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Omontuemhen: To cancel power privatisation is to repeal everything ever privatised


Pedro Omontuemhen

Pedro Omontuemhen

Pedro Omontuemhen is a partner and lead, Power & Utilities, PricewaterhouseCoopers, Nigeria. In this interview with ROSELINE OKERE, he spoke on the dangers of reversing the privatisation of the Nigeria’s power sector.

Just few weeks ago, some people were calling for the outright reversal of the whole power privatisation programme, what is your take on this?
I am not sure if that is viable option to do. The whole process of privatisation of the power sector was something that was published and well known by all Nigerians, supported by the World Bank, supported by development agencies. We went through, what I call beauty parade and people indicated interest; submitted forms and people won the bid.

For you to now go ahead and cancel it for whatever reasons, you would put the country in the bad light. So, if you cancel it and you call me as an external investor to invest in the sector, I will be worried because it means any contract you enter into in this country is not sacrosanct and therefore it can be cancelled. I think government should absolutely disregard that and not cancel the privatisation process. If there are issues, or problem, then you want to come back and talk to the operator to deal with them and see how you can correct whatever anomaly or challenges you are facing, but to cancel it outright that would not be right.

There is also call for the review.
Review, yes, I think there is scope for review. The government has the power to review them. We forget when we say privatisation; government is still represented on the board of the distribution companies. Government is on the board and they can influence how things are done based on the 60-40 arrangement they have with those boards. So, they can do that, total cancellation is not the right thing to do, if you cancel the power, then you have to cancel everything you have ever privatised in this country. So, where do you stop?

Some people are of the opinion that the exercise was not flawless and that government was merely looking for the highest bidder instead of looking for companies that have the capacity.
That was not right because government asked people to participate and people went with technical partners. Part of the method of selection was not just financial capacity, but technical capacity and your ability to reduce what they call technical and commercial loses. You do not come down two years down the road after people have put their sweat and power and all of their hard works and only to cancel the process, which would not be appropriate.

Three years ago, when the investors took over the power assets, there was hope that within a short time, they would turn things round, now the situation is going from bad to worse.
Do not forget that the challenge is not just distribution; there is also challenge of regeneration. You cannot give what you don’t have. If I am not able to generate the power, then I cannot supply you the power. If I supply you the power and you refuse to pay, you know that government agencies have not paid. We know there are some big men that are stealing power and if you do not pay, I cannot pay for those giving us the power. But it starts with transmission or even before transmission, you have the generation, so if I do not generate, I cannot transmit and if I do not transmit, I cannot distribute, and if you do not pay me when I distribute, I cannot pay for generation.

So it’s a chain. So, Nigerians are also guilty because they use power and they do not pay. As far they are concerned they think is still government free power.

The distributors are saying they must increase tariff and consumers are not ready to pay.
It is a challenge that if I am not getting power, why should I pay more, but the one you are getting are you paying for it? So, if you are not paying for what you are getting, then you are part of the problem. Then, I always ask, what are the alternatives? If you do not get power and you generate your own power, compare the cost of generating your own power to the cost of power from the grid, which one is cheaper?

When you do the analysis, you discover that the grid power is cheaper, so it is better to pay for the grid power even at a little bit of increase and have regular electricity. As a consumer my worry is, I want to have light all the time, but if I have it, would I be able to pay for the light? Some of us leave our homes and leave the air-conditioners on, leave the fridge on, leave the freezer on , that is power you are wasting. We need to teach customer how to be power efficient.

What are the implications of having several embedded power plant operating without licenses in the country?
There is a difference between embedded power and captive power. Any power generating company generating power over the threshold set by NERC to qualify for off grid generator should seek a license. What you may be referring to are large private and government institutions who are producing over one MW for their own use. I do not think NERC is bothered with these set of people for now, as we are more concerned about generating enough power to meet our needs. It will be unreasonable to be a large-scale captive or embedded power generator that is selling power to third parties without a license. You risk losing your investment. Licensing helps to protect the investor.

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