Jonathan's Route to Power!

President Goodluck Jonathan unveiled his “Roadmap for Power Sector Reform” last Thursday August 26, 2010 at the Eko Hotel and Suites in Lagos. Sitting in the hall watching proceedings, I got a feeling that I had experienced on two previous occasions in the last decade-at the dawn of the digital mobile license (GSM) auctions in 2001 and the launch of the pension reforms in Abuja in 2006. If the president and his team succeed, he will go down in history as the person who removed the last major obstacle on the path to Nigeria’s economic liberation! At the launch, Jonathan seemed to recognise what was as stake as he proclaimed an imminent “revolution” in the power sector. In the roadmap document, he declared “We have the will. This Roadmap shows the way”. We hope this bold talk will be matched with swift and effective execution!
To be fair, there are indeed signs of strong commitment by the regime to solve this power conundrum once and for all. The implementation mechanism is one such indicator. Consistent with his decision to take direct responsibility for the power ministry, President Jonathan personally chairs the Presidential Action Committee on Power (PACP) which includes the Vice-President, Secretary to Government of the Federation, Head of Service, Ministers of Finance, Petroleum Resources and National Planning, Minister of State for Power, CBN Governor and the Special Adviser on Power, Professor Barth Nnaji. Professor Nnaji heads the Presidential Task Force whose membership includes the Permanent Secretary in the Power Ministry, NNPC Group Managing Director, DG Bureau of Public Enterprises, DG Bureau of Public Procurement, Senior Special Assistant to the President on Special Projects and selected CEOs of PHCN unbundled entities amongst others.
The policy and legal underpinning of the roadmap is the 2001 National Electric Power Policy and the Electric Power Sector Reform Act 2005 (EPSRA) while the Roadmap now provides an (updated) policy and implementation approach. The fact that it took four years for the 2001 policy to become law in 2005, and another five years for effective implementation of the law to commence suggests the existence of strong vested interests determined to perpetuate the status quo. Interestingly the power sector labour unions chose to go on strike two days before the launch of the road map, in spite of the government’s release of N57billion to pay the arrears of payments demanded by them, confirming that the enemies of power reform are yet to give up! The labour unions should not expect any sympathy from Nigerians. As one post on facebook asked, “haven’t they been on strike all the while?” If Nigerians had allowed NITEL workers to stall telecommunications sector deregulation, would we have moved from 400,000 telephone lines to over 100 million in nine years? I view their strike as an act of economic (and perhaps political) sabotage!
The Roadmap will resume implementation of EPSRA by corporatizing the unbundled PHCN companies (constituting boards of directors, appointing company secretaries, auditors etc), privatising the distribution and generating entities and concessioning the transmission company which will remain a government-owned natural monopoly, but under private management and management contracts. The government will cede at least 51 percent of the equity of the generation and distribution companies to core investors, but will adopt a concession approach for the hydro power stations due to the water resources involved in their operation. At the post-launch dialogue, the BPE DG, Ms Bolanle Onagoruwa indicated an audacious intention of completing the privatisations and concessions by May 2011! I endorse the need to complete at least that part of the process next year since much of the groundwork had been done before the process was stalled in 2007.
The Roadmap clearly envisages a private-sector driven power sector. There is no sensible alternative to this approach if you note that Nigeria as at August 2010 only generates 3,804 MW of power for 150 million people contrasted with South Africa which generates 40,000 MW (50 million population) and Brazil (100,000 MW for 201 million people). Nigeria’s per capita electricity consumption is thus 3 percent of South Africa and 7 percent of Brazil! The vision 20: 2020 target of 40,000 MW according to the Roadmap requires annual investment of $3.5billion for the next ten years!!! Beyond finance, we also know our experience with value-for-money, managerial incentives and competence, and service delivery in the public sector. The cost of alternative power generation in financial and environmental terms, and the opportunity cost in terms of manufacturing output, jobs, industrialisation and quality of life of the present power deficit, is a major hindrance to development.
In order to encourage private investment, the president proposes to improve tariffs, establish a government-guaranteed bulk purchaser of electricity to carry out contract management and bulk trading until the industry develops its own settlement, accounting, managerial and governance mechanisms and government will also offer credit enhancements to simulate investment. Pricing and investment incentives will be offered for gas sector investments as well. The government seeks to improve service delivery, reduce aggregate distribution losses, and improve collection efficiency in the interim. The president also promised to immediately reconstitute the board of the regulator, Nigerian Electricity Regulatory Commission (NERC). And government will ensure speedy completion of NIPP, PHCN and IPP power projects as well as repairs of existing infrastructure. All these measures are expected to yield about 7,000MW of power by 2012 and 14,000MW by December 2013. We are holding our breath!