Govt Should Let Go It’s Equity
Barrister Kunle Kola is the President of the Nigerian Consumers Protection Network and also President of the Network for Energy Reform. He was a member of the National Technical Investigative Panel on Nigeria Power System Collapse. In this interview with EMEKA ANUFORO, he speaks on the options left to government in current calls for the reversal of the electricity privatization programme.
What is your position on the calls for the review, cancellation or reversal of the privatisation?
The global understanding of the term ‘investment’, particularly when it has to do with inflow of Foreign Direct Investment (FDI), is for the investors to produce something different from what it used to be. We have expected that these investors would have invested substantial funds, but they have not demonstrated the capability and capacity to drive the sector as a private sector driven venture. We expected them to have brought in foreign direct investment into the network. What we have seen thus far is that they went on borrowing money from local banks and in most cases, in dollars. Most banks have corresponding banks or partnership or understanding with foreign banks. For instance, if the exchange rate is in single digit in the US and its 20-30 percent in Sub-Sahara Africa, they will bring the money for whoever is ready to borrow. The more the dollar increases the more the loan they are taking will increase. When you talk about technical investment, when you talk about investments in infrastructure; and when you talk about investment in metering and basic thresholds, they have not done that. The technical partners that some of the firms engaged with as part of the privatisation process were merely a marriage of convenience. It was skewed in the most fraudulent manner and most of them have had their way. They are not really there anymore.
Before the privatisation, the expertise that was put together to assess the liabilities indicated that aggregate of liability to the market was about 40 percent. A company that was engaged by the distribution companies to do midterm observed that it had since moved from 40 per cent to 80 per cent. What it means is that instead of declaring profit, they are talking about increased liabilities. They have not declared profit to government. The bidding process itself was done in a manner that many people declared it not transparent enough. The powerful influence of the promoters was strong. Edo State, for instance, is getting between 45-50 megawatts, which cannot take anybody anyway.
We need to address issues beyond the glamour and monthly meetings of the sector. The 5000 megawatts that was currently bandied about cannot take any country anywhere, considering our population, to the Promised Land. We cannot get there soon. It has been established that government does not have the desire to reverse the privatisation process. There is so much interest.
For instance, Edo and Delta State Governments bided for the Benin Electricity Distribution Company. They had the resources to invest, but government agents had their minds on whom to sell to.
We have been hoodwinked as a nation. We have been put in the hands of bourgeois who are in and out of government. There is nothing that anybody would do to make government reverse the process. Government is not willing to reverse. We are talking about the interests of promoters who are strong politicians. They have the resources. It is an elitist class system and tyranny against the majority of Nigerians.
It is a precarious situation, the same way the Ikeja Electricity Distribution Company spoke of plans to suspend metering because of the dollar to naira exchange rate. We may not get there yet and Nigerians are crying. We have huge power poverty in Nigeria, going by a recent survey in rural access to energy globally.
What we are saying now is that the first step government should take is to invest its equity. Let it run strictly as business. The gas operators have a huge indebtedness from the generation companies. The DISCOs are receiving power from generation companies and they are not paying. The gas providers are not being paid. Government should let go of its equity in the value chain of the power sector. Government should now move to off grid rural electrification in a build, own and transfer model in different clusters across the country.
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