National Development Strategy Series: 16 years of Democracy (3)

THE Power Supply and Electricity Reform Revolution Once upon a time there was a company called the National Electricity Power Authority, NEPA for short and it had a monopoly on generation, transmission and distribution of power in Nigeria. It also had the entire power value chain in its grasp, so if you were an engineer, or a supplier of cables, meters or insulators there was only one customer and that was NEPA. In addition if you needed power for your business, your school, your shopping center, or even your industry there was only one supplier and that was NEPA. Everyone was forced to do business with NEPA Private and Government and everyone that wanted to work or support the industry had to do it through NEPA or you had no business selling anything that was needed in the power value chain. So it happened that NEPA became large, very large and in charge. The staff of NEPA though they were brilliant engineers for the most part their leadership was inefficient and corrupt. And in the end they built a very clumsy and ineffective institution that held an entire Nation to ransom for almost 50 years.  It was a nightmare trying to wrestle power from the Lords at NEPA, many Presidents had tried it and gave up. They will remind you of the law that vests power in NEPA as an operating company as well as a regulator. They will say it had to be that way and if you tried to change it the Power industry will collapse and Nigeria will be finished. This is what all our Presidents were told up until 1999 when we got a new democracy and a new way of doing things. Our new President Obasanjo wanted to tackle the Power crisis in his first term. He even appointed a very young Liyel Imoke as his Adviser to make sense out of the mess that had become the Nigerian Power Situation but the same road blocks that were presented to the Presidents before him were once again given to President Obasanjo and he was told that he would be wasting his time if he wanted to take on the Power mafia in NEPA, he was told to look elsewhere for reforms and to leave NEPA alone.  

NEPA in the early days The Company NEPA held so much power and control; over the lives of Nigerians but they did not know, or maybe they did but did not care. This company would decide when it pleased them to supply power to certain parts of the Country and to shut down other parts of the country when it pleased them. The place was run as a market woman would run her open market store, and I sometimes believe that the market woman would have done a better job. The waste and destruction of NEPA property was legionary. In Lagos almost every community has been a victim of the so called “Transformer Scam”. Where some officials of the Old NEPA would come at night and steal the transformer on your street and then when the residents wake up to the fact that there is no light because of a missing transformer they will make as much noise and reports as possible to the local NEPA office. After weeks and weeks of waiting and no work is done, one NEPA official will show up and meet the leaders of the neighborhood and say that the NEPA store room is empty so that new transformers will not be bought until the next budget circle which could take as long as nine months to  a year. You will get really scared at this point that you will have to be without light for almost a year. After the NEPA official let the scary thought sink in for a few moments then he would offer you a solution. He could go the Alaba Market and buy a new transformer and have your street and neighborhood back with electricity in three days. Wow! you would think what a choice, three days to one year.

The choice is a no brainer. What do we need to do to get the transformer here installed and working in three days you would ask. Then the scam comes in, he would be buying the Transformer on the open market and so you and your neighbors will have to contribute towards it. And you would also have to contribute towards the installation cost as well as NEPA is not paying for their work and their time on this project and so on. By the time he is done with you and your neighbors you will be out of the pocket a few million naira and he will then move on to the next community or neighborhood. This was the NEPA practice all over Nigeria and the people suffered in silence. In addition, I personally witnessed an event which shook my confidence in Nigeria for many years as a young man. I was well known to Alhaji Rilwanu Lukeman and he had promised me an opportunity to do business with NEPA, this was way back when he served as the Chairman of NEPA and one Hamza was its Managing Director. Anyway he gave me a letter to the MD of NEPA and I was excited I was going to do business with the Almighty NEPA. My mind worked in several directions, would I take on a cleaning contract or would I be asked to supply helmets for the field engineers. The day I got to the MD’s office was LPO day. LPO means the Local Purchase Order, this was the day that NEPA gave out its purchase orders to all its contractors. So I had to wait in the MD’s waiting room for a few hours. While I was there I witnessed what I felt was the real reason NEPA would never work. A very long line of men showed up to collect their contracts and Purchase Orders, I counted them and there were more than a hundred of them. However, every single one of them was dressed in flowing babariga or agbada. And out of the hundred or so only three of them could sign their names to collect the LPOs. The others, all ninety seven of them had to use thumb print to collect their LPOs. I felt a cold chill go down my spine. This was the real reason that NEPA could not work as the people that are supplying NEPA its inputs are illiterates. And NEPA is a highly technical institution, so why was the MD doing business with people who could not even sign their own name and had to use thumb print? I felt so sad for Nigeria at this point, that I did not even hear a word the Managing Director, Hamza was saying when I was finally ushered into his office. All I could think of was that I had to get out of this country as our Leaders were not a serious set of people. I left Nigeria, not long after that experience and as I predicted NEPA went from bad to worst. 

POWER REFORM The great news is, we got a democracy in 1999, and our President choose to take on the mafia at NEPA. They told him that he could not separate the regulation of the sector from the operations because NEPA had a law that set it up. So guess what he changed the law. The new law which took five years to pass at the National Assembly eventually broke the back of NEPA, created a new regulator, the Nigeria Electricity Regulatory Commission (NERC), and vested the former operations of NEPA into a new company called the Power Holding Company of Nigeria, PHCN. It also allowed for the private ownership and operatorship of Power Generating plants. The President also launched the National Integrated Power Strategy which gave birth to the Niger Delta Power Holding Company, and funded the establishment of eight new power generation plants. No new plant had been built in Nigeria in 20 years prior to that. The foundation had been laid with this new law and the industry started to bubble. However just as we were going to go into over drive, President Yar’adua came in and some of his overzealous Advisers convinced him to halt the Power reform. President Yar’adua was our President so I cannot blame his advisers for this. The fact is that as President he took the decision. And he set up all kinds of probes and counter probes to see what was done with the investment in Power President Obasanjo was making. In the end Nigeria lost billions and we lost three years. As while probes were going on, power plants were arriving at the ports and going unclaimed as the companies that ordered them were not getting paid by Government and in many cases their CEOs were running from one security agency to another. And in the confusion that followed the Federal House of Representatives led by one Nduli Elumelu decided to add kerosene to the fire. The House Committee on Power launched its own probe into the Power reform of President Obasanjo and their probe only served to further delay the process even further. 

President Jonathan to the Rescue At the time President Goodluck Jonathan become President the power reform had suffered a deadly blow. Newly purchased Power Plants were rusting away at the ports, and Nigeria was now owing twice as much as we agreed to pay the initial contractors as the demurrage charges being charged the suppliers and for which these charges were passed on to Government were killing. In addition there was no additional planning done after the Yar’adua probes were launched so many of the sites for the new Power plants were not fully ready to accept the new equipment. There were to be gas pipe lines built to these sites, this was not done as everyone was focused on the probes. The concrete bases for the very heavy power generating plants were not built at any of the sites. The necessary recruiting of technical personnel had not been done for the management and maintenance of the Plants. In fact the entire Power reform was in a mess. 

President Goodluck Jonathan took the bull by its horns and got things back up and running. He appointed Prof Bart Nnaji as his Adviser on Power and later elevated him to the substantive Minister for Power. And he set up a Strategic Power Reform Task Force with the sole agenda of developing a new Power Reform road map and plan which will take up the most productive elements of the Obasanjo plan and provide new innovative solutions to areas that were not covered. In February of 2010, at the Eko Hotel in Lagos President Jonathan launched a new and revised Power Reform Road Map which would revolutionize the Power and electricity industry. He said it would be built on the private sector and it would be driven by the Private sector investment in all areas of the Power and Electricity Industry value chain including Generation, Transmission and this time he included Distribution. He promised that even though it had been very hard for past regimes to privatize NEPA which was now the PHCN, he was going to get this done, and he even gave himself deadlines. One of the most important aspects of the Power Reform agenda of President Goodluck Jonathan was that he was able to put the PHCN into the hands of private investors. It was not easy as the unions and the established interests did not want to see this happen. They kicked and screamed and blackmailed and in the end the unions were able to extract over six hundred billion naira from Nigeria in terms of severance and other entitlements as a price for letting PHCN go. We paid the price and for good reason, we had to move on, and we couldn’t build a 21st century economy without a clear strategy for Power. And as God would have it our President understood this more than anybody.