Dogara seeks review of power privatisation over N309b bond

House of Representatives Speaker, Yakubu Dogara has canvassed a rethink of Federal Government policy to privatise power companies in the country.
Speaking during a public hearing on the need to halt plans to raise a Federal Government- Secured Bond of N309 billion to finance the shortfall in the Nigerian Electricity Market (NEM), he said it was necessary to take a holistic look at the ongoing privatisation policy of the government.

Lawmakers have been troubled by the desire by government to raise the bond for NEM. According to Dogara, “For the benefit of the average Nigerian, a market shortfall is defined as the invoiced amount of electricity transmitted to the distribution companies (DisCos) in any given month less the amount remitted by the DisCos to pay the market participants for electricity supplied.”

Dogara, who was represented by the House Minority Whip, Hon. Yakubu Barde, noted that the whole essence of Federal Government embarking on the privatisation of the defunct Power Holding Company of Nigeria (PHCN) and the electric power sector reform programme was to bring about efficiency to the Nigerian Electricity Supply Industry (NESI).

“Unfortunately, since the unbundling of PHCN and transfer of the businesses to the privately-operated Successor Companies on November 1, 2013, we have not had a good report from the Electricity Market,” Dogara said.

He maintained that the statistics show an abysmal situation of things and if this trend continues, there may, need to embark on a fundamental re-thinking of the privatisation process in Nigeria.

“Duration of uninterrupted supply is average six to eight hours per day. Metering of customers is dismal. Crazy estimated bills are used to exploit consumers. Generation capacity has not improved; yet, tariffs were increased in February 2016,” he said.

He noted too that in spite of all these, there were reports that the cumulative market shortfall had risen to over N700 billion as of date.”This trend escalates at the rate of about N25.6 billion monthly from Nigerian Bulk Electricity Trading Company Plc (NBET) August 2016 Electricity Market Payment Report.

“Our concerns in the House of Representatives are, which should come first, stopping the bleeding of the market revenue by putting controls in place or raising a Bond to cover the incessant shortfall?

“Why is this Bond secured by the Federal Government in a privatised market operated by private entities?”What is the performance of the N213 billion Stabilisation Facility availed the operators by the Central Bank of Nigeria in March 2015?

“What is the role of the Nigerian Electricity Regulatory Commission (NERC) in this process? Who will bear the cost of the facility, consumers or the operators? How would this impact the electricity tariff.

“My expectation is that all these issues would be brought to the fore at this Investigative Hearing and Nigerians will be well enlightened on what is going on in our Electricity Market,” he said.

He urged members of the Committee on Power to follow through the deliberations and report back to members on time.In his comments, Minister of Power, Works and Housing, Babatunde Fashola, said the quest to resolve the payment gap in the NESI that threatened the long term sustainment and development of the NESI led to the work NBET had done before the House halted it.

The Minister, represented by Louis Edozien, Permanent Secretary, said that the bond combined with promissory note would greatly help the sector to provide funding, thus resolving significant proportion of the current liquidity challenge in the sector.

“It would be in the public interest if the house supports NBET to complete the design of the product and expedite its implementation,” he said. In his remarks, Chairman, House Committee on Power, Daniel Asuquo, said the committee recognised that it was in an effort to stem the tide that the Federal Ministry of Power and NBET came up with the concept of raising the FG secured bond.

“It is pertinent to note that we wonder what role the Nigerian Electricity Regulatory Company is playing in this whole process.”If N309 billion is injected into the market today, it would only reduce the exposure from N700 billion to N391 billion.”According NBET’s August 2016, published electricity market payment report, the bleeding would continue at the rate of N25.6 billion monthly.

“Does this solve the primary bleeding of the electricity market?”We in the National Assembly, as representatives of the people who have elected us into office and bound to ask equations and we are attentive to be enlightened.

“In fulfilling our doctrine of transparency, we are hosting this investigative hearing in public so that we can all appraise the rationale behind the borrowing.

“We are keen on knowing how and when this Federal Government secured bond would be structured, repayment plan, repayment source and over what period, “he said.