A Review of the Nigerian Energy Industry

Why Nigeria needs to succeed with electricity sector reform – UK Govt

Oscarline Onwuemenyi

24 November 2011, Sweetcrude, Abuja – The United Kingdom has tasked the Nigerian government to drive through the reform agenda in the electricity power sector, but cautioned that it would be hard to attract good investors (bidders) unless there is a resolution to outstanding labour issues.

Country Representative of the United Kingdom Department for International Development (DIFD), Mr. Richard Montgomery, noted that for years, the Nigerian people had seen their governments talk about fixing the power sector, but nothing was delivered.

Speaking at the 2011 Nigeria Energy and Power Summit (NEPS) in Abuja, he stressed that the power sector reform was the most important of Nigeria’s reforms, pointing out that failed reforms of the past had contributed to the growing rate of poverty in the country.

“As we look across the range of economic reforms currently underway: none are more important than those aimed solving the problem of this country’s chronically poor power supply. Consistently, every survey on the barriers to business, and to investment, has identified lack of reliable power supply as the biggest problem holding back development.

“For years the Nigerian people have seen their governments talk about fixing the power system, and then deliver nothing. Too many times, huge sums of money have been spent, with ordinary Nigerians left to wonder where it all went.

“That is why the international community welcomes the decision by President Jonathan to take personal responsibility for the reform of this vital sector, as soon as he took the highest office. It is why the British Government, through the Department for International Development- or DFID- has given strong support to this reform process, and will continue to do so. Real progress has been made over the last one-and –a-half years,” he said.

Montgomerry stressed that the implementation of the transition market and the submission of detailed bids for those companies being privatized was the critical phase of the reform that now beckons, he promised that the DFID would continue to offer technical assistance in building on the progress made by Nigeria through its Nigeria Infrastructure Advisory Facility.

On the role of the private sector, he stressed that the private sector involvement represents the best hope of attracting the very large investments needed if the sector is to meet the demand for power in the country.

“More private sector involvement represents the best hope for better service delivery. That is not to say that the private sector is best under all circumstances. It is absolutely crucial that the process of privatization is transparent and genuinely competitive. It is vital that companies should only be sold to bidders who are both technically and financially qualified to run them properly.”

And despite the efforts that have been made so far, he stressed that a lot still needs to be done to attract good investors, warning that emphasis must be on the quality of investments not the number of companies.

According to him, “The government must ensure that bidders have both the policy framework and the information they need in order to submit good bids. In both areas, there remains more work to be done. Some issues are well known. There can be no successful reform without the introduction of a realistic tariff for electricity; it will be hard to attract good bidders unless there is a resolution to outstanding labour issues.

“I will ask all those involved to remember every day just how much this reform matters to Nigerians. The failed reform s in the past have left millions more in poverty in this country than would have been the case had the country had better power supplied. Getting reform right this time is the key to stronger businesses, a growing economy across the country, and better incomes and more jobs in the years ahead.

“Those involved in the reform have the chance to look back one day and say they were involved in a process that will come to be seen as a true turning point in the nation’s history.”

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