Senate says power privatisation has failed, mulls review

Senate President Bukola Saraki

Leke Baiyewu, Abuja

Senators on Wednesday strongly criticised the privatisation of the power sector, saying the model adopted in the transfer of the assets from the Federal Government to private operators had failed.

The Senate, therefore, called for a review of the privatisation process to maximise the capacity of the sector.

The lawmakers, while speaking on a motion by Senator Dino Melaye titled: ‘Discos, electricity consumers and the burden of overbilling’, lamented the failure of the power sector even after it had been privatised.

Seconding the motion, Senator Bukar Mustapha stated that the problem with the sector was inefficiency.

He said, “The problem we have is the inefficiency within the system, which we have actually, so far, not decided to address. I will give you a small example: Nigeria has an installed capacity of 12,522 megawatts of power; we have non-available capacity of 5,300MW; we have non-operational capacity of 3,180MW; meaning that the amount that is actually available is just over 4,000MW out of 12,500MW.

“We have transmission loss of 228MW and we have distribution loss of 447MW. At the end of the day, only 3,800MW reaches the consumer, and we have commercial loss of more than 36 per cent. So, what is actually being paid for out of the over 3,000MW is only 1,800MW.

“So, unless and until we decide to look at this inefficiency within the value chain, there is no way we can have better electricity generation, distribution and also billing system in the country. So, I agree that the model they have used for the privatisation has not worked. And unless and until this inefficiency is looked at, it will not work.”

The senator further stated that if the sector had the capacity to generate 12,500MW but it could only deliver 4,000MW, it meant that more than 75 per cent of the capacity had not been utilised.

Mustapha added, “It means that we are sitting on an emergency situation and something has to be done drastically to address this problem.

“The value chain is weakest at the distribution companies’ level, because they are the ones who collect the money and you will never know how much money is being collected, because they have failed to install the meters that are needed. We need millions of meters.”

He recalled that some lawmakers visited a meter testing facility on Monday “because each meter has to be tested, but there is no capacity to test the millions of meters in Nigeria.”

According to him, the Discos are supposed to provide the meters but lack the funds and technical capacity to provide the devices, adding, “So, it means we have to revisit this as urgently as possible.”

Senator Ben Murray-Bruce said the power generation and distribution companies were privatised on the premise that they would charge cost-reflective tariffs and make the business profitable.

Murray-Bruce said, “Those who privatised the sector did not imagine that the naira will be devalued from N160 to N500 (to a dollar). Those who invested in the business thought it was like a company where they would make a lot of money. I believe they only had enough money to pay the Federal Government and make the initial investment; they did not have the capacity to run a power sector company in a modern economy.

“This is a serious problem. The way the privatisation process took place and the difficulties we have, there is no solution in sight. They don’t have the money to buy the meters. They are technically bankrupt. Unless we revisit the entire privatisation process and unless we understand and dissect what went wrong, we will still get estimated billings.”

“We have a catastrophe in our hands. There will be no light in Nigeria under the current structure. No hope in sight unless we revisit the process and try to understand what went wrong and bring in new players with the requisite capacity.”

In the motion, Melaye said the Senate was worried by the astronomical rise in the electricity bills across the country.

He added that years after the privatisation of the power sector, the Discos, which were retailing and marketing electricity, “have not been able to effectively meter their customers, thereby leaving millions of their customers at their mercy through estimated billing.”

Melaye further said, “The Senate notes also that with the privatisation of the power sector, many Nigerians hoped that things would get better, especially with regards to the improvement of power supply and the quality of services to be rendered.

“The customers had expected, upon the takeover by the new owners, that metering would be one of the issues that would be urgently addressed to restore confidence in the industry, as this is the only way to determine actual consumption. Instead, the Discos came with astronomical monthly increase in the name of cost-reflective tariffs.

“The Senate is saddened that the Discos prefer to hound consumers with jaw-dropping estimated bills by devising means and ways of smartly retrieving meters from customers in order to realise targeted profit margins through the imposition of arbitrary billing system usually referred to as ‘crazy bills’ by customers.”

But before the prayers of the motion were considered, the Chairman, Senate Committee on Power, Steel Development and Metallurgy, Senator Enyinnaya Abaribe, said the panel was already working on the issues in the power sector.

He urged the Senate to suspend debate on the motion pending the presentation of his committee’s report.

The Deputy President of the Senate, Senator Ike Ekweremadu, who presided over the plenary, ruled that the motion be stepped down pending the outcome of the probe by the Abaribe-led panel.

“It makes better sense that we consider the report and be free to make our comment based on the recommendations by the committee,” he said.