Nigeria’s power sector failure By Oke Peter

Posers would continue to be raised on what Nigeria has benefitted from the privatisation of its power sector. Privatisation was aimed at confronting various problems obstructing the sector’s development. These include limited access to power, poor generation and usage of power capacity, contradictory roles and responsibilities between government and holding companies, among others. Consequently, reflections on how to make the power sector to thrive would continue to dominate the public discourse. The question on the lips of concerned Nigerians is whether the electricity problem is self-inflicted, economic-induced or a jinx.


The power sector privatisation started with an announcement made by President Goodluck Jonathan in 2010 that the government-owned Power Holding Company of Nigeria (PHCN), responsible for the generation, transmission and distribution of electricity, would be sold to private investors to increase its efficiency and profitability. However, the first phase of the privatisation was concluded in November 2013 and it was a landmark US$2.5 billion transaction that saw PHCN unbundled into six Generation Companies (Gencos), four thermal power and two hydros and 11 electricity distribution companies (Discos) all sold to new private owners.Interestingly, the Federal Government had high aspirations for the country to be among the world’s top 20 economies by 2020, the reason it set up the Economic Transformation Agenda with a target to generate 40,000mw of electricity by that year, a major challenge considering that the current power generation which stood at 4,000mw.



But since the privatisation exercise, there has not been any significant improvement in the sector. We cannot be doing things the same way and expect different results. It is also an acknowledged fact that the government has spent billions of naira on the sector after the so-called privatisation and it is certain that this government’s intervention won’t stop even if nothing tangible is achieved because of those that are feeding fat from it.  A research into the origin of crises bedeviling the nation’s power sector shows that there is more to it than meets the eye. Some senior officials interrogated commented that the sector would continue to fail since the government has refused to do needful before privatisation. It was discovered that when privatisation issues were proposed, its essence was for better performance. Some concerned members of staff wrote memos to government advising it to reconsider some relevant issues before selling these power companies.

Among the issue raised was for the government to review cases of outdated infrastructure that needed to be replaced or refurbished for effective performance. Most of these power equipment were installed in the 70s when Nigeria’s population was about 57 million against its 159 million population in 2010 when privatisation was being considered. Issues were also raised about the sector’s expenditures and incomes, which were bogus on paper, without considering the sector’s three-in-one status. Recommendations were also made that entitlements and gratuities of members of staff to be disengaged be paid. The staff appealed to the government to ensure that Ministries, Departments and Agencies (MDAs) that fail pay for electricity consumption should do so to increase revenue generation that would add value to the sector’s operations; these agencies include Military Barracks, Government Houses, Public Hospitals, Government Secretariats and some influential officials and a number of ‘notorious communities’ in major cities across Nigeria, where electricity theft and vandalism are rampant. Some of these agencies do not see why they should pay for electricity consumption because it is governments’ business. Government was also notified about some residential buildings where telecommunication cables were used to connect light as well as those who engage in illegal connections through underground connection of electricity to their homes.

Sadly, none of the posers raised was considered. Later, prospective investors were also advised through various publications to conduct proper audit of available infrastructures before venturing into Nigeria’s electricity business. All issues raised in the said memo were rejected, while senior workers were referred to saboteurs. The opinion of the electricity workers then was for those issues to be resolved before privatisation, as it will make the business atmosphere conducive to effective service delivery. Instead of taking time to study the workings, its statement of account then was so attractive to those in power, who were willing to venture into the power business to make big money, save for the union’s warning that those issues be addressed to avoid post privatisation crises. The problems are what are confronting us now without solution.

Another factor is fact that investors are political and high networth individuals who can get away with their excesses. They are aware of some of these problems, but as a decoy, they hired expatriates to hit the ground running and perform the magic of making 24-hour electricity available for consumers, even when it was obvious that it was not visible. Power grids are collapsing frequently, and this trend may not stop, because there is no clear sign of ensuring a functional power system. Overloading, short circuit, poor distribution system as well as damage in the transmission lines will continue to make stable electricity and unfeasible venture. Power will continue to fail until serious investment is given to infrastructures.  Electricity distribution companies will keep incurring debts and attract sanctions from regulatory agencies for violation of rules and regulations guiding the industry. Despite complaints from consumers, Nigerians are made to pay through their nose for unsteady electricity.

Let us go back to the basics and address foundational issues. Something serious should be done to restrain saboteurs within the system. Hiring consultants and professionals with millions as monthly take home will not solve infrastructure problem. Government should stop giving free money to Discos without anything to show for it. It is high time the government retraced its step and addressed the basics to prevent total and avoidable collapse of the sector.