₦airaland Forum

ola olabiy:
The said framework also does not stipulate actual prices to be charged. Just price ceiling.

This is after factoring in the cost of production and other costs. Including profits.

Itwill be silly to say the government is asking them to operate at a loss.

But, companies in Nigeriaa want astronomical rates.

Generating power from natural gas in Nigeria costs roughly $0.10 per kWh. The Nigerian FG sells it for $0.04. The IPPs and various gas plants in this country get subsidized NG from the gov't.

Obviously, there is only so much NG that the gov't is able to subsidize.

So the government isn't asking them to operate at a loss. . . but they damn sure won't produce any more electricity than they are supplied NG.

IPPs would work in Nigeria if they are allowed to charge their own price. If no gas from the Nigerian FG, you source it instead from abroad and still make your money (raising prices to the end consumer, as necessary.)

[quote author=Kilode?! link=topic=585805.msg7535892#msg7535892 date=1295054334]I'm not against privatization. I don't care who buys PHCN or The water corporation.

My point is that corruption will ensure that those companies are not sold to the right people who will see it as their chance for financial survival -Essentially real business men.

YOU cannot buy on the strength of your business proposal or because of your great ideas or your wonderful finances, they don't care about all that, It has to benefit someone in government personally. I'm not talking about $100,000 in a freezer(a la Louisiana Rep Jefferson). I'm talking about profit killing benefits and patronages, Even YOU eku_bear + Goldman Sachs cannot survive it.

It will go to those who can abuse the system, bribe massively, run the company aground and suffer little to no consequence because they can patronize those in Government, get another contract, another company, another oil block, run for office with no qualms, NO NEGATIVE IMPACT FOR THEM AT ALL. Our massive corruption encourages all that and its killing us.[/quote]Hrm. Maybe I'm very naive, then. I just feel that as long as you sell it to someone halfway competent, they'll get power up and running. It is like selling off a a piece of equipment, a tractor. Suppose the gov't sells it off to someone, gives it to them for free. Will they then take a sledgehammer to this tractor, destroying it and then selling the pieces off for scrap metal?

Even the most corrupt slowpoke on earth will say, "Hey, I have this nice tractor I got for almost nothing. Let me sell it off for full value, or rent it out to farmers. This will maximize the profit I get out of this tractor."

Maybe I don't understand Nigeria well enough, but it is hard for me to see how this outcome (or something like it) would not occur.

ola olabiy:
Do you guys live in another planet?

Are they not being regulated in the UK?
iS IT POSSIBLE FOR TO CHARGE WHATEVER YOU LIKE IN THE UK.

Just ask EON!

Err, there is regulation, but they aren't forced to sell something for $0.04 per kWh when it costs $0.10 or so to produce (approximate figures, not exact.)

The stories you are telling are quite interesting. But I'm not sure how applicable they are to this situation.

ola olabiy:
Eku, do you know what happened to the privatized ones during OBJ's reign?

You wouldn't. Yo're enjoying Californian sun, innit?

The IPPs were not going to be successful due to the poor regulatory environment. Obviously it isn't going to be fun generating electricity when the FG makes you sell it below the cost of producing it. . .
Like, let's be clear. Privatization is necessary, but so is deregulation.
I need to be able to set my own price for selling electricity, not have the government tell me what to sell it for.

@ola.obabiy: Are you satisfied with his response about how power companies in the West are funded?

@Kilode?!: It sucks, but I don't see how it has much bearing on power generation. Like, yes, it is possible for businessman to steal from their partners. But we all know that. Does this mean we should not privatize PHCN because Mike Adenuga might/will find a way to defraud his foreign partners, for example?

Like, these are two separate issues. Yes, corruption is bad. But this doesn't mean don't privatize. Or that privatization will not have a larger positive impact on the economy than tackling corruption.

I still have no clue how a privatized electricity company is going to be corrupt. Again, assuming that they aren't be subsidized by the state in some way (e.g., below market natural gas or coal sold to the electricity company.)

If I sabotage my business, I make less money. . .

Only real avenue is for me to abuse my monopoly, and charge exorbitant prices to consumers.

[quote author=Kilode?! link=topic=585805.msg7535711#msg7535711 date=1295052210]"Big man" Femi Otedola of African Petroleum: http://www.saharareporters.com/press-release/how-femi-otedola-milked-african-petroleum-ap-clement-aviomoh[/quote]Hrm, that is sort of a different case, is it not? He has some private companies which supply goods to AP. He charges more than required for these goods. So it hurts AP, but isn't a case of him destroying his own business. He is really just hurting his other partners at AP.

But. . . that happens all the time, and not just in Nigeria.

[quote author=Kilode?! link=topic=585805.msg7535668#msg7535668 date=1295051828]You will let it rot if you got it for a sweetheart deal that basically costs you nothing;

Because you bought it with stolen public money.

You will let it rot because you borrowed the money from a bank and no one can prosecute your "big mans" $ss for it.

You will let it rot because you can easily loot the company and flip the assets to your foreign friends who will buy if for pittance and make you the Nigerian Chairman.

Nigerian corruption is absolutely incredible bro![/quote]That doesn't make any sense. There is no Nigerian on the face of the earth that will destroy his own business. Even if his business is built with stolen money, he will nurture it.

Please name just one guy who will destroy his own business, one that he owns 100% of.

ola olabiy:
The homeboy won't invest rigorously in the business because he's aware that the next government will upturn the shabby sales when JEG leaves offices.

Ok?

Eh, if I'm the homeboy, I make sure I partner with some international company. If the Nigerian FG tries to take away the business from me, we (me, my international partner) sue them and take them to court.

Or you think the Nigerian government is powerful enough to run roughshod over any international company?  

ola olabiy:
Because they will only operate like NEPA did and PHCN is doing?

Hassle you for payment for services they did not provide.

And, the reason why that 'regulated price' clause was inserted is mainly for their own benefit.

You know how many uninhabited estates these politicians have all over Nigeria?

So you want these companies (the credible ones) to charge them exorbitantly for this?

So rather than actually running the business properly, generating electricity at say $0.10 per kWh and selling it at $0.20 per kWh to the Nigerian consumer, I'll instead NOT sell? I'll sabatoge my business?

All that money that Nigerians spend on generator fuel, I won't want to steal that business away from the fuel companies?

I'll just sit on my hands and watch the Nigerians spend $0.30+ per kWh for electricity when I can sell it to them for $0.20 and make a huge profit?

redsun:
Not even Bill Gate can run a smooth business in its state.A country where an office cleaner demands bribe to mop of spillage on the floor and he thinks it is his right to demand bribe because that is what the president does.

You are probably the type to complain that Lebanese and other foreigners are making money hand over first in Nigeria.

I'm sure Bill Gates is more than capable of running a power company in Nigeria

OK, let me ask everyone this.

GEJ is president. He privatizes PHCN. You are one of his homeboys. He sells the business to you at a sweetheart price.

Will you then let the business rot? So that there is no light covering the area of Nigeria your business sells to?

Only a fool let's his own business rot when it instead could be making money!

Amalaaba:
Dear Jamace,
In the name of God, please don't distort the facts about Aba.
Just like Jos, the original owners of Aba are NGWAS.

The Igbo settlers from Aro and Anambra dominates the economy and Politics of Aba. The leader of the recent violence in Aba, OSISI KANKU, mentioned this dominance as part of his reason for leading the rebellion. The Ngwa have been murmuring for some time. One day, they will burst.

Interesting. This I did not know.

Why will blackout persist?

Imagine that you are one of GEJs cronies and he sells the business to you. You will let your own business rot?

While asking questions is fine, you still have yet to answer the questions I posed for you in #258. Perhaps you should do that.

I don't think we are at the stage yet where we have names of companies interested in investing. At least, I'm not aware of any yet who have declared interest.

What on earth is your point about masts, poles, etc? Where are you going?

Also, you may as well answer the questions I posted in #258.

ola olabiy:
Tensor and Eku,
please tell us about the process of privatizing PHCN as conceptualized by you.

Well, the current privatization plans looks fairly solid to me. The main concern I have is that each of the companies are sold to strong, experienced international players. The current regulatory structure that limits the ability of companies to set their own price is a concern. Right now, the FG sets the price. So eliminating the various subsidies involved is my concern.

Overall though, I like the current plan they have in mind, but mostly want to see it implemented.

Again, do you guys know how it (electricity) works in th Western world?

What specific aspect? Like, be more specific. It works differently in different countries; I only know how it works here in the US.

@ola: Any chance you can answer the questions I posed for you around post #258?

^-- Lol, you seem to be an expert on these things

[quote author=MzD@rkSkin link=topic=582396.msg7534903#msg7534903 date=1295043796][color=#0055bb]BOTTOM LINE. Oil > Human life [/color][/quote]Eh, true, but generally that is not the way human beings actually behave in the real world.

And more importantly, why could I not have made whatever your argument is right before Glo (for example) entered the Nigerian market?

@Katsumoto: I have no clue where you are going with this argument. Privatizing PHCN = bad idea because . . . what? The bad roads in Nigeria? They'll need to bribe? Government will force them to sell energy too cheaply?

What on earth is your argument?

Maybe we should just change the name of Nigeria to the Federal Republic of Corruptistan. Everything that ails Nigeria is corruption. Not access to capital, not misaligned incentives, not poorly thought out regulation that didn't anticipate massive inflation.

Nope, everything is due to corruption. Corruptistan, we hail thee!

Katsumoto:
By your own admission, you are not really qualified to continue this debate about electricity.

I've never claimed this, and in fact think I am more than qualified. FWIW, I've confirmed my understanding with those actually on the ground. In any case, perhaps we should let arguments stand on their own merit. And if they lack merit, then so be it.

How is a private corporation supposed to make profits if it has to deal with corruption associated with such necessities such as importation of parts, transport such parts over terrible or non-existent transport infrastructure or even ensure the safety of its personnel? Do you think such a corporation would be able/allowed to charge high tariffs to cover its additional expenditure resulting from high corrupt practices?

Haba! So now your concern is whether the poor little corporations interested in buying the pieces of PHCN will make a profit, if/when PHCN is privatized?  

Perhaps we should not worry about their profit, yes?

Or better yet, let us worry about how Glo, MTEL, etc will make profit, despite the high corruption and adverse business environment in Nigeria. I weep for Glo. . .

@Ibime: Dude, nobody is asking you to talk or even responding to you. So of what relevance is your patience? Find someone who cares.

ola olabiy:
They won't sell it because they use it to siphon off money from our coffers.

Agreed.

And if sold, it will be to their cronies.

Thus, inefficiency continues.

Hrm. A few questions for you:
1) Is it that PHCN will be sold to the cronies that is your issue, or that it will not be sold for a fair price? I.e., will be sold too cheaply?
2) Is this objection worth not having power in Nigeria? Let's say they sell it to a crony, who then charges you $0.20 per kWh rather than the $0.15 per kWh he could charge and still make a good profit, given the abundance of natural gas and coal in Nigeria. Is this still not better than the $0.30+ per kWh you are currently paying by using a gen?

For me, I almost do not care if it is sold off to a crony (though of course this is non-ideal), so long as the crony makes electricity work (which he will, for obvious reasons) and charges me a reasonable enough price so I can start (for example) a factory and actually take advantage of the relatively cheap labor in Nigeria.

So I concede, not everyone is going to agree with this. Some would rather that PHCN be government owned forever rather than being sold to cronies. While I can understand that perspective, I strongly disagree with it.

Sagamite:
So why do you think we have had historical problems with Electricity?

Eh, a lack of planning and anticipation that further improvements would be necessarily. Another huge part is that government imposed a price on electricity rather than letting the free market set the price. Today, electricity is massively subsidized. As a result of that subsidy, no incentive to produce.

Secondly, why do you think billions spent to revive it failed?

Why actually spend the billions reviving it when you could put in your own pockets? After all, it is government property, not your own, is it? When things are owned by the government, there is a tendency that everybody wants to steal from it. But if it is owned by Private Party X, he will ensure that nobody carries off his property.

Thirdly, why do you think we have struggled so far in privatising it?

An excellent question, I do not know the answer.

I've been at my computer too long, starving. Going to grab some food. Back in 20 or so

ola olabiy:
You don hear am?

Electricity? Allocate 200 billion if you like. It will never get to the point of transmission.

AHRGFgh

That is EXACTLY the goddamn problem with Nigeria. It ISN'T THE GOVERNMENTS JOB TO PROVIDE ELECTRICITY. Why should any money be allocated? Sell it off, let whoever buys raise his own money to do it!

Or do you think a buyer will then sit on the power company and refuse to let electricity flow? No, he wants to make his profit. So he will make sure electricity is running 24/7.

Katsumoto:
lus it also ignores societal corruption e.g

9 year old boy - I want a blackberry
40 year old toaster of 9 yr old boy's 18 year old sister - Blackberry just to call your sister for me
9 yr old boy - also to keep quiet about u sneeking into her room last week.

I assume you are joking with that example, heh (or at least in your implication that that sorta thing happens far more frequently in Nigeria than elsewhere.)

The single biggest problem in Nigeria is electricity. If this is privatized and the government stops its silly subsidies and over-regulation, Nigeria would be a far better place.

If Ribadu says he will sell off PHCN and remove government interference and meddling in that sector, he will be the greatest president Nigeria has ever had.