Sam Amadi, former chairman of the
Nigerian Electricity Regulatory Commission (NERC), says the privatisation of
the power sector was designed to fail.
In a series of tweets, Amadi said
the privatisation process could not produce the desired results because the
power assets were sold to investors who lacked the financial and technical
capacity.
The sector was privatised after
the unbundling of the Power Holding Company of Nigeria (PHCN) in November 2013,
as private investors took over distribution and generation firms “to ensure
adequate, regular and stable supply of electricity to the consumer at a
reasonable cost”.
“The power sector was designed to
fail. We failed to corporatise and commercialize before privatizing; we
privatize senselessly without paying attention to context and corporate
governance and regulatory regime; we sold to investors who lacked capacity,” he
said.
“We had conducted three tariff
hike before December 2015. Did any of these hikes resulting in any significant
improvement in revenue or service quality? No. Why because the problem of the
sector is not mainly tariff.”
Amadi argued that the challenges
in the sector go beyond tariff increase, as such move would force manufacturers
off the grid.
“Cost reflective is important.
but excessive tariff hike is problematic because it cannot be collected and in
a country with poor supply the propensity to pay is low,” he said.
“When NERC conducted “Fit and
Proper’ test on all the preferred bidders, only one (or none) has the requisite
financial and technical competence to effectively manage the network. I took
the report to the VEEPEE to argue that none of these firms are fit. VEEPEE was
alarmed and set up a committee with BPE, MOP and NERC.
“We later discovered that BPE
amended the TOR to reduce the threshold or financial and technical
capabilities. The World Bank doubted that we could sell the discos. We
surprised the World Bank and we rejoiced but we did not know we sold to
‘straw-men’.
“The meeting called against me by
Minister and DG BPE that I was against privatization because at the villa I
advised the DG BPE that so much faith in haste privatization is not justified
by theory and practice, I hate to say I have been proved right.”
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