Ensuring transparency in privatisation of power plants


By Ahmed Umar

In Nigeria where the public sector is notorious for abandoned projects, the successful construction of 10 gas-powered plants by the Federal Government through the Niger Delta Power Holding Company (NDPHC) in less than a decade has shown that with determination and openness in public conduct, the system can work.

It has also demonstrated that when competent Nigerians are appointed and given a free hand to operate by higher authorities, they can deliver.

In fact, the feat of the NDPC through the National Integrated Power Project (NIPP) since its inception in 2004 is commendable.

Having completed the power plants, it is not yet Uhuru because this achievement has not translated into adequate power supply for Nigerians as they still live most times in darkness. Their businesses and social life are yet to pick up because power supply is till inadequate if not elusive.

A gauge of public perception of the President Goodluck Jonathan administration has shown that Nigerians primarily rate him on his performance in the power sector and until he delivers on it, they believe that the government has not fared well.

It is against this backdrop that the NDPHC and its co-travellers in the ongoing reforms in the power sector must not go to sleep until must Nigerians can have electricity for their domestic and industrial chores for a minimum of 18 hours per day.

Considering the Nigerian factor in public business, it is heartwarming that President Jonathan has approved the NDPHC’s move to sell the power plants to the private sector.

The performance of the private sector in the telecommunication sector, which has enabled virtually every adult Nigerian to have access to telecom services, has reinforced the belief that government has no business in the provision of services in which the private sector has comparative advantage.

So, in the second stage of the power reform, the government must be seen to be transparent in the sale of the power plants. It is advocated here that more checks and balances be introduced into the exercise to prevent it from being hijacked by portfolio businessmen, who are already shopping for the “foreign investors” they intend to use as fronts to acquire the power plants.

The NDPHC and the Bureau of Public Enterprises (BPE), which handle the sale of the thermal plants, must not allow their names and integrity to be soiled by selling the plants to incompetent and emergency investors.

There must be a structure to drive the process transparently to avoid the landmines and pitfalls which were noticed during the unbundling of the Power Holding Company of Nigeria (PHCN) and sale of its assets.

It is also suggested that the government must do everything possible to avoid the experience with the former Minister of Power, Prof. Barth Nnaji, during the privatisation of PHCN assets, where the minister had to quit the stage unceremoniously and halfway into the exercise because his private firm, Geometric Power Limited, attempted to acquire the Enugu Distribution Company, one of the PHCN firms.

The mistakes of the privatisation exercise under the Olusegun Obasanjo administration must not be repeated as Nigerians are still paying for the allocation of public corporations to loyalists of that government under the guise of privatisation.

Among the assets and public enterprises that went into wrong hands are NITEL, which was sold to an upstart Transcorp Plc, the Daily Times of Nigeria, now moribund, NICON Insurance, then the biggest player in the industry but now rested, just to mention a few.

Apart from one or two banks, all the public-owned banks that were privatised by the government have also gone under. All these occurred because of that administration’s penchant for impunity, patronage of cronies who were fronts and portfolio investors, and interference in the all stages of the privatisation scheme.

President Jonathan and his team spearheading the current exercise must, therefore, not fall into the same pit. It should allow best global practices to prevail in the sale of the NIPP infrastructure and demonstrate the political will to stop career politicians from using their cronies and allies through the backdoor to acquire the plants.

Whenever a breach of due process is noticed, the National Council on Privatisation (NCP), chaired by Vice President Namadi Sambo, must act fast by cancelling such bids, as obtained in the Nnaji case.

The Minister of Power, Prof. Chinedu Nebo, should learn from Nnaji’s fall and resist the temptation of the usual Nigerian factor and the slippery banana peel to influence the pace and course of the privatisation exercise.

He should know that as a notable clergyman, his reputation is at stake, while God whom he serves will weigh his actions and judge him accordingly.

Since Nebo has assured that the government would adhere to the rules of the game to make the exercise open and transparent, as a technocrat who enjoys local and international credibility, he must not squander that goodwill but use it to attract international agencies to participate in it.

Again, the issue of timeline in the sale of the plants must be well handled. The timetable released by CPCS, the transaction adviser to NDPHC and BPE for the submission of bids for the plants by prospective investors and the date fixed for shortlisting of bidders as well as others, must be duly followed.

Where there is need for adjustment of such dates, the public, especially the bidders, must be adequately and promptly informed of the reasons behind the change. This exercise must not also for any reason be allowed to go beyond the June 2014 date for the new owners of the plants to take possession of them.

The government must refrain from shifting the goalpost and changing the rules of the game after bidders have keyed into the programme. It is advised that the government for no reason should change the equity structure of 80 per cent for the core investors and retain the 20 per cent reserved for the shareholders – the three tiers of government – in order to convince the investors of its confidence in the scheme.

Because of the critical role foreign development partners play in the ongoing power sector reform, the government should strive to sustain their confidence in the sale of NIPP assets.

Such development partners include the United Nations Industrial Development Organisation (UNIDO), the Department for International Development (DFID), the European Union (EU), the World Bank, the African Development Bank (AfDB), the United Nations Development Programme (UNDP) and the United States Agency for International Development (USAID). It is on record that most foreign investors rely heavily on information and advice of these international bodies in taking investment decisions.

The international agencies must also assist the federal government with the technical know-how to drive the privatisation exercise to a logical conclusion. They should see the success of the programme as their own success. Umar writes from Abuja

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