POWER ISSUES:- Pitfalls for Jonathan’s handover of PHCN to new owners SENIOR CORRESPONDENT, Adeola Yusuf reports that the row between the Nigerian Electricity Regulating Commission (NERC) and Transmission Company of Nigeria (TCN) may erode investments in electricity sector and the aspiration of President Goodluck Jonathan to handing over assets of the Power Holding Company of Nigeria (PHCN) to new owners. Goodluck Jonathan The bickering between the Nigerian Electricity Regulatory Commission (NERC) and the Transmission Company of Nigeria (TCN) degenerated penultimate Monday, the day President Goodluck Jonathan handed over Power Holding Company of Nigeria (PHCN) to new owners. NERC had, on its own, raised an alarm over the slow pace at which the TCN board was handling government’s mandate, especially in relation to swiftly attaining sustainable efficiency in Nigeria’s emerging electricity sector. The commission expressed concern that the TCN’s inefficiency and sluggish attitude to its responsibilities could undermine further investments in power generation and distribution. Jonathan hands over After months of planning, President Gooduck Jonathan formally handed over the assets unbundled from the Power Holdings Company of Nigeria, PHCN, to private organisations that bought them, with a pledge that they would take over the companies without any liabilities. The President who personally delivered the licenses and share certificates to investors at the Aso Rock Villa, told the new owners that whereas the assets has been sold to them, the ensuing liabilities of PHCN had been pooled together, and would be managed by Nigerian Electricity Liability Company (NELMCO). His words, “arrangements are also on-going to ensure that NELMCO is adequately funded, to assume liabilities associated with the privatisation of the PHCN successor companies, as well as other related liabilities. Various options are being explored for funding the TCN, so that it is able to implement projects that are key to stabilising and expanding the transmission grid.” Five generating companies and 10 distribution companies received share certificates from President Goodluck Jonathan who also promised that the physical hand over of the assets would be undertaken at the end of this month. President Jonathan said the successful hand-over of the companies underscored the transparent manner the process was conducted as acknowledged by both local and foreign investors. He added: “Going forward, this administration is committed to providing all elements are necessary for our private sector partners to succeed in providing Nigerians with uninterrupted power supply. To start with, the Nigeria Bulk Electricity Trading Company, NBET, the off-taker, has been provided with a capitalisation of over $750 million, positioning it to carry out its mandate without financial constraints.” Workers’ full entitlements At the event, President Jonathan assured Nigerians that “things can only get better, from this point onwards.” He also promised the restive PHCN workers that their full severance packages would be paid to them, stressing: “Carefully worked out measures are also being taken to address all other issues, particularly the resolution of labour-related issues. In partnership with the labour unions, we have been able to come up with an outcome that is beneficial for all stakeholders. “As earlier pointed out by the Minister of Power, Professor Chinedu Nebo, the payment of all labour related benefits commenced in August this year, and is almost concluded as a condition precedent to today’s event. “It is important to say to our labour partners, who we know to be patriotic Nigerians that they should not nurse a feeling of displacement, but dwell on the tremendous possibilities partnering with the government through the reform process and urge them to continue in this spirit for the greater good of all Nigerians.” NERC boss and possible risks Chairman of the NERC, a federal agency, Dr. Sam Amadi, in a recent interview in Abuja, said he was scared of possible risks from the sluggish attitude of the TCN to its tasks, noting that the company and its staff members were yet to come to terms with the obvious paradigm shift in Nigeria’s power sector as a result of the privatisation exercise. He said: “I am not only bothered, I am scared. I am scared about TCN. A reform is tolerant and value based, I have argued that Nigeria’s problem with the sector is not technical issue; it is ideas, ethical and an adaptive challenge. Amadi added: “What the reform in the power sector is doing is to change the mindset primarily. So that we begin to have the mindset set away from seeing power as social service. The regulation analysis gives us cost reflective tariff, which is technical and adaptive. “Transmission is a risk not because there is no money; funding is a big deal or a risk because it is still government owned, but because its inefficiency will undermine further investments in generation and distribution and what is paramount now is to allow transmission to be regulated, which means you don’t appoint people without approval but appoint based on competency,” he added. Also commenting on the issue, Chairman of the Technical Committee of the National Council on Privatisation (NCP), Atedo Peterside, warned of the danger posed by the seeming “pussy-footing” attitude of the reconstituted supervisory board of the TCN, adding that the board seemed lost with its expected responsibilities. Atedo, who spoke on the next phase of Nigeria’s power sector privatisation exercise while presenting a paper at the “special forum on financing the power sector reforms for economic development” organised by the Bankers’ Committee said: “Transmission is the “life-blood” of this entire electricity eco-system and it is also potentially the weakest link at present. I am reliably informed that, currently, stranded capacity due to transmission evacuation constraints is in the region of 100MW. The other weak link is gas supply and gas transportation.” He said the ability of the TCN to catch up with generation availability and also keep pace with future expansion will depend on its continued access to financing for its huge capital expenditure needs and its ability to execute and rigorously monitor project implementation to high professional standards. Atedo added: “Unfortunately, the board of TCN is yet to get its act together. Since the appointment of a chairman and some initial board members was first announced some months ago, so much time appears to have been lost in squabbling over who does what, when and how. If TCN does not deliver the goods in 2014, there will be a crisis of sorts when the 10 NIPP power plants come on stream.” The board, which is led by one-time chairman of the Revenue Mobilisation, Allocation and Fiscal Responsibility Commission, RMAFRC, Hamman Tukur, has been accused of showing minimal concern to the expected role of the TCN in the power sector that is gradually becoming private sector driven. Nationwide protest Although the feederal government handed over the PHCN to new owners, another pitfall for the success of this move is the bickering by electricity workers’ unions over the settlement of severance package. This became evident in the way the workers in all business units and cash offices of PHCN nationwide were shut down penuiltimate Monday by aggrieved workers, protesting the Federal Government hand over of share certificate and licenses to 15 new owners of PHCN assets without payment of workers’ terminal benefits. Last line While some are agitated over the seeming impatience of the PHCN workers despite the government’s promises and honest efforts to meet these obligations to the workers, others believe the workers are not in any way to be blamed, given Abuja’s attitude of not faithfully keeping promises and agreements over the years as is evident in its case with university lecturers who have been on strike for over three months now. For the power value-chain to yield the desired results, the Federal Government must urgently wade into the bickering between NERC and TCN before they destroy the President’s aspirations, those of investors and many Nigerians on stable electricity supply. Electricity, which starts from generation, transmission to distribution needs synergy, and a problem at the transmission will automatically make achievement in distribution meaningless. A stitch in time saves nine.
Posted on: Tue, 08 Oct 2013 07:58:05 +0000
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