@1025,
who are thos managing the telecom sector, are they not Nigeria,

privatization, bring about efficiency by eliminating waste and corruption, why?

Simply because someone has invester his or are money and want to make profit,
the reason why government is so corrupt, is because it is not a profit mking venture, once phcn becomes a profit making venture, they will care about thier customers, and becomes efficient, otherwise they will loose money,

@Debosky,
i must say that you are very right and your statement here is a vivid indication of a person with the proper understanding about the issues of the energy industry both in the developed and the developing nations as well.
Like you have noted, there needs to be appropriate price signals in a energy industry, one  that sends out the correct message to investors in such a manner that investment is timely, ensuring that the balance between energy supply and demand is maintained.
However, in Nigeria's energy industry we see a situation where the intervention of the government by adopting regulatory mechanisms such as price caps have created a distortion in the normal operation and flow of the energy system. As such, low electricity prices have failed to send the correct signals to investors and this has stalled the investment in the energy industry, manifested by a lack of adequate transmission, distribution and generation systems.

Also, i think another problem is the fact that Nigerians do not understand the concept of privatization. The regulation of our energy industry created a monopoly (PHCN), and privatization will rid us of that monopoly by introducing private competitors in the generation and distribution systems, allowing us the consumers or the people buying electricity and the producers of electricity to determine the prices by allowing the interaction of demand and supply as in a normal competitive market.

furthermore, a mere look at our energy industry will show you the ineptitude of government handled organizations, even though the government has the welfare of the people at heart, it is unable to balance the effective organizational attributes, efficient decision making and hands on skills needed to run the power system, and the needs of the people.

If we are to look at the subsidies in the electricity sector, we will understand how much the government spend in keeping electricity prices low and how that money can be used in creating jobs else where. I have researched and found that this is the downside of subsidies, once they have been implemented people begin to see them as a right from the government and letting go becomes a problem. this is typical of countries like Nigeria.

The privatization is a right step, but my problem with the entire scheme is the unclear nature of the market model that the government intends to adopt. Are we looking at a single buyer, a multi-buyer model or a hybrid model? these things need to be made clear for us to have a clear representation of the intentions of the government.

I think what the government needs to do is to create an understanding between itself and the people of Nigeria. It needs to ensure that there is a clear understanding of its policies particularly when it involves issues that affect the allocation of the resources at the individual or household level.

netotse:

govt plans to introduce an inclined sliding block tariff next year. . .

means, people that consume more electricity will pay higher prices, that's how the 'poor' are going to be taken care of. . .

The privatization exercise will eventually be judged by how effective this type of provision is as well as any improvement in the supply of electricity.

sweet9ja:

Please, ignore that fake communist. FGN should without delay privatise all utility companies, introduce road tax for vehicle in the country and remove sudsidy from all petroleum products. Money acruing from this exercise should be directed toward improving healthcare delivery, education and building and maitening our road network.

Sinsc you know that these will not happen, why spout rubbish? The subsidies on fuel and electricity are the ONLY things that the poor get from their government.

lmao who said electricity will be expensive when the power sector is privatized? lailai this phcn ppl are theives. Many nigerians don't know their right either . i'll use my family as an example. My family stays in ibadan but my dad works in lagos and i school in lagos. We have a place in lagos. I stay in the hostel and i don't even go home on weekends. My dad leaves home(in lagos) 6am every morning and gets back home 10pm at night. He doesn't spend his weekend lagos. By sat morning he's off to ibadan and he doesn't come back till monday evening. So tell me who consumes the electricity we pay for at home? but at rhe end of the month these bastards will still bring a bill of between 3k and 4k without reading the meter which is wrong. What's the meter used for if not to calculate the number of units of electricity u've consumed in a month and bill u based on the number of units consumed. After paying 4k per month for years he wrote a letter to them(phcn) and when they took the meter readings they found out we've been over billed for years we're now being billed fairly. We pay abt 500naira per month now
Many nigerians are already paying more than they use so please let them privatise it we're ready to pay 10k per month if 24hrs of electricity is garantueed

ANYBODY THINKING THAT THERE WOULD BE COMPETITION WHEN THE POWER SECT IS PRIVATIZED MUST BE HIGH ON CHEAP DRUGS.
IT WOULD BE A PERFECT EXAMPLE OF PRIVATE MONOPOLY

playah P:

ANYBODY THINKING THAT THERE WOULD BE COMPETITION WHEN THE POWER SECT IS PRIVATIZED MUST BE HIGH ON CHEAP DRUGS.
IT WOULD BE A PERFECT EXAMPLE OF PRIVATE MONOPOLY

The competition wouldn't play out exactly the way it does in telecoms. In power, the distribution company serving PH would at least be able to purchase power from the cheapest power generator.

People should please stop comparing the telecoms industry to the power industry, they are two very different sectors, you can cover the whole of nigeria with telecomms facilities for the cost of just 3000 MW. I am a little bit skeptical because I feel that we will be extorted by the private companies, but, that is the road the government wants to travel, that is what we have to prepare ourselves for. One issue I have is after power is privatised and subsidy is removed from petroleum products, what next will they privatise, education? health, federal roads? What is the function of the Government, people keep saying privatise this, privatise that when we do not have any safety net. We need to vote in leaders who have the interest of the people at heart so that when privatisation issues crop up, they will make sure that the effects will not be debilitating.

hercules07:

People should please stop comparing the telecoms industry to the power industry, they are two very different sectors, you can cover the whole of nigeria with telecomms facilities for the cost of just 3000 MW. I am a little bit skeptical because I feel that we will be extorted by the private companies, but, that is the road the government wants to travel, that is what we have to prepare ourselves for. One issue I have is after power is privatised and subsidy is removed from petroleum products, what next will they privatise, education? health, federal roads? What is the function of the Government, people keep saying privatise this, privatise that when we do not have any safety net. We need to vote in leaders who have the interest of the people at heart so that when privatisation issues crop up, they will make sure that the effects will not be debilitating.

You can't totally rule out the similarities between both!

While the power sector is distinctly different from the telecomms, I still beleive that the private sector is better equipped at managing it that the government can ever be.

If this country wasn't so currupt, privatization should bring about availablity at little or no extra cost. But by the time the President, his cabinet and the reps will start asking for 'cuts' the private companies will have the free will to exploit the masses as they deem fit!

@Uju

Exactly, you will not believe that our Senators have shares in MTN, will they now jeopardize their interests in that company?

DapoBear:

No. There is no competition between supplier of electricity; if you are dissatisfied with whoever provides electricity to your house, then it isn't as if you can find someone else to do the job. It is effectively a local monopoly.

Same as I stated. Only privatization can facilitate competition. Nigeria does not need a monopoly in any good or service. Places like Mexico and even Togo do not have the kind of electricity problem we have in Nigeria because of the 'generator merchants' backed up by the corrupt people in government. We need to do away with the 'Dangote' era of monopolies forstered by the Nigerian government.

The main point of privatizing is to to attract outside investors with lots of cash who will not mind spending the billions of dollars required to get the infrastructure up and running.

No. You take jobs away from Nigerians with all that your 'investing'. What are all your electrical engineering graduates doing all over Nigeria? Bunkering oil?
Electricity should strictly a Nigerian domain with minimum interference from the outside world.  What on earth do you produce? Are you not tired of getting ripped off by what you can do by yourself?  Please, shed that "big man" mentality and put Nigerians to work for a change. You have the brains. Encourage privatization with strict regulation. Period.

What group of sane investors would want to dabble into the Nigerian power sector with all that red-tape and saboteurs' mentality/complex. Only Nigerians can fix that kind of problem indigenous to Nigerians and perculiar to the underdeveloping mindset.

A secondary point is to remove control from the federal gov't, who will no doubt slow down progress in places like Lagos and Abuja where the power business is likely to be most profitable. The federal governments modus operandi right now seems to be to slow all the parts of the country down to molasses speeds of progress, when some parts would like to progress more rapidly.

I think you are contradicting yourself. Only with privatization can the role of the federal government be diminished. So, which do you want? What side are you arguing for or against?

hercules07:

@Uju

Exactly, you will not believe that our Senators have shares in MTN, will they now jeopardize their interests in that company?

Despite the 'shares' they have, communication is still cheap compared to when it was managed by NITEL. The competition has made it harder for MTN to keep exploting Nigerians and it can only get better with time.

I think the same can be applied to the power sector!

hercules07:

People should please stop comparing the telecoms industry to the power industry, they are two very different sectors, you can cover the whole of nigeria with telecomms facilities for the cost of just 3000 MW. I am a little bit skeptical because I feel that we will be extorted by the private companies, but, that is the road the government wants to travel, that is what we have to prepare ourselves for. One issue I have is after power is privatised and subsidy is removed from petroleum products, what next will they privatise, education? health, federal roads? What is the function of the Government, people keep saying privatise this, privatise that when we do not have any safety net. We need to vote in leaders who have the interest of the people at heart so that when privatisation issues crop up, they will make sure that the effects will not be debilitating.

They are indeed 2 different sectors, but the CONCEPT, PRINCIPLES, BENEFITs and in some cases CONS  of private ownership and competition are the same everywhere. The amount of investment required does not matter. Even when selling akara, competition comes into play. For eg ,if there is only one akara seller on my street, everybody may flock around her even though her akara is not that good and the price is high. But if someone else wants to sell akara on that street, he will either have to sell tastier akara , reduce the price or package it better. The CONCEPT can be applied in ANY sector.

Jaidey-one:

lmao [b] who said electricity will be expensive when the power sector is privatized?[/b] lailai this phcn ppl are theives.
Many nigerians are already paying more than they use so please let them privatise it we're ready to pay 10k per month if 24hrs of electricity is garantueed

The same people whose parents are generator merchants in Nigeria of course. Where you have street lights being powered by diesel all year round, simply because people like Uduaghan and Fashola have relatives with generator and deisel contracts all year round.

Don't blame the PCHN peeps. The government sabotages them too to infinite un-productivity. Governmental roles should be strictly regulatory period. But only in Nigeria of course.

Rogues!

Sho you right. . .only privatization can forster the innovation Nigeria needs. Give us guranteed electricity, and I will pay any price. Enough of these generator merchants in government like the buffoon in this opening article.

Blazay:

Same as I stated.

OK, maybe I misread you.

No. You take jobs away from Nigerians with all that your 'investing'. What are all your electrical engineering graduates doing all over Nigeria? Bunkering oil?
Electricity should strictly a Nigerian domain with minimum interference from the outside world.  What on earth do you produce? Are you not tired of getting ripped off by what you can do by yourself?  Please, shed that "big man" mentality and put Nigerians to work for a change. You have the brains. Encourage privatization with strict regulation. Period.

Nope, it is very capital intensive. So you need to attract outside investment. . . or convince Nigerian banks to loan you the $500 million to setup a nicely sized power plant. Unfortunately, Nigerian banks charge assloads of money in interest, in part because there are way more profitable things they can do with their money than investing in electricity generation.

Regarding who maintains/builds the power plants, yes, no reason not to hire Nigerian engineers. But this is a secondary issue. Primary issue is financing.

What group of sane investors would want to dabble into the Nigerian power sector with all that red-tape and saboteurs' mentality/complex. Only Nigerians can fix that kind of problem indigenous to Nigerians and perculiar to the underdeveloping mindset.

Assuming you can get rid of the red tape, then I think foreigners are the perfect sort of person to target. The toll road that Fashola built by giving a 30 year concession? Iirc, some Australian bank put up a lot of the capital. This is the sort of things Western banks like to invest in. Securities that are relatively safe (at least, compared to other things in Africa) and have a predictable income stream.

Nigerians on the other hand seem to be interested in higher-rewarding investment opportunities. Which to be fair makes a lot of sense; there are lots of more profitable businesses one can probably invest in in a place like Nigeria than generating power.

I think you are contradicting yourself. Only with privatization can the role of the federal government be diminished. So, which do you want? What side are you arguing for or against?

I'm arguing for less federal gov't interference and control.

Privatisation is the only solution to our long troubled power sector. Remember the days of NITEL and GSM companies. Did it not work? I want to ask those that are resisting privatisation, how many NITEL lines do they have then and now. They are only resisting it because of their selfish motives. They will miss all their inflated contracts and the evil they do in NEPA, oh sorry! PHCN (whatever name they baptize it with). ENEMIES OF PROGRESS and CORRUPT CIVIL SERVANTS. I beg make our Oyinbo experts come save us from 'Darkness' into 'marvelous light' o jare. Yeye people.

@HP ( u know compaq no exist again)

The principles might be the same but the differences are significant, the competition in telecoms is keen, in power, competition is not going to play a major role.

Its beta they sell PHCN to Japanese. Give them 2 yrs and u'll see constant power supply. I blv those in charge of importing gen are the ones behind unstable power supply in the country

@ Hercules,

I feel you there. I agree it can't be as keen, but competition is competition, whichever form it takes. If I want to set up a 1000Mw plant, I will have to ensure I use the best technology and processes to ensure that I can sell my power to PH DistCo at say N11/Kwh because I know that currently PH DistCo has a 7 year contract to purchase from say PowerGen at N15/Kwh.

Very lively debate. In a few sentences.

1. Similar fears of infrastructure, corruption, financing and affordability were abundant in 2001.
2. There are ship loads of money out there seeking viable investment opportunities.
3. The Nigerian power market has unbelievable potential. It will be second to none in africa and earnings will dwarf anything telecom operators have seen.
4. Roads, power, corruption, security, governance are all worse than in 2001 but investment in telecoms has not receded.
5. The cost of power infrastructure is not more expensive or complex than oil and gas infrastructure.
6. There are more indigenous jobs in the telecoms sector today than pre 2001.
7. Scale has brought down the unit cost of telecoms services.
8. Technology has improved the range of services offered allowing both rich and poor access. e.g Blackberry, blueberry, strawberry, beri-beri.
9. Telecoms privatisation has freed the government from an annual bill of 100 billion ? (2001) - though it has not improved government finances and would have saved us 12 billion US lost/mismanaged by the OBJ regime.
10. Power reforms will bring the players with the best practices in various fields of enterprise globally.
11. Power reforms is the only way any meaningful industrialization can be achieved.
12. Power reforms will lead to a reduction in Lebanese visa applications to Nigeria.
13. Power reforms will enrich the people of the Niger-Delta since the primary fuel for generation is sourced there leading to (hopefully) direct negotiations with affected communities and peoples.
14. Power reforms will collectively reduce the health bills of Nigerians and make them speak more quietly when interacting with folks of other countries.
15. Power refo, Ah ah NEPA.

The originator of this topic must be a Director of PHCN or NEPA.

PRIVATISATION is the way to go because huge sums of money is required to fund the electricity project. Nigerians must learn to pay for the necessities of life. Nothing is free.

See what privatisation has done to the Telecommunication industry in Nigeria. NITEL is almost dead now but Nigeria is advancing in telecommunication without NITEL wahala. The same will happen if electricity is privatised.

I lookforward to the disappearance of the name PHCN and NEPA because they represent bad news and bad omen for Nigeria.

DapoBear:

OK, maybe I misread you.
Nope, it is very capital intensive. So you need to attract outside investment. . . or convince Nigerian banks to loan you the $500 million to setup a nicely sized power plant. Unfortunately, Nigerian banks charge assloads of money in interest, in part because there are way more profitable things they can do with their money than investing in electricity generation.

Nothing is impossible with the eradication of corruption. If you like get foreign investors, capital intensive or not. . .same result. Halliburton sounds familiar?
Siemens? Nigerians will corrupt anything incorruptible. The kind of government you have of course. For chrrisakes, Senegal has electricity 24/7 all year round.
Without a reliable transportation network or the basic security. . .count foreign investors out.

Regarding who maintains/builds the power plants, yes, no reason not to hire Nigerian engineers. But this is a secondary issue. Primary issue is financing.

With all the crooks you have all over Nigeria? Seize some properties and use the proceeds to develop the community. Adenuga had no problem spending millions/billions(depending on what currency you are referring to) for one daughter's wedding huh?

Assuming you can get rid of the red tape, then I think foreigners are the perfect sort of person to target. The toll road that Fashola built by giving a 30 year concession? Iirc, some Australian bank put up a lot of the capital. This is the sort of things Western banks like to invest in. Securities that are relatively safe (at least, compared to other things in Africa) and have a predictable income stream.

Outsourcing never helped any developing country. Communist China would not be #1 today despite the snobbery from the West.

Nigerians on the other hand seem to be interested in higher-rewarding investment opportunities. Which to be fair makes a lot of sense; there are lots of more profitable businesses one can probably invest in in a place like Nigeria than generating power.
I'm arguing for less federal gov't interference and control.

Shows you are not ready to be an independent nation. Bring back the colonialists then.
Your approach can only keep Nigeria down for ever.
Learn to invest in yourselves. . .then the world would invest in you.
Right now we are at a disadvantage economically.

I ask again, what investors in their right minds would be crazy enough to dabble into the Nigerian power sector full of saboteurs that cannot be held accountable for their treason against Nigeria? Investors want to gain. . . not lose. Nigeria is a losing investment all round. Only in the oil sector. . .where we get ripped off good, do the investors see the possibility of a gain. . .since the Nigerian government is too daft to figure it out.

@ hercules
I seriously do not believe what you are saying because the power sector is one of the very few industries where the principle of competition and effective allocation of resources is applied to the wire, almost as is in economic theory.

@blazay
you have just stated one of the key issues of the Nigerian power sector, which is the extent of infrastructural decay and sabotage. This in itself is one of the major barriers to private investment in the power sector, and given the level it has reached it creates worries when we think of the cost the consumers will bear after the private firms have invested in generating and distributing infrastructure.
We must also note that privatization in other countries also involved the participation of foreign investors like in the UK, Sweden, Denmark and Germany. This however does not justify a hundred percent foreign controlled power sector in Nigeria. I think it is left to Nigerian investors to garner themselves to see how Nigerians can also participate in this.

From the telecommunications example I AM SURE THAT Privatisation of Electricity will benefit every Nigerian tremendously.

PHCN is enough, let us change direction. Paying bills without power. Phcn stop holding power, release power and go.

mobbi_06:

@ hercules
I seriously do not believe what you are saying because the power sector is one of the very few industries where the principle of competition and effective allocation of resources is applied to the wire, almost as is in economic theory.

@blazay
you have just stated one of the key issues of the Nigerian power sector, which is the extent of infrastructural decay and sabotage. This in itself is one of the major barriers to private investment in the power sector, and given the level it has reached it creates worries when we think of the cost the consumers will bear after the private firms have invested in generating and distributing infrastructure.
We must also note that privatization in other countries also involved the participation of foreign investors like in the UK, Sweden, Denmark and Germany. This however does not justify a hundred percent foreign controlled power sector in Nigeria. I think it is left to Nigerian investors to garner themselves to see how Nigerians can also participate in this.

I agree. All that investor bizz proposed by the dude in this article is all a smokescreen. Nigerians would fall for that gimmick any day, any time. Nigeria needs to learn an ounce of self-reliance. When one of my flights was diverted to Senegal for some mechanical problem to be checked out over night, I was ashamed to see that the city had electricity through out the night. The hotel we stayed in never switched from deisel to PCHN for one second. Even Mexico. It is really embarassing.

Do we mention Ghana?

how does he know that?

Blazay:

Nothing is impossible with the eradication of corruption. If you like get foreign investors, capital intensive or not. . .same result. Halliburton sounds familiar?
Siemens? Nigerians will corrupt anything incorruptible. The kind of government you have of course. For chrrisakes, Senegal has electricity 24/7 all year round.

Without a reliable transportation network or the basic security. . .count foreign investors out.

What does corruption have to do with high interest rates?

Outsourcing never helped any developing country. Communist China would not be #1 today despite the snobbery from the West.

What on earth is being outsourced? Foreign investment != outsourcing.

Shows you are not ready to be an independent nation. Bring back the colonialists then.
Your approach can only keep Nigeria down for ever.
Learn to invest in yourselves. . .then the world would invest in you.
Right now we are at a disadvantage economically.

No, not at all. Again, there are just much more lucrative opportunities available in Nigeria. If i have $100 million, the last thing I'd do is invest in electricity production. Too many other things one can do with the money in Nigeria. However, foreigners don't necessarily think in the same way. Again, they are attracted to relatively safe things like power production, roads, etc.

DapoBear:

What does corruption have to do with high interest rates?

Are you following this thread at all?
If you want investors in Nigeria, you need reliable transportation and security. In a nutshell, the pre-requisites of investing in your power sector are just not there. You are already dreaming of high interest rates. Young man, you need to learn to crawl before you think of doing the 'leap-frog' jump. With the level of corruption in Nigeria, no serious investors will think of investing in a 'rogue' state unless you want Halliburton revisited. Bribery and short cuts with absolutely nothing done.

What on earth is being outsourced? Foreign investment != outsourcing.

Jobs for your Nigerian graduates. If you can supply Ghana and Benin electricity. . . surely one state. . . just one state in Nigeria could benefit. So what kind of investors do you need in the power sector that Nigerians can not take charge of. If not for corruption and nepotism?

No, not at all. Again, there are just much more lucrative opportunities available in Nigeria. If i have $100 million, the last thing I'd do is invest in electricity production. Too many other things one can do with the money in Nigeria. However, foreigners don't necessarily think in the same way. Again, they are attracted to relatively safe things like power production, roads, etc.

Without security and basic amenities?

Is that right? I was taking you seriously for one minute. Now, I know you are here to kid around.
Keep investing in darkness.
You are beginning to sound like a representative of the government yourself.
Would not be surprised if you stand a lot to gain from such pro-investors' argument.
Only enemies of Nigerian progress would frown against privatization.
At least give the Nigerian private sector a chance.
Not difficult to ask.

A recurring theme on this thread is the obstacle of corruption. If you cannot manage your 1million dollars efficiently, I doubt you can manage 1 trillion in any investment venture in Nigeria. . . .power, transportation or otherwise. I think you need to address that first.

Blazay:



Are you following this thread at all?

Nigerian banks charge high interest rates. And you are attributing this to corruption?! Rather than the fact that the country has high inflation, not-so-great mechanisms for recovering defaulted money, etc? Even if there was no corruption in Nigeria, interest rates would still be high.

If you want investors in Nigeria, you need reliable transportation and security. In a nutshell, the pre-requisites of investing in your power sector are just not there. You are already dreaming of high interest rates. Young man, you need to learn to crawl before you think of doing the 'leap-frog' jump. With the level of corruption in Nigeria, no serious investors will think of investing in a 'rogue' state unless you want Halliburton revisited. Bribery and short cuts with absolutely nothing done.

Then pray tell, how did Lagos State get investors to commit hundreds of millions to build the Lekki road?

Jobs for your Nigerian graduates.

So somehow you believe that foreign investment REDUCES the number of jobs in Nigeria for graduates? I do not follow your argument. Foreign investment increases the amount of jobs, not decreases it.

If you can supply Ghana and Benin electricity. . . surely one state. . . just one state in Nigeria could benefit. So what kind of investors do you need in the power sector that Nigerians can not take charge of. If not for corruption and nepotism?

You are beginning to sound like a representative of the government yourself.
Would not be surprised if you stand a lot to gain from such pro-investors' argument.
Only enemies of Nigerian progress would frown against privatization.
At least give the Nigerian private sector a chance.
Not difficult to ask.

You've thoroughly confused me.  Anyway, I suspect we agree, but somehow you are misunderstanding my position.

Long story short, I'm very much pro privatization, pro foreign investment. I encourage Nigerian private businesses/capitalists want to invest too; the more the merrier. Whoever wants to invest, let him bring his money and go ahead. Everyone is welcome to spend their capital building Nigeria.

DapoBear:

Nigerian banks charge high interest rates. And you are attributing this to corruption?! Rather than the fact that the country has high inflation, not-so-great mechanisms for recovering defaulted money, etc? Even if there was no corruption in Nigeria, interest rates would still be high.
Then pray tell, how did Lagos State get investors to commit hundreds of millions to build the Lekki road?
So somehow you believe that foreign investment REDUCES the number of jobs in Nigeria for graduates? I do not follow your argument. Foreign investment increases the amount of jobs, not decreases it.
You've thoroughly confused me.  Anyway, I suspect we agree, but somehow you are misunderstanding my position.

Long story short, I'm very much pro privatization, pro foreign investment. I encourage Nigerian private businesses/capitalists want to invest too; the more the merrier. Whoever wants to invest, let him bring his money and go ahead. Everyone is welcome to spend their capital building Nigeria.

agreed