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RE-PHCN And National Assembly AND PHCN’S War Against IPP’S By Bunduma Mohammed
There is up serge of articles about the power sector in various newspapers since the appointment of Dr. Lanre Babalola as Minister of Power about a month ago. Among the various articles, two strongly requires response; one in the Nation Newspaper dated February 12, 2009 by Salisu Mohammed and another by Engr. Ishaya Dazang captioned PHCN's war against IPPs in Guardian of February 20, 2009. Most of the articles including those two have one thing in common; they praise Dr. Lanre Babalola as the expected messiah and discredit Engr. Bello Suleiman the current chief executive of Power Holding Company of Nigeria PLC as the current problem of the sector.
As one read some of these articles it is clear that all is not well in the power sector as the Ministry and PHCN seems to be fighting each other. This is not new in Nigeria as we had witnessed severally, one arm of Obasanjo government fighting another. This is however strange because it is from a government under a President who seems to be abiding by the rule of law. From the frequencies of these articles and without a single denial by either Dr. Babalola or his office, one can easily conclude that the ugly situation has his blessing. The game of one arm of government fighting another has started again. But this time it is not an arm or sector against another but a sector/department against itself. Interestingly, it is the sector that required the most attention if this nation is to make progress.
It is very sad to read several distortions in papers about achievements of Dr.Babalola by recruited praise singers. Most of the writers do not understand the sector and what can be called achievement. To forestall a situation that the public is misled, it is a duty to state the fact. There was little achievement by anybody in the Nigeria power sector for many years. Leaders in the power sector were mostly interested in satisfying their interest and interest of those who appointed them instead of developing the sector. This applied to Dr. Lanre Babalola when he was the head of power sector reform in BPE and Deputy General Manager Tariff in NERC. The two assignments he supervised; power sector reform Act while in BPE and the Multi Year Tariff Order when he was in Nigeria Electricity Regulatory Commission were total failure because other interest other than Nigeria dictated the outcome.
The Act is not only irresponsible document but it was done by people who were confused or do not understand the dynamics of reform. It is a document produced without taking into account experiences in other part of the World. Although there were several unresolved issues, the document was timed as if every issue has been resolved. They also arrogantly refused to provide a single fallback position. After producing a law that is difficult to implement the easy option is to find scapegoat instead of owning up to the failure. Whose interest was the power sector Act intended to protect? Certainly, not Nigerian people? It should be noted that the power sector reform was done without adequate consultation with stakeholders. All suggestions by staff representative (Nigerian Union of Electricity Employees and senior staff association) and other staff were not only rejected but not acknowledged. The first thing they did was to blanket staff from the reform because according to them the staffs were against the reform. They failed to understand that staff is the most important stakeholder in every reform. This is because their livelihood depends on the success of the reform and like other citizens; they are also consumers of the utility. Where is the achievement in a document that instead of advancing the sector has divided the society?
The Multi Year tariff orders (MYTO) also supervised by Babalola if implemented as it is, can completely destroy the power sector. The short comings of the MYTO have been pointed out by several international experts on tariff. The MYTO will ensure that more than half of the distribution companies fail. This is because the MYTO treats the country uniformly and did not take into account the disparities in the level of development of Nigeria. Like the Power Sector Reform, the MYTO failed to take into account even some of the basic inputs of the power sector like gas and fuel.
What is happening in the power sector clearly illustrated the lack of vision of this government. The government started by suspending the fraudulent sale of Egbin power station by Obsanjo in his last days in the office. The government went ahead to suspend the implementation of the entire power sector reform. The government eventually appointed a committee on power sector reform under the leadership of Rilwanu Lukman. The committee in its report also agreed that the power sector reform should be suspended for three years. A visionary government could have gone back to National Assembly to amend the Act. The government did not even issue a white paper on the committee’s report yet appointed an interim management to resuscitate the sector.
The need to have body to oversee the sector before privatization was long overdue. I recall the World Bank Vice President in 2007 conversed same position. This was because there was complete breakdown of corporate governance in the sector prior to the coming of the new interim management. Even if you want to sale your house what is wrong in looking after it before you get a buyer (the failed power sector reform Act did not anticipate this). However, the government should have amended the Act to provide for the short-comings.
After taking far reaching steps of suspending the reform and privatization and putting in place the infrastructure to support that position. The President has just appointed Dr. Babalola an unapologetic supporter of Washington consensus as Minister of Power. The government is now in total confusion because it is suspending reform on one side and promoting that same reform on another side. We now have strange bed fellows managing the sector. Unfortunately the losers will be the Nigerian people. This President who said he will declare state of emergency on power will after all not add a single Mega Watt.
The President surrounded himself with few friends from katsina who hardly differentiate a legacy for him and their deep pockets. This was how Obasanjo messed himself up when he appointed his childhood friends Ige and Agagu to head the sector. It was too late when he realized it was a mistake and created the confusion call NIPP. This is Nigeria where nobody frowns at the repetition of failed policy.
In the article by Dazang he stated that Bello Suleiman is frustrating private sector? I do not know which private sector he is referring to. Out of the twenty nine (29) licences issued by Nigerian Electricity Regulatory Commission (NERC), for more than three years not a single one is generating electricity. The International Oil Companies that have several incentives and concessions, how many of them have built power stations to date? They are only ready if they can recoup their investment in three to five years. That is why the tariff of Agip and Shell IPP are too high and unreasonable.
There is no real private interest in the Nigeria Power sector. Those struggling to take it over are only rent seekers who want to profit from their proximity to those in power. The lack of real private interest is due to poor infrastructure, inadequate tariff structure, inconsistency in government policy, insecurity, inadequate legal and regulatory framework and general poor investment climate (contract enforcement mechanism etc). The lack of interest of foreign investors was very clear at the various investors forum in London, America, Germany and China 2000 to 2005. Now that the West is still defining what type of capitalism they want to adopt. The current laissez-faire of Adam Smith has completely failed. While the western nations are constantly buying up their failed private assets, no one should expect them to come here. The reality is there is no private interest in the sector to frustrate as was stated by Mr.Dazang.
Bureau for Public Enterprises (BPE) on the other hand messed itself to employee of companies under privatization. Staff cannot trust them due to the antecedence of officials of BPE. They carried out the reforms and privatisation without consultation and communication with staff. They treat staff of organization to be privatized as enemies of reform and kept them in the dark. The problem is again compounded by their treatments of staff of already privatised institutions. There is hardly any organization that was privatised that staff did not publicly protest the handling of their entitlements by BPE. In the case of the power sector, BPE was not transparent in handling the reform and the privatization. How can BPE sale the largest power plant without following due process and yet expect staff to still trust them.
Mr Mohammed in his article is even blaming Rilwan Lukman for appointing Bello Suleiman as the Chairman of PHCN. Lukman is not the President of this country. The same President Yar’adua who appointed the so called chairman of PHCN is the one who appointed the new Minister of power. It should also be noted that both Bello and Lanre were members of committee on power sector reform that recommended the suspension of the reform for three year. They both draw their legitimacy from their membership of the power sector reform committee which produced the master plan they are to now implement. This can give legitimacy to that rumour that the President is not the one making appointment in Nigeria now. That his friends make several appointments and policy decisions on his behalf without clearing with him.
The Nigeria power sector had suffered long period of neglect. There was no investment into the sector for a long period of time. It was only during the last days of Obasanjo that some effort was made. The National Integrated Power Project (NIPP) was conceived out of desperation and was not allowed to follow due process and conventional procedures. So many inadequacies existed in the procurement and implementation of the NIPP contracts. The NIPP despite it inadequacies, remained the only bold step to tackle the power problem in Nigeria. Instead of Nigeria to address the problem of implementation of the NIPP, we allowed our national assembly to dramatise and internationalised our inefficiency. Our in ability to prepare and award contracts properly was cerebrated World-wide. National assembly did not even go to the root of the problem. We went to the gallery and with lots of media show of shame. Now we are back to the bases.
Since the power sector reform has failed and it has inherent weakness government should have sent a bill to National assembly to amend it. No sensible nation could mortgage itself to the will and dictates of Washington consensus as we did in case of power sector reform. We stupidly wrote in that document more than what the IMF required. Nations that have made progress do not submit to such ill advice of IMF and World Bank. They have only one-way solution to every problem. Privatised, Control Inflation, build foreign reserve, liberalise and protect foreign investment. These are the usual prescription which should be followed even when your people are dying of hunger and diseases. Malaysia and Singapore followed the Washington consensus prescription until they lead them to the East Asian financial crisis of the 1990’s.Same was Chile and Argentina. The later unilaterally voted to freeze all foreign debts and they were forced to negotiate with them. Countries that want to make progress specify their agenda and do not wait for somebody from Washington to tell them what to do.
Arrogance and lack of consultation is what has brought the Nigeria power sector to this sorry state. The entire conception and implementation of NIPP was done without a single consultation with stakeholders. These were the case with virtually all the other initiatives in the power sector during President Obasanjo. If Babalola wants to advance the sector he must abandoned the Nasiru El-Rufai like arrogance and embrace consultation. One can be effective without necessarily being arrogant.
If the Government has made a mistake in establishing the executive management for PHCN, then instead of dramatising government mistake on the page of newspaper like in the case of NIPP, government should find solution to the problem. The other point being conversed by the Ministry under Babalola will eventually lead the sector to its eventual demise. How can we appoint several board headed by politicians to a sector that cannot sustain itself. This is part of the game to fight the interim management of PHCN but where will that lead us to. Babalola and Aliyu (Permanent Secretary) should not repeat the failed power sector reform where there was no fall back position. They should think of what happen after they have destroyed the interim management. Are we going to organise the fastest privatization in history where what happened to NICON and NITEL will be a child’s play? Are we to allow the politicians on the various PHCN successor companies to use scarce fund to rig the 2011 election?
I believe the government must massively invest in the power sector now. Nigeria cannot private the power sector now because there is nothing to privatise. If the intention of the privatization is to attract experience companies in the industry World-wide then we are on the wrong side because nobody will come. We cannot allow BPE to repeat the experience of NICON and NITEL. The power sector is not like communication sector that can be transmitted virtually. If PHCN collapsed like NITEL did, it will be a big disaster for Nigeria.
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