Sweet Crude

September 3, 2013

Nigeria realised N400bn from electricity privatisation

By Clara Nwachukwu

Mr. Atedo Peterside has been a banker all his life; although now a retired banker of repute, but still the Chairman, Stanbic IBTC Bank Plc. However, in this interview, the focus is not on the financial services sector, but his headship of the Technical Committee of the National Council on Privatisation, NCP. The Council just concluded the largest privatisation transaction in Nigeria’s history with the sale of 15 power companies unbundled from the Power Holding Company of Nigeria, PHCN, to private investors. Despite this success, there are still some issues leading to when Nigerians will begin to experience uninterrupted power, which Peterside clarifies. Excerpts:

For more than 13 years Nigeria has struggled to privatise the Power sector, why did it take so long to achieve?

The political will was not there and the knowledge was not there either. Unbundling a power sector into its constituent parts and privatising them transparently is a herculean task.

Having gone this far, what is your view of the just-concluded sale of the 15 PHCN successor companies?

First let me clarify the number of PHCN Successor Companies. There are 11 Distribution Companies (Discos) and 7 Generation Companies (Gencos) and then there is the Transmission Company of Nigeria (TCN).

Second, let me object to the use of the word “Conclude”. I am a firm believer in the saying that “it is not over until the fat lady sings”. Sportsmen know that a game is not over until the final whistle goes. We received 25% down payment on 10 Discos from the preferred bidders. Nine of them paid the balance of 75% on or before the 21st August deadline.

The Core Investor for the 10th (Enugu Disco) defaulted and did not pay the balance of 75%. All is not lost there because we do have a Reserve Bidder and from the noises I have heard them making, they appear to be ready to step in and pay. For the 11th (Kaduna Disco) the process is still on because a Preferred Bidder and Reserve Bidder emerged later and so the transaction is still proceeding.

For the Gencos, full payment has now been received for Kainji, Geregu, Ughelli, Egbin, and Shiroro (a fraction of their funds came in late). There is a $30m approximate shortfall out of the $201m total that was due on Sapele. Meanwhile a preferred bidder ($260m) and a reserve bidder have emerged for the 7th Genco (Afam) and so that transaction is still proceeding. Now you understand why I object to the use of the word “Concluded”. I do not want to lose focus. Let us wait until the last dollar has been received on the last Disco and the last Genco. Only then will I attempt a mild celebration.

Atedo Peterside

Atedo Peterside

This exercise is reputed to be the biggest sales in Nigeria’s privatisation history, how do you feel being on the team that brought it to pass?

I like the use of the word “team”, because it has been a team effort. I am uncomfortable with the attention which the media has tried to heap on me. I am only a member of the National Council on Privatisation (NCP). The Chairman of the NCP is His Excellency, the Vice President and as you know he reports to Mr President. If something goes wrong in Nigeria, we blame the Presidency. If something goes right people want to exclude the Presidency and praise someone else. That is dishonest. Leaders must be given full credit for successes and then they must also accept the blame for failures. Let us be fair.

You are right that it is Nigeria’s largest privatisation transaction. Actually, I am told it is also Africa’s largest privatisation transaction.

But you are the Chairman of NCP’s Technical Committee that oversaw the entire process. Are you not a leader then?

The Technical Committee is an advisory body. Our advice could have been accepted or rejected. If our advice is accepted and everything goes right then the credit must still go to those who accepted our advice. Let us call a spade a spade. This is a team effort and at the head of the overall team is the Vice President, who reports to Mr President.

As the Chairman of the Technical Committee, what specific roles would you say your committee played in the success of the programme?

As I said earlier, we advised on the technical details of the transaction and oversaw the implementation/execution by the Bureau of Public Enterprises (BPE) and the transaction advisers (CPCS). We were also assisted greatly by the NCP’s Power Sector Sub-Committee.

Are you not the Chairman of that Power Sector Sub-Committee?
Yes I am, but the membership includes other stakeholders such as the Minister for Power, the DG of BPE, the Vice Chairman of NCP’s Technical Committee, Mr Haruna Sambo and many others.

There appeared to be too many committees and task forces on power privatisation, which was not the case with the others, why was this so, especially as some of these committees were reputed to have contributed in the delay of the programme?

As explained earlier, I chaired both the NCP’s Power Sector Sub-Committee as well as its Technical Committee. I am not aware that either of these committees delayed anything. The Technical Committee is an advisory body. We always gave our advice promptly. If you are focused on the national interest and what is best for Nigeria and Nigerians, then you will be very prompt in your decision making. It is the shameful pursuit of vested interests by decision makers that has delayed progress in the past.

The problem with power is not just about generation and distribution, but more of transmission, yet the deal with TCN does not appear to be tidy with the back and forth issues with Manitoba Hydro of Canada. What is the situation with transmission?

There is a board of TCN and they must be held accountable. The centre of gravity of Nigeria’s power sector has shifted to the private sector. Over N400 billion has been paid by the private sector to take control of the Discos and Gencos. If anybody thinks that it can be “business as usual” hereafter, then they will be swept away as a result of their own folly. That is the lesson of history.

With regard to technical issues, there is one issue that seems not to have been taken into consideration in the privatisation programme, which is the issue of territorial delineation. Under one PHCN entity, there was no need to mark the boundaries of where one distribution company begins and another ends, but now there is a need for boundary demarcation or is this a non-issue?
It is a non-issue.

Shouldn’t this boundary delineation have been done before the entities were put up for sale to avoid possible disputes and litigation?

The boundaries were established. At best there might be some need for minor clarification. This is not a deal-breaker.

Will your committee still remain relevant post-privatisation era, and in what ways?

If everything that is “privatisable” has been privatised then there will no longer be a need for a National Council on Privatisation. Nigeria is very far away from that point. We have not even touched the Nigerian Railways. Nitel is still lying comatose and is still being used as a vehicle for milking the federation. There is a lot that still needs to be done. We must take our country back from those who have looted it for decades while pretending to be running state-owned enterprises.

Now that the sales have been largely concluded, what is the next step for the investors and how soon will Nigerians begin to get a reprieve from their frustrations with power?

I believe the Discos are the most important business units because they are the ones responsible for the “last mile” and they have the customer interface. There should be efficiency gains arising from a better alignment of goals in the sense that they only get paid when there is electricity supplied to your house and the meter is running. They are therefore as eager as you and I to do away with darkness in our homes and offices. There is hope yet for Nigeria. Let us look at the bright side and smile