Nigeria’s Power Privatization is an Economic Dead-end

UNBIASED AFRICA REPORT

By Kola Ibrahim

InformAfrica – Nigeria’s power privatization is an economic dead-end for democratic public ownership and management, and massive state funding of the power sector.

Nigeria's power privatization is an economic dead end.
As Nigerian government-organized electricity privatization is being further enmeshed in chronic fraud and deceit, the labour movement especially must take a clear revolutionary stand against this corruption-ridden policy. –Kola Ibrahim informs Africa.
(Photo credit: REUTERS/Akintunde Akinleye)

Despite all attempts by the capitalist ruling class in Nigeria and its big business town criers, to portray the privatization of the electricity sub-sector in Nigeria in good light, the reality has continued to show that it is nothing but sheer fraud and deceit. It is an attempt to rob the public in the interest of the few rich in Nigeria and globally, albeit using the general disillusionment in the current state of nation’s power sector, vis-à-vis erratic power supply and exploitation of people through the dubious bills. More than this, the current attempt at auctioning the state utility corporation, Power Holding Corporation of Nigeria (PHCN), again reflects the bankruptcy of the rent-seeking, predatory and clearly unproductive capitalist class in Nigeria – both in politics and big business.

The privatization of the electricity sub-sector has nothing to do with solving the horrifying experience Nigerians have been made to go through with the virtual collapse of electricity infrastructures; itself caused by the deliberate plundering and sabotaging of the corporation by the capitalist class in both big business and politics. It is on the contrary, a means by which big businesses across the board, both local and foreign, plan to profit from the misery and frustration of the generality of Nigerians.

As Nigerian government-organized electricity privatization is being further enmeshed in chronic fraud and deceit, the labour movement especially must take a clear revolutionary stand against this corruption-ridden policy. This privatization if allowed, will lead to massive catastrophe for the nation’s economy and cause untold hardship for the working and poor people who are already living on the fringe of poverty. While government may seem to be having its ways for now in the power privatization madness, the impending catastrophe and misery it will ultimately bring will make the necessity for mass struggle against privatization necessary. This is why the working class movement and its leadership must get the perspective right, and start in earnest to mobilize vigorously and aggressively to stop this policy. One immediate step in this direction should be a 48-hour warning strike and protest, and mass production of educative materials to enlighten the mass of the working and poor people. It is against this background that this perspective is put forward. Labour leadership, both in the electricity sector and central unions, must mobilize to demand for democratic public ownership. More important is the need for the working class movement to begin the process of building a working class political platform as a counterweight to parties of corruption and privatization in place today.

Fraud is the Name of Power Reform

Fraud is the name of power reform in Nigeria.
Fraud is the name of power reform in Nigeria, led by Goodluck Jonathan’s PDP regime. (Photo source: iReports-NG)

The Nigerian capitalist governments, led by the Goodluck Jonathan/PDP regime, have not hidden their bias for this fraudulent process. This explains why the privatization has been dogged by monumental fraud and rip-off of Nigeria as an entity by the capitalist government and its big business partners. This is clearly reflected in the manner the generating corporations have been sold off. The six electricity generating firms were sold off at the rock-bottom price of around N107 billion (around $710 million), meanwhile between 2007 and 2012, over N600 billion was spent on power generation and distribution by both the Jonathan and the Yar’Adua governments.

In fact, the two main hydropower plants, Kainji and Shiroro, upon which billions of dollars have been spent to refurbish and expand, were sold for meager $760 million and $354 million respectively on a 15 year-lease. These are plants with properties and facilities worth billions of dollars including the expansive cum expensive dams. Indeed, in the 2012 budget, more than a billion naira was budgeted for the refurbishment of one of Shiroro hydropower plants.

In addition, the 60 percent of government shares in 10 of the 11 distribution companies are to be sold at total price of N196 billion. Reflecting the bankruptcy of government’s own process, NERC, the regulatory agency in the power sector had earlier valued the 11 distribution companies at a rock bottom price of N328.75 billion; yet 10 (90.1 percent) of the 11 companies were being sold for N196 billion (about 60 percent)! Interestingly, according to Joe Ajaero, the General Secretary of National Union of Electricity Employees (NUEE), land property of the distribution companies alone is worth more than a trillion naira. This means that all the transformers and distribution facilities worth several billions of dollars are being grossly undervalued and auctioned out.

Even, the newly completed state funded IPPs, upon which billions of dollars have been looted, are already being prepared for auctioning, notwithstanding the fact that they are new. According to James Olotu, the Managing Director of Niger Delta Power Holding Company (NDPHC), a subsidiary of PHCN, over $8 billion (over N1.24 trillion) was used to build 10 new power stations. However, three of the new power plants (Geregu, Ughelli, Sapele), contributing about a quarter of the expected power generation, and costing about $2 billion (N300 billion) were sold for less than N100 billion. Assuming without conceding the puerile excuse for the sale of already existing electricity firms (i.e. they need private investments to put them back on track), what excuse will the capitalist government use to justify the auction of new power plants, built with public funds. The remaining power plants, currently under construction are being prepared for auctioning too.

While government set up a liability management company, NELMCO, to shield the private buyers from the N392 billion debt incurred by PHCN, there is no explanation of who will collect the over N600 billion owed to it by government agencies and private businesses. The debt incurred by PHCN included N149.5 billion owed to Power Purchase Agreements with private power (IPP) producers. The reality however is that, while PHCN purchased power from these private power producers at market rates (i.e. far higher than its own tariff); private companies, including big corporations, pay subsidized tariffs (guaranteed with public fund) for electricity generated from PHCN plants.

Why not allow the private IPP producers to market their products directly to consumers, and not government subsidizing their profits. This is clearly double standard meant to serve the interests of big businesses. In spite of this subsidy, many a private big business (possibly including the current buyers of PHCN parts) owes the corporation billions of naira in debt.

On the other hand, at the slightest opportunity, poor and small businesses are cut off from power supply over unpaid bills. Worse still, the same government that was in hurry to auction the utility company, refused to pay up the over N400 billion it owes PHCN let alone compelling the private sector debtors to pay up their debts to the ailing company. What can be inferred from this is that starving the corporation of fund, coupled with looting of its allocation, is a good tool in stifling life out of the corporation in order to sell it for a little token.

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