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Electricity workers have no reason to go on strike, Ayodele

The recent threat by electricity workers to embark on nationwide strike has sparked a controversy. While some people especially industrialists fear that further blackout portends negative consequences for the economy, the executive director operations, Power Holding Company of Nigeria (PHCN), Abuja, Mr. John Ayodele, in an interview, says the workers have no reason to go on strike.


The threat by electricity workers to embark on a nationwide strike is capable of worsening power supply in the country.  At a time government is trying to revive the power sector.  What is your opinion on this?

Well, I believe that the electricity workers in the country have no reason to embark on any industrial action at this time. The reason is very simple. They are demanding salary increase. But, the reality is that what they are asking government to do is not possible now.

You mean workers demanding for a living wage rate to improve their standards of living is not right?
I did not say that. What I’m saying is that the issue of proposed industrial action by electricity workers now is not appropriate. When we are talking about salary increase we have to also look at the circumstance for making such a demand. For instance, the PHCN spends 80 per cent of its revenue on payment of salary alone. We should also consider the fact that government needs money to provide infrastructures for the sector to grow.

Aside from that, there are other things that must be done to put the sector in good shape in order to increase electricity generating capacity and not just salary alone.

At the moment, we are spending 80 percent on salary alone and if government approves a new salary structure higher than what we are spending, how much do you think would be left for other things in the sector to be done?  So, this is what we are saying. Government needs money to tackle other problems and the revenue of PHCN at the moment would not absorb any increase in salary.

How about the issue of monetisation arrears, is that not possible also?
If you are talking about monetisation, I would say government should honour its commitment in that respect because government has already given its consent on that issue, but salary increase at this time may not be realisable.
What do you think is responsible for the lingering power crisis in the country?

I would not agree with the word lingering because between 1984 and 1994, the sector was left to itself without appropriate revenue stream for development. By 1984, during the administration of the former military head of states, Ibrahim Babangida, we had above 5,000Mega Watts (MW) of almost brand new power plants. At that time, the sector still had substantial investment.

After that period, the sector lacked sufficient fund to propel development. By 1999, we had less than 2,000MW of electricity generation capacity and left with only 35 unit of plants, which were without proper maintenance. When in 1999, the world came to Nigeria (Under-20 World Cup), they thought we did magic to realise the little capacity we had, because they had never seen anywhere in the world where an important sector like power was abandoned without adequate funding.

When the present governor of Cross River State , Liyel Imoke, became power minister, he was given a target of 4,000MW, but he realised a little above 3,400MW. That was not the end. After that period, electricity generation capacity increased to 3,774MW.

During that period also, government made a decision to inject massive funds into the sector, but the problem was that the money was spent for new assets, leaving the old assets without appropriate maintenance.

That created a serious problem, because the new ones did not come on board to complement the old assets as planned and the refund process did not continue either. And that arrangement was a joint effort of the three tiers of government under the concept of National Integrated Power Project (NIPP). Some states were already agitating for what would be their benefit at the end of the exercise. So, they agreed to provide land.

But when contracts were awarded for the project to start, sufficient land was not given as previously agreed.  There was also problem of insecurity, due to militancy in the Niger Delta region, which prevented experts from coming into the country to do their job. So, there was stagnation because of these problems. That was why people said Obasanjo did not achieve much in the sector during his tenure.  Then another issue was the probe panel, which put a sudden stop to the project. The probe process took nine months and at the end, nothing much came out of it because even members of the panel did not have full understanding of how the power plants work, especially in the area of EPC – Engineering, Procurement and Construction.
The Engineering process alone which involves the entire designing of the project could take over six months before the second stage.

Procurement could take between 18 and 24 months without scratching the ground. So, between point E and P, 70 per cent of the money is already committed into the project without actual construction. The third process is construction and this begins only when equipment arrived. Also, EPC must be almost 100 per cent accurate for the equipment to sit completely without problem. Construction is the last thing you see in power plants and could take 15 to 20per cent of funds.

What some people do not understand is the fact that power is not like other sectors of the economy. The reason being that, it has long gestation period. For instance, power plants need experts because the turbines require special attention just like aircraft, which required experts to fix the parts. When power plants are faulty, the Original Equipment Manufacturers (OEM) must be brought in to check the turbines, in order to ascertain the real cause of the problem. We must also realise that often OEM may not have opening for a specific country since they have many countries to attend to. In such a situation, the money allocated for the job would remain in the bank until the OEM experts are ready to check the plants or the equipment. Sometimes, it takes over a year for them to respond, depending on the volume of work they have at hand.

Last December, government failed to meet the 6,000MW target and now they are putting the same target for 2010, what is your opinion on this?

The 6,000MW target was a well thought out plan by a committee outside PHCN and some top officials of PHCN. It was an agenda set up in 2007 and the funding requirement properly outlined. But again, three things suffered when rehabilitation began. There was no alignment between funding and timing.

For instance, many plants that ought to go into 6,000MW are not ready till now because the manufacturers had not come to check them. Also, money is not often released in bulk, as the allocation comes within the four quarters of the year. Sometimes, when equipment manufacturers are ready, money is not released, and when eventually money is available, they equipment manufacturers may not come at that time, because they must have organised their work force for another country.

Another constraint was shortage of gas. Between 2005 and 2011, all gas requirements had been given to Nigerian National Petroleum Corporation (NNPC) and the Agency has problems as well. Infact, when some plants were ready for commissioning, there was no gas to check the state of the plants.

Throughout 2008 and 2009, there was no gas to power the plants, aside from just knowing that they were china products. And later on when we finally checked them, we discovered that the plants were not reliable and not what we expected. The problem of kidnap was also another factor because the expert rates were not willing to come to Nigeria to look at the plants because of the insecurity in the country.


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