The proposed sale of power plants

Controversy surrounding the proposed sale by the Federal Government of the five National Integrated Power Projects (NIPP) assets should not be surprising, considering the obvious failure of the privatisation exercise of power distribution aspects of the sector, for which Nigerians are still suffering. The question that readily comes to mind is whether or not the latest proposal will not go the way of its predecessor. Will government observe due diligence? Will the exercise not succumb to corrupt influence? Are the intending buyers really qualified or are they digging for treasure? Will there be adequate protection of the public interest? While many more of these questions beg for answers, government will still need to assure the citizens that the proposed sale will not be tantamount to stripping of public assets.

Until these posers are resolved satisfactorily, the controversy will linger, and the proposal itself will appear to be wrongheaded; like a step in the wrong direction. It is indeed possible that those angling to sell or buy Nigeria’s cherished national assets don’t believe that there is a future for the country. The power plants are cherished national possessions, which should not be hurriedly handed to private concerns unless adequate precaution is taken to preserve the interest of the ordinary Nigerians, else the sale will be tantamount to selling Nigeria, which is unacceptable. The vehement opposition of consumer rights groups to the idea is to be understood from this perspective. There is need, therefore, for caution in going forward.

Speaking against the proposal, President of the Nigeria Consumer Protection Network (NCPN), Kola Olubiyo argued that the proposed sale of the power plants by the Bureau of Public Enterprises (BPE), poses a national security risk. He noted in a statement in Abuja that the planned disposal of the plants under the Niger Delta Power Holding Company (NDPHC), points to national assets stripping at a time President Muhammadu Buhari’s administration is winding down. The move is suspicious.

Reports indicate that the Federal Government through the Bureau of Public Enterprises has commenced due diligence assessment of the 16 pre-qualified investors shortlisted for the acquisition of the five power plants.

The move to sell the power plants is coming against the backdrop of the House of Representatives’ directive to the BPE to halt the sale of the plants located in Calabar, Cross River State; Ihorbor, Edo State; Olorunsogbo, Ogun State; Omotosho, Ondo State and Geregu, Kogi State. This followed a motion of urgent public importance moved by the Chairman of the House Committee on Power, Magaji  Aliyu (APC, Jigawa) who, about three months ago, said the power assets belonged to the three tiers of government with the Federal Government owning 47 per cent while states and local governments own 53 per cent. Surely it is important to address this point. He added that the Federal Government was adamant about selling the assets to fund the deficit in the budget without the consent of the other tiers of government and others.

The Director-General, BPE, Alex Okoh, had outlined 16 pre-qualified bidders to include Mota-Engil Nig; Amperion Power; Sifax Energy; Pacific Energy Company Ltd and Globeleq Africa Limited. Others are Geoplex Drillteq Limited; Asfalizo Acquisition Ltd; Launderhill PJB; Lauderhill Tata; Unicorn Power Genco Ltd; Connaught Energy Services Ltd; ENL Consortium Ltd; Ardova Plc; Central Electric and Utilities Ltd; North South Power Consortium and Quantum Megawatt Consortium. According to the BPE, the next stage of the process is the bid opening; however, it noted that government was currently carrying out due diligence on the 16 pre-qualified companies.

Speaking under the aegis of the NCPN, power consumers described plans by the BPE to sell the power plants as “miscalculated action that has national security risks’, noting that the Special House of Representatives Joint Committees should meet to commence inquiry into the matter and urged the lawmakers to halt the planned sale.

Obviously the Federal Government needs to be careful in order not to plunge into another round of failed power assets privatisation. The country has gone through this road before with disastrous results as seen in the shoddy operation of the power generating companies (Gencos) and power distribution companies (Discos). At the moment, there is no guarantee that those companies pre-qualified to acquire the NIPP assets are qualified. Government must put in place a machinery to remove all doubts on the credibility of the proposed buyers, if the assets must be sold. The problem is that Nigerians do not trust government to the right thing, and this position is buttressed by current state of the power sector. At this stage, the country cannot afford to repeat the same mistake made on the Gencos and Discos.

There are lots of problems within the power sector. On one hand, power is generated without being distributed. As far as the issue of power supply is concerned, Nigerians have been shortchanged. Most consumers are still not metered; instead, they are fraudulently charged using estimated billing. Government directives are not obeyed by the operating companies, years after 13 power plants were privatised by the Jonathan administration in 2013.

It bears repeating that if the power plants must be sold, government should follow due process and carry out proper due diligence. The BPE has a critical role to play in the entire process. It is pertinent to ask what guarantee is there that the action will work. And why is privatisation not working in Nigeria? The reason, of course, is not far-fetched and has to do with embedded corruption in the system, failure of government institutions to pay electricity bills plus the attendant huge debts being owed the Disco. Are government institutions ready to start paying now?

While it is true that the power sector has not fared well under public administration, its performance has not markedly improved under private guidance. This calls for closer scrutiny and self examination by government, given that other climes manage their power sector apparently seamlessly. A public-private partnership is needed in the power sector to provide required expertise, capital and an enabling environment; but government must be upright in the processes, and be seen to be so forthright.