money in foreign currency. You cannot go and borrow dollars when your base income is in naira, you will have an issue because your earnings are in naira you are taking a huge exchange risk and that is what happened today.”
The federal government had on September 30, 2013, following the privatization process initiated by the Goodluck Jonathan regime, divested its shares from the default Power Holding Company of Nigeria. The company was divided into separate companies or entities called Local Electric Distribution Companies. Each company is responsible for handling electricity distribution in each state or region.
In May 2016, the structure of the companies consisted 11 distribution companies, DISCOs, six generation companies, GENCOs, and one Transmission company, TCN, all being regulated by the National Electricity Regulatory Commission, NERC.
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