Revisiting power sector privatisation



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Revisiting power sector privatisation
Posted on: August 19, 2015, 08:54:32 PM

The Nigerian Electricity Regulatory Commission (NERC’s) threat to revoke the licences of some power generation companies otherwise known as gencos is hardly surprising. Although there has been noticeable improvement in electricity supply in the country in recent time, this however, cannot obscure the fact that the power generation and supply targets envisaged under the privatisation arrangement has not been met, four years after its introduction.

When the administration of former President Goodluck Jonathan succeeded in privatising the power sector with the purpose of significantly upping power generation by 2014 and beyond, it was received with cautious optimism in view of the successes of the privatised telecom sector.

However, the privatisation process was to take off in the form of the unbundling of the poorly performing PHCN from which some electricity distribution companies (discos) had emerged. A key component of the unbundling exercise was the issuance of licenses to gencos that met the stipulated criteria. Under the arrangement supervised by the Nigerian Electricity Regulatory Commission (NERC) the gencos were supposed to generate the power to be transmitted to the end users by the discos.

According to former President Goodluck Jonathan’s Roadmap on Power, the initial generation target was 5,000MW, which was expected to rise to 14,300MW by December 2013. It was also believed that when these companies came fully on stream, the country stood a chance of generating 10,000MW—20,000MW between 2013 and 2015.

But four years after, the country is still labouring to meet the initial 5000MW target. This tells an obvious story: most of the gencos have not met our expectations.

While the revocation of license may be an inevitable option to bring sanity to the privatisation process, NERC, as the regulator in tandem with the federal government, should address the problems militating against the attainment of the objectives of privatising the power sector and, if need be, chart a new direction altogether for the power sector.

We hope the new President Muhammadu Buhari regime will bring fresh perspectives and impetus to ensure the rapid expansion of the power sector, as no meaningful progress can be made in its effort to diversify the economy unless new grounds are broken in the power sector.

We believe that a new regime under a brand new ruling political party should be able to make a big difference from the previous administration which after 16 years of multibillion dollar experiments could not produce much result.

We are convinced that once we get it right, the world will rush to partner with us in developing our power sector because of the enormous market with its vast potentials for returns on investment.

Source: Vanguard


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