Cancel power privatization now, Senate tells FG

Written by on May 20, 2020

Following unending epileptic electricity supply in the country, the Senate yesterday condemned the power sector, and asked the Federal Government to urgently cancel the entire privatization process carried out during former President Goodluck Jonathan’s administration.

It also warned that Nigeria might not have adequate power supply in the next years, if the privatisation was not cancelled, and urged the Federal Government to immediately suspend the planned electricity tariff increase due to take effect in July.

The Red Chamber also called on government, through the Ministry of Finance, to include the Nigeria Electric Power Sector in the disbursement of proposed N1.7trillon COVID-19 intervention fund.
Speaking yesterday during discussions on a motion, titled “Power Sector Recovery Plan and the Impact of COVID-19 Pandemic,” President of the Senate, Senator Ahmad Lawan, said it is disheartening that with huge sums of money spent so far on the power sector, results are not being achieved.

Lawan, who said the the Senate committee will investigate trillions spent so far to reinvigorate the power sector without commensurate results, said: “We gave power to them (power generation and distribution companies) and they still come to the public to ask for funds.

“I think it’s time for Nigeria to consider reversing privatization of the power sector or they should just cancel the entire privatization process completely. If we leave it, we may not have power for another ten years.”

DISCOs lack capacity “We expected efficiency and something better. DISCOs have no capacity to supply us power. We shouldn’t continue to give them money. They’re private businesses; we need to review this whole thing. Something is wrong.

“Our committee needs to investigate trillions spent. That’s a lot of money. Try and find out what has happened so far. Government needs to look at this whole thing. Maybe government is not doing its own part.

“We need to find out. There is lack of capital. We feel very bad. There is no electricity and the country is suffering.”

Consequently, the Senate mandated the Committee on Power, led by Senator Gabriel Suswam (PDP, Benue North-East), to investigate all Federal Government interventions in the power sector since privatization of the sector to date, with a view to ascertaining adequacy of such interventions and desired impact, and report back within four weeks.

The Senate also asked its Committee on Power to investigate all market participants in the power value chain and ascertain the level of corporate governance compliance in the Nigerian Electricity Industry and also report back within four weeks.

The resolutions yesterday were sequel to the adoption of a motion on Power Sector Recovery Plan and Impact of COVID-19 Pandemic, sponsored by Senator Gabriel Suswam.

Senate seeks forex access for power sector The Upper Chamber commended the Federal Government for the proactive initiative to establish the N1.7trillion COVID-19 crisis intervention fund to cater for critical issues on effective management of COVID -19.

It also urged the Central Bank of Nigeria, CBN to allow operators in the power sector access to foreign exchange for procurement of equipment and materials as it was done in the aviation sector and oil industry.

The Senate equally asked the Federal Government to consider additional tariff support to cushion the effect of rate shock over a fixed period to allow time required for TCN and DISCOs to access funds to implement performance improvement investments that will support increased tariffs of certain classes of customers, especially during the pandemic.

The Senate urged the Federal Government to include the Nigerian Electric Power Sector in the disbursement of the proposed N500bn COVlD-19 Crisis Intervention Fund in order to ameliorate the financial hazards and operational challenges, such as enumeration of metering of actual consumers and recent problem arising from the pandemic.

Earlier in his presentation, Senator Suswam noted that stable and uninterrupted power supply is also a critical factor in the management of COVID-19 patients at designated isolation and treatment centres across the country.

According to him, uninterrupted electricity is also key in the proposed upgrade of health facilities and in the manufacturing sectors of the economy.

He noted that if the negative impact of COVID-19 on the sector continues without any emergency financial intervention from the Federal Government, DISCOs, might not meet their remittance obligations to the electricity market.

He also said the financial obligations of Generating Companies, GENCOs, and gas-to-power suppliers would also be negatively impacted.

‘Take care not to upset investors’

Reacting to the development yesterday, Executive Director, Spaces for Change, Victoria Ibezim-Ohaeri, said: “It is true that trillions have been spent to reinvigorate the power sector without commensurate results. Taking steps to investigate, understand and address the factors militating against the success of power sector reforms, is also a step in the right direction.

“However, care must be taken to avoid distortions in investor confidence in the process. In other words, cancelling the entire privatization program abruptly is not the kind of decision to be made in haste. The plethora of laws, regulations and standards guiding the power sector reforms cannot be overlooked, unless repealed.

“The oversight actions proposed by NASS, though necessary, must be taken with care to ensure that political decisions do not cause business uncertainty and financial instability, which could potentially spill over into the macro economy.’’

Similarly, a Port Harcourt-based energy analyst, Dr. Bala Zaka, said: “The move to take over the privatized assets would not succeed because the privatization was based on many laws. It would be difficult to cancel the exercise without visiting the laws.

“The Federal Government made a mistake to place the assets at the bosom of the companies without doing appropriate work to establish their competencies. Much emphasis seems to have been placed on financial competencies than technical, which explain why much progress has not been made over the years.”



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