People and Politics By Mohammed

People and Politics By Mohammed Haruna

Why Privatizing Power Alone is Not Enough

Among the over 80 texts I received from readers of The Nation in response to my last column was a poser from one, Engineer Ajuwon. What, he asked from 08035769362, was my alternative to President Goodluck Jonathan’s power reform road map which, he said, I “pulled down” in my bid to defend “IBB et al”? Any failure to give my alternative, he said, would amount to “irresponsibility and mischief kawoi!”

Ajuwon, it seems, read me rather casually. Otherwise it would have been apparent to him that my alternative was summed up in my conclusion that the problem with our power sector, as with everything else, is not so much its type of ownership as the dishonesty, among other vices, with which our leaders make and implement public policies.

I made this same point over twenty years ago in my column in the rested Citizen newsmagazine. In the heady days of the collapse of Communism in the late ‘80s, the chief priests of Capitalism became so intoxicated with the triumph of their creed they would not as much as concede that it too, like everything else in the world, had its limits.

“These days,” I said in that article entitled “Privatization is it?” in the Citizen of September 10, 1990, “it all sounds as if capitalism is all virtue and any form of public ownership of property is all vice. Nothing could be more wrong than this attitude.”

Privatisation too, I said, had its vices, not least of which was the greed that it bred in society. I gave the example of how President Ronald Reagan’s, and the British Prime Minister, Mrs Margaret Thatcher’s, mantra about getting government off people’s backs led to the Savings and Loans scandal in America – which was like a dress rehearsal of the much bigger global financial meltdown of two years ago – and also led to huge increases in unemployment, crime and hooliganism in both countries.

I then argued that the relentless pursuit of privatisation led by Chief Olu Falae, the chief priest of privatisation under then military president, General Ibrahim Babangida, could only land us in the peculiar trouble of a stagnant economy without the welfare safety net that characterised the advanced economies we wanted to ape.

Worse, I said, we faced the additional danger that as we rolled back government all too fast, our economy would be re-colonised, “this time by counterfeit capitalists who bring with them little or no expertise or enterprise.” Although those were my exact words, I was not alone in that position. It was shared by Alhaji Aliko Mohammed, the Dan Iyan Misau and a dyed-in-the-wool capitalist; he said as much at the launching of Citizen in January that year.

Seven years after my article, The Economist, arguably the most authoritative advocate of free market, published a survey of the world economy entitled “The future of the state,” which clearly showed that the Reagan/Thatcher “small government” revolution was more hype than substance. Like it or not, it pointed out, historically “In all of the advanced economies, government has grown fat.”

It showed, for example, that government spending as a percentage of Gross Domestic Product which in Britain was 43% at the beginning of Mrs. Thatcher’s so-called free market revolution in 1980 barely dropped to 39.9% in 1990. America’s under Reagan actually rose from 31.8 % to 33.3%.

So much then for getting government off people’s backs.

The moral of all this therefore is that there is no running away from governments everywhere as major actors in the economy. The greater moral is that, small or big, government is worth its name only if it promotes the greatest good for the greatest number of its citizens. It can do this only when it has leaders who, among other virtues, have integrity and make and implement policies in the most transparent manner.

As we all know too well the privatisation of our economy by government, going all the way back to the indigenisation policy of the ‘70s, has been anything but honest and transparent. Instead it has been characterised by blatant conflicts of interests where those who make and implement policy are, along with their cronies, its greatest beneficiaries.

Time and again we have seen how public assets have been grossly undervalued and sold not necessarily to the highest and most competent bidder but to the most well-connected. Consequently we have, time and again, experienced how promises of more efficient and cheaper goods and services from privatised companies have been broken.

Nothing illustrates the threat to our economy of its privatisation by self-interested public officials better than that of the power sector. Last month the Nigerian Electricity Regulatory Commission published a highly instructive half-page advert in Thisday ( October 26) and Punch of the following day in which it threatened to cancel the very first generation licence, NERC/LC/001, it issued to Farm Electric Supply Ltd. nearly four years ago. The company, whose address was given as “Behind Ota General Hospital, Idi-Iroko, P.O.Box 90, Ota, Ogun State,” is suspected to be connected to former president, Chief Olusegun Obasanjo.

FESL was given its licence on condition that it would generate electricity within three years of its existence. More than four years on this month, not only has the company generated zero electricity. There is no sign that it has even started work on its site. Worse, as NERC said in its advert, “It is important to note that all recent correspondents to the company’s last known address have been returned undelivered.”

FESL is not alone in failing to fulfil its side of a bargain that was supposed to bring stable light to the suffering people of this country. As I said last week none of the licensees, including Geometric Power Plant headed by President Jonathan’s adviser on power, Professor Bert Nnaji, has delivered even one watt of electricity. Yet the gentleman would boast in The Guardian of August 29, that power generation was his forte.

“If,” he said in the interview, “you are talking about conceiving, developing, constructing and running a power plant, I have done all of them.”

The excuse for the failure of the licensees to deliver even a single watt of electricity is that the country’s electricity tariff is too low. Not surprisingly the Bureau of Public Enterprise, whose record of privatisation has been controversial to say the least has been a, indeed, the, principal advocate of this position; only recently its spokesman said in defence of the licensees that, “... the enabling environment has been harsh and uninviting. In particular the tariff regime has not been encouraging and the companies are not charity organisations.”

Nnaji himself was more forthcoming than the BPE in his own self-defence. “I don’t think the goal of any reform,” he told The Guardian in the interview I referred to above, “is to make power available at cheap rate. That’s not the intention of this reform. The intention is: One, to make power available; two, to make it delivered at a reasonable rate.”

The professor did not spell out what was “reasonable” but it would hardly be unfair to assume that he would like tariffs few Nigerians could afford, considering the fact that since the enactment of the Multi Year Tariff Order (MYTO) law in 2006, PHCN’s multi-tariffs have been automatically adjusted upwards every 1^st of July with the aim of eliminating all subsidies by 2012.

His possible alternative could be the controversial Enron model in Lagos State who’s 1999 Power Purchase Agreement (PPA) with then NEPA - now Power Holding Company of Nigeria – was bound to leave the public utility so much in hoc to Enron that it was condemned even by the World Bank, that bastion of private enterprise, as “unduly favourable to Enron,” among the bank’s several objections. Still this did not deter all the parties involved from going ahead to sign the agreement.

Today the owners of Enron, which has changed its name since the collapse of its parent company in America following its infamous financial scandal, seem to have been laughing all the way to their banks at the expense of PHCN and the Lagos consumers.

Public ownership of electricity may have failed to deliver satisfactory service all these years. But neither would private ownership as long as public officers hide under public policy or collude with private business to mutually feather their own nests.

Alas nothing has happened since President Jonathan fully took charge of the country in May suggests that things have changed for the better from what they have been for decades.