Who owns Nigerian power?

on   /   in Viewpoint 12:51 pm   /   Comments

FOR starters, there is no question about who wields political power in Nigeria: now securely in the hands of Dr. Goodluck Ebele Jonathan, the President. This question is about one area of authority that President Jonathan and the federal government should be happy to let go now.

Today, if one were to read Nigerian newspapers or hear Nigerian officials discussing the problem of electricity generation and distribution in the country, one would assume that nothing has changed in the structure and ownership of power utilities and who should be responsible for electricity generation and distribution in Nigeria.

However, by the end of 2013, Nigeria successfully sold over 20 previously public-owned power generating and distribution businesses to private investors. It is not surprising that scores of investors from all corners of the earth battled to buy a piece of Nigeria’s power sector. Government had invested billions of dollars to upgrade the existing power stations. Just as much funds were put into unbundling the monstrous national electricity company into manageable businesses. Over all, with a population of about 170 million, and a growing economy, there is a ready market for the emerging power industry in Nigeria. But, notably, the prospect of a prosperous power industry, ready to serve Nigerians and give even more impetus to Nigeria as a major world economy is a concept citizens find hard to comprehend because of Nigerian governments’ abysmal record of running the power sector.

The best way to address that abysmal record is what the Jonathan Administration has already done: privatizing the sector and selling off the publicly-owned holdings. It is now time for the government to step back and focus attention on taking its regulatory roles more seriously – and nothing more. The government should give room to the new power companies to take charge of and responsibility for the gains and failings of power supply in Nigeria. By implication,government’s hanging on to the power industry, or being compelled by those private companies to shoulder more direct responsibilities,would amount to continuing with the failed public control of the sector. It would equally mean that Nigerian tax payers would be funding the power companies which are now privately owned. Worse still, maintaining direct government involvement in the industry will stifle the needed innovation and competition to improve the sector.

As a result, the idea of government officials making daily commentaries on how much electricity has been generated nationally and setting new targets are not in consonance with the principle of a privatized sector of which government should take the role of a regulator and no longer as an active owner of the business. By continuing in that vein, government gives the impression that it still owns and runs Nigeria’s power sector. It shields the private owners from responsibility and questions on what they have done and are able to do to improve power supply and quality of services in their areas of operation. While everyone in government, including President Jonathan, should optimally be interested in how the privatization evolves, the President and the rest of the government must step back and stop receiving pot-shots on behalf of owners of the power companies.

The fact that these companies are still being babied may point to something more worrying. Does it mean that they do not have the capacity to run the businesses as they claimed during the biding process? Were they thoroughly investigated before the decision to sell? Was the idea to create regional power monopolies proving to be defective? I will comment at those worrying questions separately.

First, in view of the decay in the Nigerian power sector, and that includes the ongoing battle by energy workers to ensure the privatization reign fails, the new power companies should be given more time to set up, employ the needed technology – and especially fresh talents for a whole transformation of the power sector. As was the case in the transformation of the telecommunication sector, the new companies should be given time to identify and deploy the needed technologies. Owing to the level of decay, this process will take a longer time than was the case in the telecommunication sector. However, it is worrying that the companies are focusing more on aggressive revenue generation than on developing the businesses and deploying the needed technology.Again, it is not the responsibility of government to be in the forefront, making the case for these companies by asking the public to be patient with the private power companies. They should take ownership of their businesses.

Additionally, while the government can provide support,such like in import duty considerations, the idea of government providing direct funding to the power companies would be another slippery road down the mire of subsidies. Having learnt from experiencing the impediments to a successful removal of petroleum subsidies,officials can acknowledge that it will be another onerous battle for the government to extricate itself from power industry subsidy if it takes that wrong step.Moreover, such government support will stifle the ripple effect of the privatization on the banking sector and other opportunities for the Nigerian Stock Exchange. Fortunately, the Nigerian banking and financial services sectors have grown in bounds in the past decade to support the evolving power industry and similar large-scale enterprises, on the one hand.

On the other hand, handing off direct involvement in the daily operations of the power companies will go a long way in dissipating the cloud hanging over the sales process. Using government funds to back the companies or using government apparatus to shield the companies from public probity and accountability will lend credence to allegations that political and business allies were favoured in the bidding process. Government’s continued babying of the companies will feed that conspiracy theory.

Finally, the idea of quantifying the amount of power generated nationwide takes away responsibility from these individual companies. The power industry is no longer centralized and assessment of its performance should not be centralized.Although I do not agree with the idea of regional power monopolies, we should focus on the performance of those companies individually, how much power they generate, how well they distribute generated power, and how well they serve their customers in their areas of operation. Certainly, the government should no longer serve as the communication and public affairs unit of those companies.

In conclusion, the President, the government, and every Nigerian wants a turnaround of the power industry, but we accept that the public ownership of the industry will never bring about the change we all dream of. The Jonathan Administration has done what it needs to do to address the problem. Having privatized the power sector, government should focus on regulation of the industry, allow the companies to take responsibility for their businesses – and stop taking blame for the industry.

Dr. AMBROSE AKOR who teaches and researches on the role of mass media in contemporary public policy and foreign policy processes, wrote from Manchester, UK.

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