Is it Not Time to Privatise the Three Arms of the Nigerian Government?

hand-in-oil-pollution-nigeria-Amnesty-Intl

It is amazing to hear that the Nigerian National Petroleum Corporation’s refineries are to be sold due to inefficiency and under-performance problems if a self-set 30-day government ultimatum is not met. This is the same NNPC that is supposed to be the only concrete evidence that President Muhammadu Buhari is doing a good job. Ibe Kachikwu, NNPC’s new General managing Director, is even portrayed as some Nigerian equivalent of Jack Welch, a great American super-CEO. Yet, privatisation is the most possible solution to the refineries failing performance, especially when it comes to fuel provisions. The logic of governance is failing Nigeria’s management disastrously and common sense is appearing to be increasingly uncommon the higher one goes. Continue reading

The Owners of Nigeria Technostructure (ONT)

In Nigeria there exists a non-market non-governmental extortionist technostructure that is nameless but for the purpose of convenience we shall call it the ONT (i.e. the Owners of Nigeria Technostructure). Continue reading

RE: The Imminent Collapse of Nigeria’s Power Privatisation

http://eyoekpo.com/post/101658521484/the-imminent-collapse-of-nigerias-power-privatisation

I found Timi Soleye’s piece in the Financial Times interesting. The Financial Times and its editors would have a lot to lose by way of reputation if Soleye produced a story on the privatisation of the electric power sector in Nigeria without facts and which could be readily debunked by counter-facts. Newspaper articles are often constrained by word count limits necessitating summaries. Does one have to represent hidden vested interests to write what they think or observe?
Well, let us stick to the claims in Eyo Ekpo’s response. Firstly, that Nigeria’s privatisation was universally acclaimed as the most transparent and comprehensive of its kind ever to take place anywhere in the world despite its size and complexity is highly inaccurate. Privatising a dysfunctional few thousand megawatts of electric capacity for a nation with Nigeria’s income history, massive population and perniciously underestimated electric demand does not make for significant size. A country with a population of 60 million people should have an installed operational electric power capacity 100,000MW. In complex electric networks, electricity is transmitted and pooled by “loop systems”, Nigeria’s network is an archaic “radial system” necessitating endless shedding of electricity. It is essential to note Nigeria has one of the very lowest electricity consumption per capita figures in the whole world. What was privatised was purely power cuts.
Secondly, I presented a document to NEPA/PHCN when J O Makanju was managing director with detailed facts that the Nigerian power sector was operating at less than 10% efficiency. France has the most efficient industry in the world and operates at 35% efficiency under conditions of constant electricity. It was a document I also showed two NEPA / PHCN directors and a minister and former minister of state. They were stunned by the facts and even got senior engineers to the sector to evaluate the facts but assured me the privatisation would go ahead back then. No audit of efficiency or asset conditions of the electric power sector in Nigeria has ever have been conducted since then if it has can we please have details?
Thirdly, the “steady state of NESI” is fancy talk. Where is the steady-state constant electricity the sector is supposed supplying to consumers? Is that not what the privatisation is all about? I guess it is a case of “we are getting there”, hope.
Fourthly, since when has Nigeria been a bastion of rule enforcement? Due diligence and preparatory procedures, especially in the form of meetings and documentation, has never failed to impress observers in any sector in Nigeria. It is when it comes to realisation and operations that the disappointment and failure begin. Market transition rules are primarily legal reform requirements, and they are not a measure or indicator of performance or efficiency of any sector.
Fifthly, the most significant stakeholder in the electric power sector is the consumer. The stakeholders highlighted as necessary to the industry are distinctly “elite”, owners and regulators (and “facilitators”). Dr Lanre Babalola, as a minister, was furious (NERC tasted pepper) with the poor strategies and levels of revenue collection for electricity consumed. While the “electricity elite” were misforecasting and perniciously underestimating daily electricity demand, marketing privatisation as a panacea, promising constant electricity and selling hope. No one took out time to evaluate the affordability of electricity for the customer, the incidence and impact of power theft on revenues or the potential debt burden of non-payment on the sector. Articulated rules are not action(s). Prepayment metering has not provided the magic its beneficiaries promised, and no initiatives for alternative methods seem to be considered. $1 billion unpaid is a lot of money to be owed for any sector anywhere in the world.
Sixthly, the term “discerning investor” is sometimes associated with project finance (participants) which is a consortium of investors who share and spread the risks of investing in financing privatised sector assets and concessionaire BOT (Build-Operate-Transfer) projects. Investors do not like to lose money, and Nigeria has many country risks. The most eager foreign interests in the Nigerian electric power sector are electric turbine sellers like GE and Siemens; they do strictly turnkey business. Operations investors are wary of the Nigerian electric power sector. Enron-AES IPP in Lagos State even has its turbines on barges that can be tugged away when necessary. Senior executives Bureau of Public Enterprises were in unison in the claim that the purchase of Nigerian assets was not undertaken by foreign investors but by Nigerians often with foreign fronts. The NIPP scandal in participation, scale and scope were utterly disastrous for foreign interest in Nigerian electric power sector investment.
Seventhly, is it true that $4 billion’ worth of turbines was imported into Lagos port and left there to accrue huge demurrage because the project principals of the NIPP had not considered the difficulty of transporting them to their riverine destinations? These turbines were then auctioned for peanuts to non-existent buyers because of the unsustainable demurrage accrued. The turbines were recovered, though. I can see the link between ports and the electric power sector slightly in this case.
If see no evil, hear no evil, speak no evil is the motto of NERC, we have to wish it the very best.
 
Grimot Nane

 

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