18 March 2014, Abuja – The Bureau of Public Enterprises (BPE) Monday said the federal government’s decision to hold on to the transmission component of the Nigeria Electricity Supply Industry (NESI) was in good faith.
This is just as the Minister of Power, Prof. Chinedu Nebo, called on the existing operators in the power sector, notably the new owners of privatised generation and distribution companies to live up to their pledge of improving efficiency in the sector in line with their agreement with the government during the privatisation processes.
The BPE stated that the decision was primarily informed by the desire of the government to see its reforms in the sector take off unhindered by such challenges of weak and compromised transmission network with regards to the nature of commitment required for the sub-sector to grow.
The Director General of BPE, Mr. Benjamin Dikki, said yesterday at the inaugural edition of the Nigeria Power Forum in Abuja that government opted to hold on to the Transmission Company of Nigeria (TCN), which is one of the successor companies unbundled from the defunct Power Holding Company of Nigeria (PHCN) because of the level of financial investments and pay-back period required by the subsector, access to Right of Way (RoW) and the transmission cost that could impact on the final electricity tariff paid by consumers.
“People are asking why the government refused to privatise the transmission network, having privatised the generation and distribution companies that were created from the unbundling of the PHCN and I can clarify that now.
“The current state of the TCN is such that will need so much financial commitment to bring it up.
“These huge investments are also tied to longer pay-back periods or timeframe that only the government can access. Secondly, we have the issue of Right of Way and you will agree with me that there are still some areas in this country that are uncovered by the transmission network, now, it is easier for government to get through the challenges of Right of Way than private operator,” Dikki said.
He further noted: “The wheeling tariff that will cover the transmission cost incurred by TCN if privatised will mostly raise the tariff that will be paid by consumers especially when we still have low generation capacity, it will be more economical to that when we are averaging about 40,000 megawatts, the government can concession TCN because there will be more capacity to take care of the tariff.”
Meanwhile, Nebo in his opening remarks said: “This entire privatisation process is akin to changing the owner/driver of a car. The mere change of driver, on its own, does not automatically translate to an efficient performance of the car.
“We must now work together to develop the emerging electricity market with a strong, responsive yet proactive regulator and other participants meeting all obligations including their respective business plans.
“The privatisation of the PHCN legacy assets is over and that of the NIPP assets at an advance stage. The main task now is to ensure that the impact of the privatisation is felt in homes and businesses all across the country.
Clearly we have moved aggressively to fully implement the roadmap on power. The early signs of improvement have been acknowledged but are not yet evenly felt,” the minister added.
The forum, which was organised by CWC Group, seeks to provide a constructive platform for networking of a critical mass of investors that are interested in Nigeria’s power sector reform processes.
– Chineme Okafor, This Day