A Review of the Nigerian Energy Industry

Severance package for 47,913 ex-PHCN workers gulps N500bn

30 November 2014, Abuja – Nigeria spent N500 billion to pay off workers of defunct Power Holding Company of Nigeria (PHCN) to allow the electricity sector privatisation run its full course, the federal government has said.
The government, through the Minister of Power, Chinedu Nebo, gave details as to how proceeds from the power privatisation exercise was spent, saying  that the sum was used to settle debts and severance benefits of workers in the power sector to ensure that the privatisation took place last year.
PHCN-Workers-protest-3011Nigeria had in 2013 earned about $2.6 billion (N442, 000,000,000) from the privatisation of PHCN successor companies. The Director General of the Bureau for Public Enterprises (BPE), Benjamin Dikki, had said that the proceed was not enough and so the government had to source for additional N45 billion from the federal treasury.
Nebo said in his address at the 2014 edition of the ministerial press briefing in Abuja that such gesture enabled the government to create the conducive environment for the private sector to invest in the power sector, having come in opposition with members of the electricity workers union who had a different view on the electricity privatisation exercise.
While urging Nigerians to be patient with the government as it tackles the challenges in the sector, the minister said that government was determined to ensure that power gets to at least 75 per cent of Nigerians by 2020.
He stressed that the government had initiated the required efforts to achieve such ambitious plan, adding that for only about 40 per cent or 68 million Nigerians to have access to electricity was an indication that the sector still requires continuous efforts.
Nebo noted that while most power plants built under the National Integrated Power Project (NIPP) were almost completed, gas supply plan had delayed their take-off. He however added that the country had made mistakes in the past by building power plants without adequate plan for sustainable gas supply.
“We must admit that we made mistakes (under previous administrations) when the plants were designed because no thoughts were given to how gas would be brought to power the plants. And getting this mistake fixed is not a one day job. But we are there now and in weeks from now about three of the plants will come on-stream,” he explained.
On the country’s transmission infrastructure, the minister explained in his presentation that approximately $2.7 billion has come the way of the Transmission Company of Nigeria (TCN) for funding of it transmission expansion projects.
The funding, he noted, consists of several support from bilateral partners in form of loans such as World Bank’s $700 million, JICA’s $200 million, African Development Bank (AfDB) with $370 million, $1.65m proceeds from the sale of National Integrated Power Project (NIPP), EXIM China’s $500 million and contractor-financed turnkey projects worth $1 billion.
The privatisation programme had been bedevilled by labour related issues. Power sector workers had vowed to cripple the exercise if their severance benefits were not taken care of before the companies were eventually transferred to their new owners.
As a result, there had been pockets of protests by workers to compel government to accede to their demands.
Subsequently, President Goodluck Jonathan earlier in the year approved N384billion for the payment of severance benefits to employees of the defunct PHCN who were disengaged from the services of the company.
This was in fulfilment of the agreement reached between the labour unions in the power sector and the Federal Government during a recent peace talk brokered by the Secretary to the Government of the Federation, Senator Pius Anyim.
Controversies about the payment of the severance package, the amount to be paid and the number of beneficiaries had been core issues hindering the privatisation of power firms in the country.

– This Day

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