Lagos – There was apprehension on Thursday among power firms following President Muhammadu Buhari’s plan to review the privatisation of the power sector.
Government said the review was to enable it restructure the ownership and capacity of the assets to add value to Nigerians.
President Buhari spoke at the close of the Nigerian Economic Summit in Abuja.
He explained that the exercise would entail the restructuring of the ownership of the power plants to ensure that their owners who do not demonstrate sufficient capacity to operate the facilities cede their stakes to new investors.
Industry operators who spoke with INDEPENDENT on Thursday expressed fear over the outcome of the planned review.
The Federal Government had on November 1, 2013, privatised the successor companies of the Power Holding Company of Nigeria (PHCN).
The companies, which had been constrained by funds, claimed that they didn’t do sufficient due diligence on the assets before buying them.
The revenue shortfalls plaguing the sector has almost inched to N500 billion.
But the government had in recent years provided intervention funds for the owners of the power assets.
Represented by the Minister of State for Budget and Planning, Zainab Ahmed, Buhari also said the planned review was designed to open vista of opportunities for new investors to bring in fresh funds to make the plants more functional.
At the opening of the summit, Vice President Yemi Osinbajo turned down a proposal by one of the operators who begged the Federal Government to inject more funds in the power plants sold to private investors.
He said rather than make available fresh funds, the incumbent owners of the power companies who lacked the capacity to finance their operations should transfer their equity to fresh investors to assist them to actualise their aims.
Chairman, Transcorp Ughelli Power Limited, Tony Elumelu, had advised the Federal Government to consider refinancing the electricity distribution companies by acquiring fresh shares of the firms.
He explained that injecting fresh funds would arrest the current situation where operators of these power plants were holding the government to ransom with several demands.
FG’s Earlier Stance On Review
Minister of Power, Works, and Housing, Babatunde Fashola, had earlier said if the Federal Government would ever heed the repeated call on it to revoke the privatisation of the generation and distribution companies of defunct Power Holding Company of Nigeria (PHCN) it sold to private investors in 2013, it would also demand the refund of billions of naira paid out to over 20,000 workers of the PHCN from them.
He spoke at the third edition of the annual National Council on Power (NACOP) in Jos, capital of Plateau State, where he said the repeated call for the cancellation of the PHCN privatisation was ill-advised.
Fashola said the country had made similar mistakes in the past with its refineries only to end up being worse off in terms of importation of petroleum products and expenses on petrol subsidy.
He stressed that the only reasonable request to make of the government in this regard would be to continue to ask for an improvement in the sector, which he claimed the government was already doing through the Power Sector Recovery Programme (PSRP).
According to the Bureau of Public Enterprises (BPE), which was responsible for the sales of the PHCN assets then, the country earned about $2 billion from the exercise, and at the same time paid about N118 billion to its workers as severance package.
Fashola said: “Let me set the context by once again reminding all of us that the power sector has been privatised and is largely in the hands of the private sector.
“Therefore the work that needs to be done is largely the responsibility of the private sector.
“Our roles in this regard are well set out in the Electric Power Sector Reform Act 2005 pursuant to which the privatisation of the power sector took place.
“That law, which I urge everybody to read, clearly sets out my role as minister, which is to administer the law in section 100.
“As we are all aware, there have been comments about how effective privatisation has been in the power sector and some people have called for its cancellation which I disagree with.”
He also stated that four years of the power sector privatisation in operation was not enough to judge its success.
He argued that for over 60 years, the country’s power sector had remained quite inefficient and so could not attain efficiency within four years of privatisation.
Fashola further clarified government’s responsibilities in the sector, saying, “Our role as governmental institutions at federal and state levels is to implement the laws, enunciate policies, and take actions that help the private sector play its part effectively.”
Voices Against Privatisation
Among prominent Nigerians who picked holes in the privatisation were Alhaji Aliko Dangote and labour unions in the country.
Foremost human rights activist, Femi Falana, advised the Federal Government to sell the remaining 40 percent shares in electricity companies to state governments, trade unions and other organised groups in view of the lacklustre performance of the sector since its privatisation.
Chris Okonkwo, President-General, Senior Staff Association of Electricity and Allied Companies (SSAEAC), said privatisation of the power sector by the Federal Government was a mistake.
Okonkwo also accused the Distribution Companies (DISCOs) of fraud against Nigerians by holding on 100 percent for 60 percent of shares of the DISCOs bought by them.
The SSAEAC president who described privatisation of DISCOs as trial of policy, stressed that government never got to the right point to have done it.