Progress on Power Privatisation-Repeat

*Note* This article was first published on October 24, 2012 and is repeated due to current unfortunate developments as anti-reform elements seek to undermine power sector privatisation by cancelling the Manitoba Transmission Concession. It would be a monumental tragedy if President Jonathan allows the unravelling of electricity sector transformation. (*Happily this appears to have been overtaken by events as the President has decided to affirm the Manitoba contract) President Jonathan moves closer by the week to probably his greatest legacy as Nigeria’s elected leader – completing the privatisation of the power sector. Fate perhaps has destined that it was Jonathan’s lot to transform power sector dynamics in Nigeria, as the template for what he is now executing had really been put in place in 2000/2001 at the Bureau of Public Enterprises (BPE) when the Power Policy was written. It was the same period that a Telecommunications Policy was also designed at the Bureau, except that the telecommunications one became law two years later in 2003 in form of the National Communications Commission Act. Indeed, even before the legislation was passed, the policy had been meticulously implemented starting with the 2001 digital mobile licence auctions which kicked off the transformation of the telecommunications sector in Nigeria. The power sector was, however, a totally different kettle of fish. First of all, the policy was half-heartedly implemented even by those who should have been its advocates and custodians. Indeed, the executive and legislature appeared to have entered into a conspiracy against the Nigerian people as they kept the draft bill to provide legal basis for policy implementation in the shelves of the National Assembly from 2001 till 2005 when the Electric Power Sector Reform Act (EPSRA) was eventually, and apparently reluctantly, passed. When EPSRA became law, I rejoiced hoping that perhaps the sector bureaucracy and the relevant political elite were now ready to relax their grip on the sector, but as usual, we underestimated the Nigerian capacity for self-destruction. Instead of proceeding with swift implementation of the new framework encapsulated in the new law, the then administration made a 180-degree about-turn with a new National Integrated Power Project (NIPP) which has turned out to be one of the most notable policy scandals in the Nigerian nation. NIPP was philosophically the direct opposite of the framework envisaged in EPSRA, which sought a private sector-controlled power sector, with generation and distribution sold to private investors, while transmission, which was a natural monopoly, concessioned to private managers. The law also provided for an independent regulator, the National Electricity Regulatory Commission (NERC), and unbundling of PHCN into multiple distribution and generation entities. NIPP, on the other hand, was sold (probably by enemies of the impending reform and bureaucrats and politicians who wished to award contracts!) to the government as an emergency intervention by government, which was required to invest in emergency power. Unfortunately, anyway, by the time EPSRA was enacted, the government of the day had embarked on a major national distraction called “third term”, and probably the NIPP could play some role in oiling the wheels of the third term project! It was only after the failure of the third term project that government sought a rushed completion of the privatisation and concessioning of the PHCN entities, a process that could not be concluded until late President Umaru Yar’Adua took office and (illegally) suspended EPSRA implementation. Yar’Adua and his chief adviser on energy, Rilwanu Lukman, were completely opposed to the notion of privatisation of the power sector, most probably in defence of perceived, but in my view misguided, regional interests. Even though EPSRA, a law enacted by the National Assembly and assented to by ex-President Obasanjo, remained the law of the land, Yar’Adua and Lukman disavowed it, and Lukman came up with a bogus and unrealistic alternative based on continued government control which required the public sector to invest $85 billion into the power sector. No lessons were learnt from the failures of the NIPP scheme, even as it appeared that the Yar’Adua regime actually partly orchestrated its failure by first stalling it and then deliberately misinforming the public about the amount spent. Given this tortuous background of power sector reforms since the 1999 return to civilian rule, President Jonathan deserves commendation for seeing through the subterfuges and re-instating the process of sector reform based on the framework envisaged in EPSRA. That was what the president’s Power Sector Roadmap purposed to do and, as the countdown to the end of the process looms, appears set to accomplish. Credit must also go to the former power minister, Bartholomew Nnaji, who fought tooth and nail to escape all the traps laid out by highly-placed anti-reform elements, though he was eventually consumed. We eagerly await the operational takeover of the transmission company to Manitoba of Canada who won its management contract; conclusion and handover of the privatised power generating entities; and conclusion of the process in relation to the distribution companies as well. But no one should take those who oppose power sector privatisation for granted. For them, it is not over until it is over, and they will continue to mount rearguard actions against its successful conclusion to the very end. President Jonathan and the folks at BPE and the National Council on Privatisation (NCP) must be vigilant and must sustain the admirable political will demonstrated so far in the sector.