BESIDES the fact that global economies are now private sector driven, the inefficiency in Nigeria’s power sector, occasioned by actions and inactions of the Federal Government and civil servants, necessitated for the ongoing reforms in the sector. But whether the reforms would bring about the needed efficiency in the generation and distribution of electricity depends on how well some contentious issues regarding the liquidation of Power Holding Company,PHCN, are resolved. CHARLES KUMOLU reports.

LIKE other sectors of Nigeria’s socio-economic existence, the story of the country’s energy sector since the Electricity Corporation of Nigeria ,ECN, ordinance No. 15 of 1950, has been punctuated by operational failures .

Although, those in charge of the nation’s power sector could claim otherwise, owning to some distant and recent reforms in the sector.

But the despised state of power sector in Nigeria, is a common knowledge to both the learned and unlearned man on the streets of Lagos and Lafia, as almost all Nigerians are victims of the near absence of electricity in a country of about 160.000.000 people.

Recent liquidation

It is for this reason, that a lot of people are not often bothered about developments in the sector, even when such developments could make darkness to give way to light. This situation is already playing out, following the recent liquidation of the PHCN.

Expectedly, this move would have triggered diverse reactions from consumers following the exit of government in its management, but reverse is the case.

This, to a large extent, underscored the apathy of the populace to happenings in the sector.

In fact, but for the unfolding dispute between, National Union of Electricity Employees (NUEE) and the Federal Government,FG, not a few would have been aware, that PHCN had silently been buried, leaving in its trail a lot of contentious issues.

These issues, VanguardFeatures,VF, findings revealed, bothered on labour matters, criteria for redeployment of staff to successor companies, job security of affected staff, how the reforms would enhance power generation and distribution, the role of PHCN in the new set up, among others.

In the beginning: The journey to the current state of affairs in Nigeria’s energy sector, it was gathered, could be traced to the 2005 power sector reforms by President Olusegun Obasanjo.

That reform, which came about through the enactment of Electric Power Sector Reform Bill,EPSRB, started the process of privatising PHCN.

In line with this reform, the FG would retain transmission arm of PHCN, which would be handed over to a credible firm under a five-year contract.

The FG would also invest $3.5 billion for the construction of a 700 kilowatts super transmission grid that would enable power generation companies to transmit 6,939 Megatwatts,MW, by April 2011, when National Independent Power Generation Plants, was expected to come on stream and transmit 14,019,MW by 2013.

Consequently, PHCN was established and subsequently unbundled into eighteen 18 successor companies.

It is in furtherance to this reform that the 2012 liquidation of the company was announced recently.

“PHCN is no longer legally in existence” the Minister of Power Barth Nnaji said, while confirming the liquidation of PHCN.

He further added that, “the regulatory agency simply in its responsibility had instructed the market operator that the PHCN headquarters is not a market participant and should no longer get paid, they need to be transferred to where they can be useful.”

PHCN no longer legally existing: The implication of this move is that FG, would henceforth, relinquish 70 percent of its stakes in Nigeria’s electricity generation and distribution.

The government had initially planned to sell just 51 percent stake to investors who had put forward various bids for the purchase of any of the unbundled units of the PHCN, especially in distribution and generation, while it was to retain 49 per cent.

Analysts have described the decision as a bold move and an investment friendly initiative that could fast-track the privatisation of the sector.

Industry experts, also maintained that the step is a milestone in the plans to guarantee security of electricity supply, increase electricity generation and making electricity affordable.

It is also expected to open up opportunities for the 18 unbundled successor companies of PHCN to be sold to successful bidders by the end of the first quarter of 2012 as projected by the Bureau of Public Enterprises (BPE) and the Power Ministry.

Despite this, the question of how best to handle the redeployment of PHCN staff to successor companies, appears to be a stumbling block to the final lapse of the privatisation exercise.

In a manner similar to the wave of protest that trailed the beginning of the process few years back, NUEE, are already at war with the FG over certain aspects of the programme.

The workers under the aegis of Senior Staff Association of Electricity and Allied Companies (SSAEAC) kicked against FG’ s plan to redeploy PHCN workers.

The President-General, SSAEAC, Mr. Bede Opara, noted that government ought to have addressed all pending labour issues before giving up the PHCN corporate headquarters in Abuja.

“All labour issues must precede bidding and sale of any public company, and that PHCN must comply with all outstanding agreements reached with the workers before any staff will be made to leave the service of the organisation,”Opara noted.

His NUEE counterpart, Mr. Joe Ajero in a similar protest, petitioned Mr. Emeka Wogu, Labour Minister, over perceived illegal liquidation, warning that that if the plan was carried out, it would amount to an illegality since PHCN, as a limited liability company, could only be liquidated through a court process

“Before this is done, issues affecting creditors, debtors, employees and retirees, must be resolved. Information at our disposal reveals that a major step towards achieving this ominous aim is to post out all staff from PHCN corporate headquarters, Abuja,” Ajero fummed.

The electricity workers are not alone in this battle, as they seem to have the support of some experts, who argued that the FG is not handling the matter in a proper manner.

President General of Trade Union Congress,TUC, Peter Esele is in support of moves by the PHCN staff to ensure that all pending labour issues are resolved, before being transferred to successor companies.

Labour issues and court process

Esele told VF that, “ there is nothing wrong for labour issues to pass through court process. There is nothing wrong in carrying the union along and making the people understand what you are trying to do. But unfortunately, the government always does whatever they want, because they know they can get away with it. And no body is always held accountable about some of these decisions that does not favour the generality of the workers.

“For example, you saw the billions of dollars that was pumped into power generation projects and nothing came out of it. I think that I am on this with the union, until the government does the right thing about the unbundling of PHCN as it affects their welfare. Some of them are being transferred, some are being asked to go, without receiving their entitlements.”

Indeed, Esele’s submission may be right, following similar instances in the past, where workers had not been treated fairly in the privatisation process. Many are not in a hurry to forget the case of Nigerian Airways and NITEL. Like the PHCN, the then NITEL workers raised concerns pertaining job security and other unsettled labour matters.

It is against this backdrop that Esele suggested thus: “ The issue is simple, if you no longer want them, pay them off and let them go. The way the government is handling the issue of workers in this whole process is not the best way to handle this kind of issue, having watched some of the actions on television and noted what the people are saying, I can conclude that the government is not handling it well.

Imposing choice

“Normally, when you want to do something like this, you give the workers various options to choose from and not imposing your choice on them. You can’t come and tell me that I have to work for a new company, I have the choice to chose where I will work. I have seen that happen in other companies.”

Regardless of this, further investigations among industry experts, revealed that the wave of protest by PHCN staff, may not be unconnected with the fact that it would no longer be business as usual, given the level of corruption in the sector.

A retired NEPA staff, Mr. Uchenna Onyewe(not real name), told VF that, “I have been in that system and I know why they are always protesting. This is not the first time that they are threatening fire because of privatisation. If you know the height of sharp practices among these NEPA civil servants, you will know why the sector has remained inefficient. Privatisation is good if well carried out, with all parties involved having a fair deal.”

For Dr. Sam Amadi, Chairman Nigerian Electricity Regulatory Commission,NERC, the latest position of PHCN staff on the power sector reforms, suggested that there are some grey issues that needed to be addressed.

“What is going on about the power sector reforms presently, suggests that there are some incoherence somewhere. And as a public policy expert, I will suggest that such areas of incoherence should be identified and the questions resolved in the interest of all the parties involved. For example, if you want to privatise as quickly as possible, most of the agencies in this sector are bloated and overstaffed. So, sharing them to successive companies also implies overstaffing,” he stated.

He further said: “The operating cost is high. You can not have over 57, 000 people, producing 4000MW. So, for me the whole idea of transferring them, should also be done along the efficiency yearnings of the consumers and NERC as a regulator.”

While tracing how the liquidation exercise started, Amadi said, “ PHCN was unbundled in 2006 because it was PHCN and we had successor companies of PHCN. There are some of them that are providing general services. So the physical liquidation of PHCN by government does not concern NERC . What concerns NERC as a regulator is that we will no longer be charging consumers headquarter charge, because they have already unbundled PHCN.”

Liquidation will not increase power generation

Therefore, he added that, “what NERC is simply saying is that we will also deal with the eighteen companies that are providing services. NERC was not consulted before the physical liquidation and NERC has no hand in what is going on. NERC’s opinion was not sought, as far as we are not collecting money from the market. If the federal government decides to no longer fund PHCN, it is not the business of NERC, because it is funded by the federal government. I saw reports saying that it is NERC and Ministry of Power that did so. But it is the initiative of the ministry of power as part of the privatisation process.

Posed with the question of whether the whole exercise, would translate into increase in power generation, Amadi said, “the liquidation has nothing to do with increasing power, it will actually increase cost, because the people who are involved in whether the light is stable or not is the Abuja distribution company. So the headquarters has no direct work on how to stablisise power. Many of them at the headquarters could be involved in general services like legal because you know NEPA has a backlog of legal cases. But what they are doing clearly from the market point of view, does not really add to power generation in the country.”

Difficult days ahead/African example

However, there are indications that greater challenges lie ahead. Accordingly, experiences from some countries in Africa, where it had been introduced, suggested that many technical issues in relation to market design, market structure and regulatory setup, can arise.

Elaborating on this, a joint UNDP /World Bank Energy sector Management report, noted that power sector reform has conventionally begun with an initial stage of commercialisation and corporatisation of state-owned utilities, which is followed by their unbundling and the introduction of competition when country size allowed and private sector participation.

It also said, “Although many countries have begun this reform process, no African country has completed the transition to a fully unbundled, competitive, and private electricity sector; in fact, among the six countries studied, so far only Uganda has successfully unbundled its utility. Some have introduced limited competition for the market by allowing bids by independent power producers (IPPs) or concession agreements, but none have succeeded in developing competition in the market through a competitive power market or at the distribution level.”

It further added that, “private participation is now present in the form of IPPs (Ghana, South Africa, Tanzania),concessions (Mali, Uganda), and management contracts (Mali, Tanzania and, briefly, northern Namibia), throughout the continent, countries that have undertaken the reform of their power sectors have established electricity regulators with various levels of success.”

This notwithstanding, Amadi told VF that power sector privatisation in Nigeria, could still be successful if the successor companies are operated like business entities.

“We need to ask if we want to right size and properly run the successive firms like companies in order to bring about efficiency. They should be run like companies and not as parastatals. The companies should have board of directors, who can take independent decision to sack staff, who are no longer contributing to the efficiency drive of the organisations.,” he submitted, noting that “when you run them like parastatals, you may not get the desired results that privatisation brings about in other climes where it is successful. Right now our concern is the efficiency of that sector and presently the sector is very inefficient and it is the consumer that is bearing the brunt of that inefficiency.”

18 unbundled companies and successor companies

Some of the companies that are to be privatised in the electricity sector include;

Abuja Electricity Distribution Company Plc ,Benin Electricity Distribution Company Plc; Enugu Electricity Distribution Company Plc; Eko Electricity Distribution Company Plc; Ibadan Electricity Distribution Company Plc and Ikeja Electricity Distribution Company Plc.

Others include the Jos Electricity Distribution Company Plc; Kaduna Electricity Distribution Company Plc; Kano Electricity Distribution Company Plc; Port Harcourt Electricity Distribution Company Plc and Yola Electricity Distribution Company Plc

In addition, among the new successor companies are; Discos, Transyco, Neimco, Bulk purchaser, NERC and Naptin.

http://www.vanguardngr.com/2012/02/liquidation-of-phcn-the-facts-farce-and-shape-of-days-ahead/