By ‘Fisayo Soyombo
VENTURES AFRICA — The privatisation of the Power Holding Corporation of Nigeria (PHCN) seen by government as a lasting panacea to the country’s inefficient power sector will be sealed before the end of the year, but debts totalling $140 million in electricity bills owed by Nigerian government agencies are stalling the process.
Power Minister, Bart Nnaji says the agencies will have to pay, sooner or later. “We cannot continue to operate a system where government agencies become dead beats,” he said. “They have to pay. Every government agency has a budget for this, they simply don’t pay.”
By October, Nnaji expects his ministry to have finalised the sale and handover of 11 government-owned distribution firms and six generation companies to private buyers who can boost supply with their investments.
If this is done, the ministry hopes to up electricity supply from “below 4,000 megawatts currently to 6,000 megawatts by year end.” This, it is again hoped, will then rise to 10,000 megawatts by the end of 2013 and 40,000 by 2020.
Plans to sell generation and distribution units of PHCN have been in the works since 2010 but generator and fuel importers, unions and power contractors who have been profiting immensely from power outages are known to be working against the sale.
PHCN is owed an estimated N110b worth of electricity tariff, with 20 per cent of the debt coming from government — another of the many glaring examples of corruption in the country’s public sector.
PHCN is itself a debtor, owing gas suppliers, such as Shell and Eni, some $500m, one of the reasons for the continuing drop in power output.
Despite possessing the world’s seventh-largest natural gas reserves, Nigeria has never generated enough power for either the domestic or commercial needs of its ever-rising population. Being Africa’s second-largest economy, pundits have repeatedly analysed that solving the power problem alone withholds the potency of launching its GDP growth into double-digits and as well as break its boomeranging over-reliance on oil.
Still, the country will have to brace up for higher electricity tariffs before privatisation can take place, as the current set up is unprofitable for buyers.
“The urban poor and rural dwellers will see a reduction in tariff; the lower to middle class people would see about 11 percent increase in tariff,” Nnaji said. “The rest will pay the actual tariff. A wealthy person would pay about double.”
To kick-start the process, Nnaji is negotiating with power unions over the 50,000 staff at PHCN who would lose their jobs under privatisation, although many of them would still be re-employed by new private owners.