Babatunde Fashola, minister of power, works and housing assures Nigeria will not cancel power privatisation programme despite its lapses

|  By Anayo Ezugwu  |  Jun 5, 2017 @ 01:00 GMT  |

THE Nigerian government will not cancel the privatisation of the power sector in 2013 despite the fact that it has failed to resolve electricity challenges in the country. It will rather use the Power Sector Recovery Programme to solve existing challenges in the exercise.

Babatunde Fashola, minister of power, works and housing, said government initiated the recovery plan to save Nigeria’s electricity market from collapsing. He said the programme has already taken off and was in operation despite not being launched.

The minister said the programme which the government developed in partnership with the World Bank, would correct the reported troubles of the power sector. He noted that government would through it provide an enabling environment to grow private investments in the sector.

Fashola stated this shortly after inaugurating a 100 kilowatts peak (kwp) capacity solar photovoltaic (PV) rooftop system that was built by a renewable energy firm, Protergia, for the House on the Rock church in Abuja. According to him, the recent N701 billion payment guarantees government approved for power generation companies, Gencos, reconstitution of a board for the Nigerian Electricity Regulatory Commission, NERC, and Rural Electrification Agency, REA, as well as the declaration of an eligible customers regime for the market, are some of the dictates of the recovery programme.

“The power sector recovery programme has already taken off. To deliver on the objective is a combination of government collaboration with citizens. The policies and programmes and assurances that have already gone in will result in initiatives like this (the rooftop solar system).

“Our role as government is to regulate, formulate policies and provide an enabling environment for businesses to get into the business of power. One of the things we have done is to get the FEC approval for payment assurance to all those who generate power into the grid, that is one of policies that has taken place. One of the policy actions is the constitution of the NERC and REA. “It is a continuation of policies and actions that should have taken place at the time the privatisation happened which didn’t happen.

“As you are aware, I also exercised my powers under the electricity sector act a few days ago to declare the eligible customers and they are those people who if they are not served by their Discos, can begin to make arrangement with their generation companies where the Disco is unable to make investments in terms of transformers and feeders, to serve them, to have a direct relationship with a man who is producing the power.”

Fashola said going forward government would punish operational acts that distort the market, adding thus: “These are some of the reforms that will ultimately improve competition, and wherever you have competition, really, you will have productivity. With competition, everybody can play, we set the rules and if you break the rules, we’ll blow the penalty.

“We already have a privatisation in place but it has challenges. Some people have argued that we should cancel it, but we think that the concept of privatisation is proper. The errors in the privatisation we have can be retooled and re-engineered and they will be solved and that is what the power sector recovery programme speaks to,” Fashola said.

It could be recalled that Aliko Dangote, president, Dangote Group, had on Thursday, October 27, 2016, at the National Institute of Policy and Strategic Studies, NIPSS, programme in Kuru Plateau State, suggested that the privatisation of the power 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 ten 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 privatisation process initiated by the former Goodluck Jonathan administration, divested its shares from the default Power Holding Company of Nigeria, PHCN. The company was divided into separate companies or entities caller Electric Distribution Companies. Each company is responsible for handling electricity distribution in each state or region.