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The Journey so far: A Special Feature on Federal Ministry of Power (February 2013 – 2014)

“This administration has stressed, repeatedly, that the requisite investments in the power sector will only be achievable if the private sector is incentivized to make these investments.”

–      President Goodluck Jonathan, GCFR (Taken from his speech when he launched the Roadmap for Power Sector Reform on August 26, 2010).

 

Restructuring the Electricity Industry

His Excellency, President Goodluck Ebele Jonathan

His Excellency, President Goodluck Ebele Jonathan

Almost every visitor to Nigeria, and indeed a majority of Nigerians, believe that Africa’s largest nation has huge potential, especially in human and natural resources. Both foreigners and Nigerians concur that the major problem facing Nigeria is lack of competent, result-driven and visionary leadership, as identified by foremost Nigerian novelist, Professor Chinua Achebe in his book, The Trouble with Nigeria.

To harness the potential of the over-160 million Nigerians, the nation needs competent leaders at every tier of government that will restructure, reform and re-engineer every sector of the society. And so, when President Goodluck Jonathan assumed office as Acting President in May 2010, all eyes locally and internationally, were on him, expecting him to deliver the much needed dividends of democracy. Recognising the importance of power or electricity in national development as well as the chronic shortage of electricity that had accrued over the years before he assumed duty, Jonathan alongside his Think-Tank, carefully deliberated on and designed a well-articulated programme of action called the Roadmap for Power Sector Reform. The Roadmap was launched on August 26, 2010 and its cardinal objective is to transform, once and for all, Nigeria’s electricity industry. As President Jonathan noted in the Roadmap,” our administration is determined to bring an end to our nation’s stunted growth and usher in the fresh air of prosperity by pursuing a new era of sector-wide reform, which is driven by improved service delivery to every class of customers in the Nigerian electricity sector.”

 

A New Paradigm:

Wasting no time, Jonathan constituted a Presidential Task Force to implement the power sector reform road map, appointing Professor Barth Nnaji as its chairman. Nnaji later became the Honourable Minister for Power. The major goals of the Roadmap are: improvement in service capability and delivery (which are still on-going) and divestiture from power generation companies (GENCOs) and power distribution companies (DISCOs). The paradigm shift is to allow private sector operators invest in Nigeria’s electricity industry just as government did in Year 2001 when it welcomed investments from the private sector in the telecommunications industry. Today in the telecommunications industry, over 100 million Nigerians use telephones to make calls. Empowering 160 million Nigerians and making life easier for them through stable, ever-increasing generation and supply of electricity is the major vision President Jonathan has vis-à-vis electricity in his Transformation Agenda.

 

 

Removing Obstacles

Recently commissioned Geregu Power Station

Recently commissioned Geregu Power Station

In order to incentivise the private sector, the Jonathan administration identified those obstacles private investors complained about and set about removing them. It also planned the sales of the seventeen (17) GENCOs and DISCOSs.

It is to be noted that while the Jonathan administration introduced some new mechanisms to remove identified obstacles, it also consolidated on reforms earlier introduced by Presidents Olusegun Obasanjo and Umar Musa Yar’Adua administrations. The identified obstacles were removed through some of these interventions: Establishment of an appropriate pricing regime. The Nigerian Electricity Regulatory Commission, NERC was established by President Obasanjo for this purpose and a new board was reconstituted by President Jonathan and which is now led by Dr. Sam Amadi; Establishment of a Bulk Purchaser. The Nigerian Bulk Electricity Trading Company (NBETC) Plc was established with the purpose of buying electricity in bulk on behalf of the power distribution companies, thus stabilizing the availability and supply of electricity; Provision of FGN Credit Enhancement.

Being a long-term and capital intensive business, government needed to provided credit enhancement and guarantees for strategic stakeholders such as the NBETC and power distribution companies. These mechanisms are already put in place; Operationalising the Nigerian Electricity Liability Management Company NELMCO. This agency was established to manage the extant assets, liabilities and other obligations of the GENCOs and DISCOs which could not be easily transferred to prospective new owners; Human Capital Development. Government set up National Power Training Institute of Nigeria, (NAPTIN) to will train and retrain personnel for the new private sector driven electricity industry.

Privatisation of the PHCN Companies

Newly commissioned Omotosho Power Station

Newly commissioned Omotosho Power Station

Having successfully removed obstacles that limit private sector investment, the Jonathan administration put in place the strategy of divestiture from the power industry by selling its power generation and distribution companies. These are the hydro power generating plants at Kainji, Jebba and Shiroro, the thermal generating plants like Egbin and the distribution companies which once were known as Nigerian Electricity Power Company (NEPA) but were unbundled into Power Holding Companies of Nigeria, (PHCN). Through the National Council on Privatization, NCP, government commenced the very sensitive yet critical stage of selling its power assets to prospective, private owners. Invitations were called for and received from potential investors.

In the course of the privatization process, the former Honourable Minister for Power, Professor Barth Nnaji had to step aside in 2012. Not a few Nigerians as well as foreigners interested in investing in the power sector were concerned about Nnaji’s resignation. Many people thought that the whole process would grind to a halt. But then President Jonathan took his time to search for and chose another competent, world-class administrator as the new Honourable Minister for Power to coordinate the affairs of the ministry. By February 4, 2013, Professor Chinedu Ositadinma Nebo, a former Vice-Chancellor of the University of Nigeria, Nsukka, UNN and pioneer Vice-Chancellor, Federal University Oye-Ekiti, assumed office as the substantive minister.

 

Nebo –­ A Call to National Assignment

Nebo came at a critical time – a break-or-make stage – in the Roadmap for Power Sector Reform. Not many people gave him the benefit of doubt, concluding wrongly that having being an academic all through his career, he might not be able to understand the arcane world of power or electricity engineering and successfully handle the sales of the power stations. They underestimated Nebo. Not only had he succeeded in two previous national assignments, (repositioning the University of Nigeria, Nsukka as a world-class university, he also pioneered the founding of Federal University, Oye Ekiti, as its Vice-Chancellor, Nebo is passionate about quality service to humanity.

For a man who reverences God and is determined to do his best for humanity, bequeathing worthwhile legacies to other leaders behind, Nebo was like a Solomon come to judgment. Through the wisdom of God, utilization of ‘Open governance’ (a concept which entails consulting widely and being accountable) and a determination to do the right always, Nebo successfully completed what Nnaji had started.

 

A New Dawn Begins

Nebo handling over certificate of ownership to one of the new investors

Nebo handling over certificate of ownership to one of the new investors

Nigeria’s journey to stable and ever-increasing electricity has commenced and there is no going back. Nebo readily admits that electricity generation and supply has dropped since December 2013, and apologises to Nigerians. He attributes such drastic drop to vandals and saboteurs. He tells Nigerians that the Jonathan administration is making genuine and lasting efforts to curb the destruction of oil and gas pipelines across Nigeria. One of these efforts is the installation of digital surveillance gadgets on the pipelines which will soon be procured.

He has also enlisted the help of the Office of the National Security Adviser to the President to check pipeline vandalism, an initiative that has culminated in a multi-ministry, multi-department cooperation among security agencies in Nigeria as well as the Ministries of Power and Petroleum Resources.

Nebo urges Nigerians to be understanding and see the big picture. He cites the telecommunications industry in which private sector players like MTN, Econet (now Airtel), Etisalat and Globacom have invested billions of dollars as examples of how the private sector can help Nigeria and Nigerians, harness their full potential. Though there were teething problems such as high call rates and poor network in the early days of the telecommunications industry, Nebo says that that sector is now stabilised such that a sim card that sold for about N25,000 to N30,000 in 2001 now sells or N100 to N200.

Good things take time to mature and bear good fruits. Under Nebo’s leadership, the Federal Ministry of Power is determined to ensure an ever increasing generation of supply of electricity to users across the nation. This is the story Nebo has to tell Nigeria: that President Jonathan is fully dedicated to ensuring that electricity is made available to all Nigerians and that he (Nebo), the staff of the Ministry of Power, government agencies like NERC, NBETC, NELMCO and other stakeholders are determined to ensure that the Roadmap for Power Sector Reform is fully implemented.

 

 

 

 

 

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