A Review of the Nigerian Energy Industry

Electricity in private hands

Power Transmission11 November 2013, Lagos – Friday, November 1, 2013 will go down in the history of electric power development in Nigeria as the day when the private sector effectively took over the functions of providing electricity to Nigerians.

It was a culmination of a process that took all of eight years after it was conclusively ascertained that government machinery can never succeed in providing Nigerians with reliable power supply.

Apart from the inefficiency and corruption for which the defunct National Electric Power Authority (NEPA) and the now equally defunct Power Holding Company of Nigeria (PHCN) were renowned, state control of electricity, despite the mobilisation of over 2.5 trillion Naira ($16 billion) in building new power plants, could not advance the quantum of power production beyond the peak of 4,750 megawatts.

The process of privatisation was painstaking, with a seemingly transparent and credible bidding process for the six unbundled PHCN companies consisting of six generating companies (GENCOS) and eleven distribution companies (DISCOS) sold to new private owners for about 400 billion Naira ($2.5 billion). It also involved the resolution of very difficult Labour issues, in which 47,000 workers of the defunct PHCN had to be paid off with about 384 billion Naira ($2.4b).

With power now effectively in the hands of the private sector, the hope of Nigerians is that the future of more efficient power supply in Nigeria is now considerably brighter, as the new investors are expected to bring in about N400 billion in the short run, with the long term prospects almost limitless if things go the way our experience in the telecom sector has shown.

Nigerians are now looking forward to a new era of healthy competition and service delivery which puts the customer first. With private supply of electricity, efficiency is expected to improve, and the virgin sectors of the economy that remain locked in will be opened up to create job opportunities and put Nigeria on the path to sustainable development.

This new era will come with its share of birth pangs. Consumers will have to be reoriented to a new habit of paying economic costs for power supply and maintaining the discipline required to make the new system work for everybody. The Nigerian Electricity Regulation Council (NERC) must stand up and ensure that both the service providers and the public are protected to bring the new approach to power supply in Nigeria to fruition.

It calls for responsible conduct by the new owners, the consuming public, the Labour unions and the governments at various levels.

We hope that very soon, all the benefits of private enterprise will trigger a major rush of investment that will put the days of darkness in Nigeria behind us for good.

– Vanguard

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