The beleaguered power sector cannot improve under the current privatisation arrangement, senators said yesterday.
After painting a glooming picture of the sector during yesterday’s session many senators concluded the only solution was to reverse the privatisation sale.
They spoke during a debate on overbilling of electricity consumers by Distribution Companies (DISCOs).
Senator Dino Melaye, who sponsored the motion, called for the overhauling of the sector.
Chairman Committee on Privatisation, Senator Ben Murray-Bruce (PDP, Bayelsa) said those who invested in the business thought it was like a company where they will make a lot of money.
He said they only had enough money to pay the government but lack the capacity to run a power sector company in a modern economy.
“They are technically bankrupt; unless we re-visit the entire privatisation process, unless we understand and dissect what went wrong, we will still get estimated billing.
“We have a catastrophe in our hands; there will be no light in Nigeria under the current structure.”
He added that the was “no hope in sight unless we revisit the process and try to understand what went wrong and bring in new players with capacity,” he said.
For his part, Vice chairmanCommittee on Power, Senator Bukar Mustapha (APC, Katsina) said the privatization of the power sector has failed in addressing the challenges.
He noted that Nigeria has an installed capacity of 12,522 megawatt but that the actually available megawatt is just over 4000.
“The privatisation model we have used has not worked. We are sitting on an emergency. Something has to be done drastically to address the situation, “he said.
Deputy Senate President, Senator Ike Ekweremadu, who presided over the plenary said the prayers on the motion should be stepped down pending the consideration of the report of the Senate Committee on Power on the privatization of the power sector.
Many electricity customers in Nigeria had expected instant turnaround of the facilities and quality of services described as rotten under the defunct PHCN after the privatisation over three years ago.
The federal government sold out 60 per cent stakes in about 17 power firms to private investors for US$2.525 billion and handed it over on November 1, 2013.
While the five Generation Companies (GenCos) were sold for $1.269bn, the 11 Distribution Companies (DisCos) went for $1.256bn. The Transmission Company of Nigeria (TCN) being the third in the value chain was not privatised.
Powers behind the privatised firms
After the federal government concluded the privatisation transaction, former Vice President and Chairman, National Council on Power(NCP), Namadi Sambo handed over 60 per cent control of 10 DisCos and four GenCos to the investors on November 1, 2013. Sapele Power, Afam GenCo and the Kaduna DisCo were not taken over until later due to some legal issues.
Daily Trust found that most of the top drivers of the new private-led firms have political affiliations. Some others were not in power sector business investments earlier but got expatriates as technical partners.
Geregu I GenCo
It has Chief Femi Otedola, as Chairman of Amperion Ltd, the core investor. He is also the Chairman of Forte Oil. It has BSG Resources Ltd and Shanghai Municipal Electric Power Company as its technical partners.
It planned to make a 50 per cent increase in the short to medium term to generate 600mw. However three years after, Geregu I hardly generates 400mw due to poor gas supply and other issues.
Transcorp Ughelli GenCo
Chairman of Transcorp/Woodrock Consortium, Mr Tony Elumelu acquired the 972mw capacity Ughelli Power firm at $300million. It planned an overhaul of generation capacity to over 1,070mw in five years but said it attained 600mw last year, after three years. Its last generation output was about 340mw this month due to gas supply, industry statistics revealed.
Kainji/Jebba Hydro GenCo
Col. Sani Bello (Rtd), frontier of Mainstream Energy Solutions got Kainji and Jebba GenCo for $170m. The Niger state investor, a former military administrator of Kano state, is also the chairman of MTN and Amni Oil and Gas,. It has Russian partner, RusHydro to acquire the plant. It said recently that it overhauled two turbines but it produces a combined energy of about 735mw and has 826mw capacity so far.
Niger State Government is one of the owners of the North South Power which acquired the Shiroro generation plant at $111.7million. Other partners are XS Energy Ltd, BP Investment Ltd, Urbamn Shelter Ltd, Road Nigeria Plc, China International Water Electric and China Three Gorges Corporation. They promised turbines overhaul and expansion, so far, it generates 179mw from its 300mw capacity since takeover.
Tope Sonubi and Tonye Cole of Sahara Energy Resource Nigeria is the local partner to the NEDC/Korea Electric Power Company (KEPCO). The $407m plant was to be revamped to generate 1,000mw. Currently it has 660mw capacity and has been producing only 171mw due to gas constraints.
Owned by Ambassador Shehu Malami, the company takes charge of power supply across Kogi, Abuja, Niger and Nasarawa states. Along with its partner, Copperbelt Energy Corporation (CEC) Plc, Xerxes Global Investments of Malami said the company has spent over N40bn in improving the network, metering and the billing system since it took over in 2013.
Owned by Sahelian Power (SPV) Limited and managed by Dr. Jamil I. Gwamna, the firm said it billions of naira since takeover in November 2013. It launched deployment of 73,000 meters in 2016 and said it had improved its networks but customers still have huge complaints of high estimated billing, poor electricity supply that has marred the industrial glory of its central state, Kano.
Victor Gbolade Osibodu has Virgeo Power Ltd which acquired Benin DisCo. Former Managing Director of Union Bank and wife, Mrs Funke Osibodu manages it. It promised N40bn investment in five years to turnaround it around. So far it has had the highest customer metering record among the DisCos.
Mr Charles Momoh, Chairman of the West Power and Gas alongside Dr Tunji Olowolafe, and Mr Ernest Orji fronting for it. It acquired the DisCo for $135million and promised to spend $257m to revamp it. It is unclear if half of that investment has been made in less than two years to the timeline, though it has the highest number of industrial customers in the country.
KEPCO/NEDC Consortium acquired it for $134.75, making it the only investor firm to have a stake in both the generation and distribution sections.
Ibadan and Yola DisCos
Former Head of State, Gen. Abdulsalam Abubakar and Chairman of Integrated Energy Distribution and Marketing Company acquired both the Ibadan and Yola Discos for $160million. It however declared a force majeure on Yola DisCo due to insurgency since 2014 and has been managed by government. Although with the highest customer number, Ibadan DisCo is grappling with consistent epileptic supply, and poor metering. Same goes for Yola DisCo.
Alhaji Yusuf Hamisu Abubakar is the Managing Director of the Sahelian Power SPV that acquired the Kano Disco for $102m. Abubakar was a Commissioner in Nigerian Communications Commission (NCC), a one-time Executive Secretary of the Petroleum Development Trust Fund (PTDF), and lecturer. He is also board member at Niger Insurance Company. The DisCo still grapples with poor supply and slow metering.
Sir Emeka Offor, is the Chairman of Interstate Electrics that got Enugu DisCo. He is also chairman of Chrome Energy Ltd majoring in oil and gas services, telecommunications and logistics, with an entry into power sector with the acquisition of the Disco for $106.4m.
It could not meet up with the 75% payment deadline and was earlier recommended by BPE for a disqualification.
Enugu DisCo supplying power to the five eastern states has multiple complaints of high billings, poor supply and poor metering services.
Alhaji Mahmud Yayale Ahmed is the Chairman of Jos DisCo. Like other DisCos, it promised to reduce the Aggregate Technical, Collection and Commercial (ATC&C) losses significantly to about 10 per cent in five years. However, statistics shows that it is still at over 40 per cent.
Port Harcourt DisCo
Governments of Bayelsa, Rivers, Cross River and Akwa Ibom state formed the 4Power Consortium which eventually acquired the Port Harcourt Disco.
Expectations from investors after takeover
With the takeover, VP Sambo said government expected that the new generation firms’ owners generate additional 5,000 megawatts (mw) in five years.
“This promise has been clearly captured in the Performance Agreement that the new owners have with the Bureau of Public Enterprises (BPE) which will be monitored by the regulator,” he said.
Specifically, the GenCos, and the 11 DisCos which interface with electricity users directly had a Capital Expenditure (CAPEX) and deliverable period of five years. The GenCos assured of maintaining their plants and expanding the capacity within period in their Performance Agreement.
The DisCos were expected to provide meters for most customers who are anxious to be freed from the alleged arbitrary estimated billing system where users feel they pay more than the power they consume. This was the crux of their Service Level Agreement (SLA).
The next target for the DisCos was to reduce its Aggregate Technical Commercial and Collection losses (ATC&C) which was over 50 per cent under the defunct PHCN.
The federal government which still retains 40 per cent stake in the utilities had promised to inject N100bn in form of subsidy to nursing the infant private industry. They were also to enact and enforce key market rules and stages to make the market competitive.
Through the Nigerian Electricity Regulatory Commission (NERC), government was to ensure adequate gas pricing to boost gas supply to the mostly thermal power plants.
Government’s TCN was to be revamped to wheel over 10,000mw. As at takeover, it could wheel 4,000mw. Now its managers said it can wheel 5,500mw with capacity of over 6,500mw power evacuation.
Achievements and troubles so far
The GenCos so far said they relatively expanded their generation capacity.The capacity which was around 6,000mw then had climbed to 8,500mw this year with the coming of some of the 10 National Integrated Power Projects (NIPPs).
As at takeover, power supply was at 4,000mw, today after three years, it has remained so. It occasionally climbs to 4,500mw and down to 3,500mw and at worst a complete blackout – system collapse mostly attributed to poor gas to run many GenCos.
The troubles of the power sector value chain remains unchanged, the Daily Trust reports. It has rather been compounded by the foreign exchange crisis that has diminished the capability of the operators to make significant investment, they said.