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Socialist Democracy November - December 2018


1 November 2018

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FIVE YEARS AFTER: Privatisation of the power sector in Nigeria has deepened inefficiency and widespread darkness

By Chinedu Bosah, Coordinator, CARE

Fundamentally, there was no justification for the privatization of the power sector. In all ramifications, privatization has failed. We must understand that the private power companies acquired 60% shares of the generating and distributive power infrastructure that was worth over N10 trillion but only paid a rock bottom price of about N500 billion. And yet, we have not generated beyond 7,500 MW, although about 2000 MW are lost due to poor transmission and distribution facilities. Recently Punch newspaper reported that generation is around 4,000 MW, about the same as when electricity was privatized in 2013 (11/11/2018). Ideally, $1billion will generate, transmit and distribute 1000 MW of electricity. So, we have spent so much but get so little which can only be possible in a climate of corruption and brazen looting of our collective resources.

Besides, the companies that bought the power sector had no background in power sector, lack the required capital to turn around the sector, and not interested in delivering quality service to consumers. The whole privatization was a contraption to extort from the people. This is one privatization too fraudulent.

The recent disagreement amongst the players (DISCOs, Meter Asset Providers and the Ministry of Power) bothers on to how to consolidate the exploitation and which player benefits from it the most. The first problem the players ran into was that the Distribution Companies (DISCOs) were not remitting for energy transmitted to them despite massive overcharging through estimated billing and so the government has to guarantee the Generating Companies (GENCOs) for energy generated and using public funds to bolster the sector such that about N1 trillion has been invested since privatization by the government. The second problem is how to respond to the provision of prepaid meter, which has generated so much protest and agitation in many communities across the federation. Thirdly, the inability of the private power companies and the transmission company to supply stable electricity to Nigerians is the biggest of the challenges.

Estimated billing is worrisome because it is simply broad day robbery. You sell electricity without a scientific form of measurement. The DISCOS are not interested in issuing functional prepaid meters because it is far more profitable to continue the regime of estimated billing. The DISCOs will only be ready to issue prepaid meter unless the tariff is hiked so high that consumers pay so much despite poor supply and the federal government and Nigerian Electricity Regulatory Commission (NERC) are collaborating with the DISCOs to achieve this unfair pricing considering the periodic hikes in tariff without any tangible improvement in electricity supply.

The coming of Meter Assets Providers would not stop estimated billing because of the clash of interest between the DISCOs and the meter providers and the inability of poor consumers to procure such meters. The DISCOs are opposed to it because it undermines their interest while the meter providers want to get a share of the exploitation.

The Coalition for Affordable and Regular Electricity (CARE) supports the criminalization of estimated billing and has participated in the public hearing and investigative hearing at the National Assembly wherein we argued for renationalization of the sector, massive investment and democratic management. The bill could be abandoned by the capitalist law makers if pressured by the power companies.

Criminalising estimated billing will not resolve the problem without the masses challenging the fraud. Laws alone cannot force the privileged few from perpetuating illegality. It is going to be a combination of the people-oriented laws and struggles of the working masses that will end estimated billing and reposition the power sector.

The idea that it is only private sector led-economy that will develop the economy is a mirage. We are not denying the fact that the power sector was not working properly under the capitalist government, but it is not wise to throw the baby with the bath water. The failure of the state-owned companies was because the ruling elite managed NEPA/PHCN undemocratically and looted it in the interest of a privileged few at the expense of the vast majority. And this sort of management system ruined all the public corporations in all sectors of the economy. Since all the managers are appointed by and they are responsible to the self-serving ruling elite and not under democratic control by the public was the foundation of corruption and inefficiency.

These capitalist politicians will always say government has no business in business but they are in the business of awarding inflated contracts to their private sector collaborators. While not agreeing with the management tactics of Ethiopia Airline, but it is still the biggest and the most vibrant airline in African and it is 100% publicly owned. Through privatization, the ruling elite have succeeded in converting what belongs to everybody to theirs to further the exploitation of the working masses, which is legalized stealing. Since the introduction of neo-liberal policies of privatization, deregulation, the major sectors (maritime, aviation, finance, power etc.) of the economy has gone from bad to worse. The only way out is nationalization (public ownership) of the major sector of the economy, the power sector inclusive, backed with massive investment and introduction of transparent and democratic management by the working masses. This is the only way corruption and inefficiency can be eradicated.