Nigeria's Power Sector Decade Privatization Deal Expires | READ MORE
Faith Ukanwa
Oct 24, 2023
Nigeria's Power Sector Decade Privatization Deal Expires | READ MORE
There are mounting concerns as Nigeria's power decade privatisation process is expected to elapse on October 31, 2023.
READ ALSO: INTERESTING: I Became CEO At 19, Built Two Houses At 22 - Ka3na
It has become more problematic following the decades-long crisis within Nigeria's power sector.
For over 62 years, the country's electricity value chain, from distribution to generation and transmission, has been bedevilled with challenges.
READ ALSO: UPDATE: Gov. Ikpeazu's Commissioner, Solomon Ogunji is dead
Meanwhile, the government attempted to break the jinx in the country's ailing power sector, first with the establishment of the defunct 2005 Electric Power Sector Reform (EPSR) Act, then on November 1, 2013, the commencement of the privatisation process.
READ ALSO: Nigeria hits $1.5bn in crypto trading
DAILY POST recalls that the government commenced the privatisation of the Nigerian electricity distribution and generation companies in November 2013, benchmarked on a 10-year moratorium of operational licensees with the hope that the decision would halt the age-long power crisis.
READ ALSO: Obinna Ichita Is An Idle Mind, A Rabble-Rouser, A Devil's Workshop - Chikamnayo
However, a decade later, the problems of the power industry have remained unsolved, becoming a persistent clog in the wheel of progress for Nigeria's economy.
READ ALSO: "Ikwuano Locked Down For Alex OttiÔÇØ - Monday Ubani SAN Sends Strong Message To Opposition
The electricity distribution companies are battling with liquidity issues and low remittance compounded by the metering gap; still, the generation companies struggle with poor investment and transmission inadequacies, leading to incessant grid collapses.
READ ALSO: Mike Maignan transfer news: Chelsea not willing to match valuation for AC Milan goalkeeper
For years, the country has struggled with 5,000 megawatts of electricity daily for a population of over 200 million people.
READ ALSO: How a Catholic Priest Slumped and Died While Delivering Homily in Delta Church
According to the Nigerian Electricity Regulatory Commission, NERC, report for the second Quarter of 2023, the 26 power plants' generation capacity dropped to 4,387.91MW.
Also, regarding the annual capacity payment loss in the sector, the report indicated that in 2015, 2016, 2017 and 2018, the industry's losses were N214.93bn, N273.32bn, N236.47bn and N264.08bn, respectively. In 2019, 2020, 2021 and 2022 (January - August), the sector's annual capacity payment losses were N256.97 billion, N266.10 billion, N159.86 billion and N88.13 billion, respectively.
READ ALSO: Bloodbath At Wedding: Bandits Kill 13, Abduct Many In Midnight Attack In Kaduna Community
The challenges have lingered despite the government's intervention at different times.
READ ALSO: Mother's Day: Abia Government Liaison Officer Honours Women, Says Mothers Shape Future Leaders
Recall that on September 30, 2014, the Federal Government announced a loan of N213 billion to the privatised power firms.
READ ALSO: Ofuji Ndị Igbo Sets 2026 Agenda, Promises Greater Community Engagement
Similarly, on March 1, 2017, the Federal Government approved the sum of N701 billion as a power assurance guarantee fund for the Nigerian Bulk Electricity Trading Plc to pay for the electricity produced by the generation companies for two years.
READ ALSO: INTERESTING: I Became CEO At 19, Built Two Houses At 22 - Ka3na
The government also provided another N600 billion payment assurance facility to the sector in 2019; the nation's power industry has continued to bleed despite these interventions.
The ripple effect of the power sector challenges is the under performing economy.
READ ALSO: UPDATE: Gov. Ikpeazu's Commissioner, Solomon Ogunji is dead
For instance, in June, the Manufacturing Association of Nigeria disclosed that its members lose N10.1 trillion annually to the power sector crisis.
READ ALSO: Nigeria hits $1.5bn in crypto trading
However, with the signing of the 2023 Electricity Bill on June 9 by President Bola Ahmed Tinubu, stakeholders postulated that this could bring about the much-desired change in the sector provided it is implemented across the sector.
READ ALSO: Obinna Ichita Is An Idle Mind, A Rabble-Rouser, A Devil's Workshop - Chikamnayo
Here, Nigeria's Minister of Power, Adebayo Adelabu, would need to give the sector the needed policy direction beyond statements.
READ ALSO: "Ikwuano Locked Down For Alex OttiÔÇØ - Monday Ubani SAN Sends Strong Message To Opposition
Wumi Iledare, Professor Emeritus and Executive Director, Emmanuel Egbogah Foundation told DAILY POST on Monday that the 2023 Electricity Act presents a new horizon for the country's power sector.
READ ALSO: Mike Maignan transfer news: Chelsea not willing to match valuation for AC Milan goalkeeper
He noted that the way forward is to invoke proper implementation of the Electricity Act.
READ ALSO: How a Catholic Priest Slumped and Died While Delivering Homily in Delta Church
"My advice remains the same- decentralisation of the power sector with proper regulatory institutions at the state and the federal levels.
"The Electricity Act, as amended, is forward-looking. Of course, one thing is to have a good law, and another is to follow the law's intent.
READ ALSO: Bloodbath At Wedding: Bandits Kill 13, Abduct Many In Midnight Attack In Kaduna Community
"I remain convinced that at the level of development in Nigeria, vertical integration in the power value chain remains a valid market option for value optimization.
READ ALSO: Mother's Day: Abia Government Liaison Officer Honours Women, Says Mothers Shape Future Leaders
"NERC must step up to the plate as a regulatory institution. The Ministry of Power is not a regulatory but a policy institution; of course, it cannot be a commercial institution.
READ ALSO: Ofuji Ndị Igbo Sets 2026 Agenda, Promises Greater Community Engagement
"I believe the adopted market structure for power privatisation has been faulty since its inception. Look at the turnover of the executives in Disco. Restructuring the power market for economic efficiency is critical as the licences expire. The Disco market jurisdiction is too big not to experience diseconomies of scale.
READ ALSO: INTERESTING: I Became CEO At 19, Built Two Houses At 22 - Ka3na
"The idea of owning a share in Discos reminds me of the Joint Ventures in Nigeria's oil and gas sector. For what purpose, one may ask? Revenue enhancement for FG or energy security mantra?
"If investors can come from every corner of the globe and invest in the telecom industry, why not open up the power industry for global investors?
READ ALSO: UPDATE: Gov. Ikpeazu's Commissioner, Solomon Ogunji is dead
"Finally, the economy of Nigeria is moribund because of low energy consumption precipitated by energy availability, accessibility, affordability and adaptability. The way forward is to invoke proper implementation of the Electric Power Act to reform the power industry and restructure the electricity distribution markets under state institutional control.
READ ALSO: Nigeria hits $1.5bn in crypto trading
Also, Kunle Olubiyo, the President of Nigeria Consumer Protection Network faulted the power sector privatisation framework.
READ ALSO: Obinna Ichita Is An Idle Mind, A Rabble-Rouser, A Devil's Workshop - Chikamnayo
According to him, the Performance Agreement and Licensee Moratorium expiration would allow the government to rejig the sector.
READ ALSO: "Ikwuano Locked Down For Alex OttiÔÇØ - Monday Ubani SAN Sends Strong Message To Opposition
"The Performance Agreement & Licensees Moratorium was not given to last forever or in perpetuity.
READ ALSO: Mike Maignan transfer news: Chelsea not willing to match valuation for AC Milan goalkeeper
"It was originally designed to last for five years (2013 - 2018).
READ ALSO: How a Catholic Priest Slumped and Died While Delivering Homily in Delta Church
"Surprisingly, it was extended by an additional five years, bringing it to 10 years (2013-2023).
"In all this, no meaningful regulatory efforts were made to appraise the licensees on the grounds of Key Performance Indicators, Service Agreement, Performance Agreement or vesting Contracts.
READ ALSO: Bloodbath At Wedding: Bandits Kill 13, Abduct Many In Midnight Attack In Kaduna Community
"Key Performance Indicators are primarily based on Timeline, Actionables, Deliverables, etc.
READ ALSO: Mother's Day: Abia Government Liaison Officer Honours Women, Says Mothers Shape Future Leaders
"It is obvious that all is not well, and the beneficiaries in and out of government and the licensees will stop at nothing to ensure that nothing is done to do the needful.
READ ALSO: Ofuji Ndị Igbo Sets 2026 Agenda, Promises Greater Community Engagement
"Our efforts in the prevailing circumstances aim to arouse public conscience and consciousness.
READ ALSO: INTERESTING: I Became CEO At 19, Built Two Houses At 22 - Ka3na
"If you set out a rule for a football game, you don't implement it at will or convenience. The rules of the game are sacrosanct. The Regulatory Ecosystem has suffered unprecedented inducements and weaknesses in the power sector privatisation exercise.
"It is therefore reasonable for the government to explore this window of expiration of the 10-year moratorium of the Power Sector Privatisation Exercise so that the economy and Nigerians can breathe.
READ ALSO: UPDATE: Gov. Ikpeazu's Commissioner, Solomon Ogunji is dead
"In the final analysis, the depth of the findings of the regulatory review of the power sector privatisation exercise will determine the next line of action of the Nigerian GovernmentÔÇØ, he stated.
READ ALSO: Nigeria hits $1.5bn in crypto trading
On his part, Adetayo Adegbemle, Convener and Executive Director, PowerUp Nigeria, said the review of the power sector privatisation agreement is pivotal to repositioning the industry.
READ ALSO: Obinna Ichita Is An Idle Mind, A Rabble-Rouser, A Devil's Workshop - Chikamnayo
"Things were unclear pre-privatization, and many didn't even know what to expect. So, it's been a decade of learning for us all.
READ ALSO: "Ikwuano Locked Down For Alex OttiÔÇØ - Monday Ubani SAN Sends Strong Message To Opposition
"The interesting thing about asking for reviews is that even without a 'particular review', the sector has been evolving.
READ ALSO: Mike Maignan transfer news: Chelsea not willing to match valuation for AC Milan goalkeeper
"There are some low-hanging fruits like Metering of Consumers and all interfaces in the power sector, like Customer Enumeration and classification, like balancing the mismatch between Generation, Transmission and Distribution.
READ ALSO: How a Catholic Priest Slumped and Died While Delivering Homily in Delta Church
"All these are low-hanging fruits that should be addressed immediately and would affect the sectorÔÇØ, he said.
source
Related Stories
Bloodbath At Wedding: Bandits Kill 13, Abduct Many In Midnight Attack In Kaduna Community
"Ikwuano Locked Down For Alex OttiÔÇØ - Monday Ubani SAN Sends Strong Message To Opposition
Mother's Day: Abia Government Liaison Officer Honours Women, Says Mothers Shape Future Leaders
Why ICPC Is Prosecuting Mike Ozekhome Over a London Property Deal That Has Shaken Nigeria's Legal Circle | READ DETAILS
Ofuji Ndị Igbo Sets 2026 Agenda, Promises Greater Community Engagement
How a Catholic Priest Slumped and Died While Delivering Homily in Delta Church
""
— Faith Ukanwa