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Government faces dilemma over power sector privatisation

National Planning Minister Udoma Udo Udoma (left); Vice President Yemi Osinbajo and President Muhammadu Buhari at the first National Economic Council retreat for state governors at the State House, Abuja …yesterday PHOTO: PHILIP OJISUA

National Planning Minister Udoma Udo Udoma (left); Vice President Yemi Osinbajo and President Muhammadu Buhari at the first National Economic Council retreat for state governors at the State House, Abuja …yesterday PHOTO: PHILIP OJISUA

• Buhari promises 2000mw this year, 10,000mw in three years
• President wants APC states to build 250,000 housing units yearly
• Generation drops to 2, 695 mw.

Concerned about the poor state of electricity supply situation in the country barely three years after the completion of the privatisation of the power sector, President Muhammadu Buhari has publicly admitted that the Federal Government is in dilemma on what to do to get improved power.

Putting the epileptic state of power supply in the country in perspective, the president, in a keynote remark at the opening of a two-day National Economic Council (NEC) retreat in Abuja yesterday noted that the sector had become a butt of jokes among Nigerians, but added that the situation was far beyond jokes.

Indeed, complaints and lamentations from electricity consumers may not end anytime soon following the drop in power generation to about 2,695mw.

The retreat, which has as theme “Nigerian States: Multiple Centres of Prosperity” is to generate immediate, medium and long-term viable policy solutions to the challenges facing all sectors of the economy.

The forum, which was led by Vice President Yemi Osinbajo as chairman of NEC is being attended by the 36 state governors, Central Bank of Nigeria (CBN) Governor Godwin Emefiele, the Ministers of Finance, Agriculture, Solid Minerals, Budget and National Planning, and Commissioners for Finance and Economic Planning from the 36 states of the federation and the Federal Capital Territory (FCT)

According to the president, though the  power sector has since been privatised , there is yet to be any improvement in the quality of service, as the common public complaints are constant power cuts destroying economic activities and affecting the quality of life, high electricity bills despite power cuts, low supply of gas to power plants due to vandalism by terrorists, obsolete power distribution equipment such as transformers, power fluctuations, which damage manufacturing equipment and household appliances and low voltage which cannot run industrial machinery.

Buhari declared: “Nigerians’ favourite talking point and butt of jokes is the power situation in our country.

“But, ladies and gentlemen, it is no longer a laughing matter. We must and by the grace of God put things right. In the three years left for this administration, we have given ourselves the target of 10,000 megawatts distributable power. In 2016 alone, we intend to add 2000 megawatts to the national grid.

“We are facing the classic dilemma of privatisation: public interest versus profit motive. Having started, we must complete the process. But the National Electricity Regulatory Commission (NERC), the regulatory authority, has a vital job to ensure consumers get value for money and overall public interest safe-guarded.

“These are some of the problems, which defied successive governments. But in our determination to change, we must and will, insha Allah, put a stop to power shortages.

‘‘In addition, government is determined to fast-track completion of pipelines from gas points to power stations and provide more security to protect gas and oil pipelines. Power companies should be encouraged to replace obsolete equipment and improve the quality of service and technicians.”

According to details obtained from The Transmission Company of Nigeria (TCN) by The Guardian yesterday showed that the national grid could only boast of 2,695MW, after it rallied to 4,200MW on March 3.

The breakdown of the generation indicated that Ikeja Disco received 404.28mw; Abuja, 309.95mw; Eko, 296.47 mw; Benin, 242.57; Enugu, 242.57; Ibadan, 350.38; Jos, 148.24; Kano, 215.62 ; Kaduna, 215.62; Port Harcourt, 175.19 and Yola, 94.33mw.

The sharp drop in power generation was however attributed to gas constraints, frequency management, transmission line limitations and water management.

The president, whose speech dwelt extensively on four sub-sectors of the economy noted that, while there was a general consensus about the poor state of the economy, there were divergent views about how the problems should be resolved. He identified the four sub-sectors as agriculture, power, manufacturing and housing.

According to the president, both the peasant and the mechanised farmers agree with the general public that food production and self-sufficiency require urgent government action.

He lamented that for too long, government policies on agriculture have been half-hearted, suffering from inconsistencies and discontinuities, stressing that the issues that worry the public include rising food prices, such as maize, corn, rice and garri; the lack of visible impact of government presence on agriculture, and the lack of agricultural inputs at affordable prices.

The president also stressed the need for the provision of feeder roads by state governments to enable more effective evacuation of produce to markets and processing factories.

“When I was a schoolboy in the 1950’s, the country produced one million tonnes of groundnuts in two successive years. The country’s main foreign exchange earners were groundnuts, cotton, cocoa, palm kernel, rubber and all agro/forest resources.

‘‘First, we need to carry the public along with us for new initiatives. Accordingly, the Federal Ministry of Agriculture in collaboration with the states should convene early meetings of stakeholders and identify issues with a view to addressing them,” he said.

On manufacturing, he regretted that the lack of foreign exchange had hampered import of industrial raw materials and spare parts. But he assured that the situation was temporary.

He added: “It grieves me that so many manufacturing industries in the country today are groaning and frustrated because of the lack of foreign exchange to import raw materials and spare parts.

“Painful though this is, I believe it is a temporary phase which we shall try to overcome but there are deeper, more structural problems bedeviling local industries which this retreat should identify short and long-term answers to,’’ he said.

These, according to him, include “inadequate infrastructure: power, roads, security leading to increase in costs of making made-in-Nigeria goods pricier than imports, high cost of borrowing money. Manufacturers Association of Nigeria (MAN) has been hammering on the fact that high lending rates make manufacturing unviable and unprofitable.”

He further said that due to the “lack of long-term funding, the Nigerian capital market has not completely recovered from the 2008 worldwide crisis. Banks’ funding sources are short-term in nature due to sources of the liabilities.

The president recommended that a fresh campaign to patronise made-in-Nigeria goods should be launched saying that all uniforms in government-sponsored institutions should be sourced from local factories.

On labour, he said: “We need to protect our workers from exploitation, but unions must cooperate with entrepreneurs to substantially improve productivity and quality of products if we are to move forward.”

On housing, Buhari asked the 22 states governed by the All Progressives Congress (APC) to build 250,000 housing units per annum to enable the party to meet up with its election promise of providing one million houses per year for Nigerians.

He said: “ In our successful campaign to win the general elections last year our party, the APC, promised to build a million housing units a year. This will turn out to be a very tall order unless the Federal Government builds 250,000 units and the 22 APC states together manage another 250,000.

We invite foreign investors together with local domiciled big construction companies to enter into commercial housing building to pick up the rest.”



6 Comments
  • Jacob Ajayi

    At the inception of Buhari Administration when Reuters carried a report that there was no bankable power proposal available for implementation, I made reference to the proposal submitted and accepted by the Federal Ministry of Power for implementation in 2010 with respect to achieving 17000 MW of electric power in Nigeria by 2016 most of this coming from our exsiting hydropower plants in Nigeria.Africa Mutual Funds Corporation’s proposal was reviewed, vetted and CEOs of the three existing hydropower plants were brought together in Abuja where that takeoff of repairs and upgrading of existing hydropower resources were discussed. The generation angle of the power problem was adequately addressed in our proposal. The then Minister of Power, Prof. Nnaji was adequately briefed about the dangers of relying on gas as basis for our electric power generation. Ministry of Power was adequately informed that the new mega-hydro project in Zungeru etc. cannot address our immediate power need. If our transmission assets cannot evacuate power to distribution outlets, what is stopping us from upgrading transmission assets. If the issue is with generation and transmission why did the FGN not look at the proposal that Africa Mutual Funds Corporation submitted in 2010 and “TURN THE POWER ON” for the more than 180 million Nigerians and our industrial sector. The proposal that I refer to is still available and could still be made to work in the present dispensation with whatever privatization has been done since we authored this proposal that the NUEE and the Senior Staff of Electricity Workers judged to be a workable one that will not only improve power supply in Nigeria from existing power plants, but will also transfer the needed technology to Nigeria wherein we will not rely on foreign contractors to maintain our power plants. Our firm, Africa Mutual Funds Corporation is still much alive and we can demonstrate the practicality of our solution to Nigeria’s “power problems” in a very short order. I have said and done my part! I have no other country to call my own! Let’s GO Nigeria!!!

    Read more at: http://www.vanguardngr.com/2016/03/power-situation-nigeria-no-longer-laughing-matter-buhari/

  • Auta62

    The nation has squandered so much opportunities in failing to develop the power sector in nigeria, hence our predicament. Our leaders over the years gave lip service in tackling the power sector problems. Money meant for the development of the sector were brazenly embezzled by public office holders without anybody challenging such fraudulent acts. All the noise about adding 10000mw of electric power by this regime will also go the way of previous promises. Several projections and permutations have failed to materialized before now, after all, what was promised was 20000mw, why the resort to 10000mw, which achievement is even suspect. We are only good at projection and not achievement, so the music go on.

  • John Paul

    The government is correct to focus on public interest, with regards to power supply, because in the long run, public interest will create the goodwill that will result in private profit

    Nigerian groundnuts are of very good quality. No wonder they use to sell one million tons, in two years, back in the day.

    “My policy on agriculture is to more than double our efforts on food. Food production. I went into farming purely to make sure that Nigerians don’t starve. What I saw in Ethiopia worried me for a month. Children were dying as if they were flies…so I took it upon myself to start large scale farming. Thank God I did. It was one of the most satisfying things that I have done in my life…if farmers are given a loan for the input, with the proceeds of the sale, they will pay overtime, that will improve the abundance of food in Nigeria, the prices will fall…” – MKO Abiola

    How bizarre is it that Nigerian politicians will be distributing rice, produced in India or China, on election day, in Nigeria, with their faces imprinted on the bag of rice

    “The high table mentality”

    No wonder in support of this administration’s policy on Agriculture, Tinubu proclaimed: ” I would rather die of hunger than eat a cup of rice produced in China”

    This administration’s policy on Agriculture is the way to go

  • PETER UDOFIA

    I think the body language of the president should be giving us light. We have the same brain nerves like the whites but why are we so backward in everything? If Nigeria is too big for a lion to chew why are we inviting goat that can only chew herbs? Is time for us to think forward. We are professing about agriculture when the fulani herdsmen are destroying farmlands and economic crops with cattle, terrorizing everywhere whiles we are here talking as if farming is done in heaven not on earth.

  • jellybelly

    He will privatise it. Read between the lines.

  • Jacob Ajayi

    Your response to my observation on Nigeria Power is very interesting. All the proposals and technical audit reports of the 3 hydropower plants are available at the Ministry of Power. Since you are an electrical engineer, we are not talking theory here. My power/hydraulic/mechanical engineers with practical operating experience conducted all those surveys and it cost our company more than $500,000 to conduct the surveys and produce tech reports. We are a private company making money for our investors. We do not do charity work. You know the theoretical basis of power economics. We dwell more on the practical side of it, it is practice that generates power not good essays etc!.Let’s get together…..

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