GenCos, DisCos demand N1.2trn bail-out or Senate calls for declaration of state of emergency in power sector

The harrowing experience Nigerians are currently passing through in electricity supply may be aggravated should Federal Government fail to come to the aid of power generating companies (Gencos) and distributing companies (Discos) with a bailout of N1.2 trillion.

This is as the Senate called on the Federal Government to declare a state of emergency in the sector as it described the 2013 privatisation of the sector by the Jonathan administration as fraudulent.

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An expert in the energy sector and Country Representative of Energy Market and Rate Consultants, Mrs. Rahila Thomas, painted the gloomy picture on Monday while delivering a keynote address at a one day roundtable discussion organised by the Senate at the Nigerian Air Force Conference Centre Abuja.

She said government needs to urgently inject N1.23 trillion into the sector to save investors in the Gencos and Discos from folding up business because the sector is bedeviled with myriad of problems which had put investors into huge debts and broken down trust in the entire value chain.

“Issues bedevilling the power industry in Nigeria started with fatal flaws inherent in the 2013 privatisation anchored on wrong assumptions inhibiting investors from taking  care of their loses let alone, delivering on the required electricity supply in the country.

“The fatal flaws or wrong assumptions upon which the privatisation was carried out in 2013 has to do with generation capacity government put at 6,500 megawatts but later turned out to be 3,453 megawatts, assumptions in the loss for every Naira of kilowatts put at 21 kobo but later turned out to be 52 kobo loss per every Naira of kilowatts with attendant unanticipated loses totalling far above a trillion Naira now,” she said.

She lamented further that unbearable loss in the sector by investors arose from subsidies promised on yearly basis by government on the 21 kobo loss per one naira kilowatts which later increased to 52 kobo loss per naira kilowatts without required subsidy payments by government.

“Even the N600 billion reported to have been put on the table for the sector this year, has not been accessed by investors 21 days to the end of the year.`

“Another factor is that of Forex because exchange rate of a Naira to a US dollar as at November 2013 when the sector was privatised was N157 but now between N350 to N360.

“Liquidity is the key problem in the sector due to unattractive investments in the Industry “, she added.

She however said that the country has the capacity to improve the generation capacity from the 4,000 megawatts it is now to the projected 7,000, 11,000 and 25,000 megawatts in years to come if the prevailing challenges are adequately addressed.

President of the Senate, Ahmad Lawan, while declaring the round table open, called on the Executive to, as a matter of urgency, declare a state of emergency in the power sector to overcome the legion of problems stalling steady power supply in Nigeria.

The Senate President said the privatisation of the power sector in 2005 and 2013 was a grand scheme conceived with the intention to defraud Nigeria.

He said: “For me, if there’s any sector of our economy that is so important and yet so challenged, it is the power sector. I believe that this is a sector that needs a declaration of emergency.

“This is an opportunity for us in this round-table to exhaustively discuss not only the problems of the power sector in Nigeria, but the solutions and way forward.

“The truth is that we all know what is wrong. What we really need to do is to have the political will to take on the challenges generally.

“From the electricity power reform of 2005 to the privatisation of Gencos and Discos and to what is happening today, we know that everything is fraud. If we play the ostrich, in the next ten years we will be talking about the same things.

“I think the time has come for us to have courage. I want to remind us, that we have signed the African Continental Free Trade Agreement. What will give us an edge is to have a competitive environment.

“Our industries and businesses must be able to produce things that can compete favourably with products produced in other countries in Africa. We are not in that position today, and we all know the consequences of that.

“Even our citizens, who have capital, will rather relocate to Ghana, produce whatever they want and bring to Nigeria to sell. Where does that leave our country? No employment opportunities; Nigeria becomes a dumping ground.”

The Senate President, therefore, called for a review of the privatisation exercise undertaken by the Goodluck Jonathan administration which led to a takeover of the power sector by private Generating Companies (Gencos) and Distribution Companies (Discos).

He added that the National Assembly would make significant contribution to the reform of the power sector through enabling legislation required to turn around the fortunes of power generation and distribution in Nigeria.

“If we went wrong with our privatisation of Gencos and Discos, the time has come to look into it.

“Whatever we have to do to review these things, we should do. We must do it in the interest of the people of this country. We must admit there was something done wrong.

“This round-table actually is an idea of the Senate, that we should come together to talk among ourselves. Ours is to provide legislative interventions, but we are also part of government.

“Therefore, whatever that is required to support the executive arm of government to turn-around this sector, in fact we are more than prepared to do so through legislation.

“If we are going to amend the power sector reform, we are prepared to do that, and expeditiously. Tell us where the issues are, because we can’t afford to delay any action to make the power sector of this country perform.

“In the sixties we were comparing ourselves with Indonesia, Malaysia and the rest, now we started comparing with Ghana, Togo. With all due respect, that tells us we are not making progress where other countries are.”

“This round-table is an opportunity to come up with measurable roadmaps, because we are not going to leave the implementation to the executive alone. We want to participate in every inch of the way.

“Every bit of what is to be done; we want to be part of it, so that we can contribute meaningfully to take the power sector to the next level.

“It is really disheartening that we are still talking about 4,000 megawatts. I don’t understand this. Other countries within Africa are talking of so much, even Ghana is three times better than what we are doing.”

Lawan called on the Federal Government to deploy the political will towards revamping Nigeria’s failing power sector, saying, “We are yet the largest economy in Africa, for how long can we sustain that position?

“I believe that we have to declare a state of emergency on Power, and courageous decisions must be taken by government”, the Senate President said.

Earlier, the Senate Leader, Yahaya Abdullahi, in his welcome address, said the “interaction was arranged out of the concern of the Senate and National Assembly about the intractable problems that we have been facing in the power sector.”

According to Abdullahi, “a lot of resources and human effort have gone into finding solutions to problems that have put this country several decades backwards, particularly because of the issues that have been raised and have undermined the development of power.”

Chairman of the Senate Committee on Power, Senator Gabriel Suswam, said: “There’s no doubting the consequential role which electricity plays in the economic development of countries.

The lawmaker lamented that Nigeria currently holds the position of being the second country in the world after India, with the highest population in the world without access to electricity.

Suswam identified challenges in the power sector to include institutional and governance; infrastructural; political; legislative and environmental.

“Most institutions of government saddled with the responsibility of managing the power sector lack the capability and capacity to function effectively”, he said.

The lawmaker added that there is serious infrastructural deficit in the entire value chain of the power sector, adding that “this more than any other challenge requires attention.”

Among representatives from the executive arm of government that attended the round-table organised by the Senate Committee on Power are the Minister of Power, Saleh Mamman and Managing Director, Nigeria Bulk Electricity Trading PlcC, Marilyn Amobi.