Fashola: Why Electricity Privatisation Has Failed Nigerians So Far


Chineme Okafor in Abuja

The Minister of Power, Works, and Housing, Mr. Babatunde Fashola, has said that the electricity sector privatisation, which the federal government concluded in 2013, has failed to deliver the expected results because of various constraints.

According to Fashola, the privatisation exercise has largely performed below the expectations of most Nigerians because it has challenges, which included political interference; financial illiquidity; poor metering of consumers; debts owed in the market; inadequate market governance; and below par technical capacity of operators.

Speaking during a recent public lecture he delivered at the University of Lagos, Fashola, also stated that at the moment, the government was constrained by many reasons from reversing the privatisation exercise.

He, however, noted that he believed in the privatisation of the power sector as a way to solving Nigeria’s power challenges, adding that the 2013 exercise would have to be improved on to meet its original targets.

“Without a doubt, the privatisation of power is the way to go. Admittedly it has not yet delivered the kind of results we were all made to expect, for some of the reasons I have stated; political interference, liquidity, metering, debts, governance, technical capacity of operators and the political dishonesty with which Nigerians expectation were raised to the sky,” Fashola said.
He then added: “But I have no doubt at all, having studied the privatisation of Brazil, Mexico, India, South-Africa and China (who went through some or all of our current challenges), that reliable electricity will happen in Nigeria.

“It is not an event, it is a journey marked by positive trends that have occurred and will occur as the right solutions are deployed to challenges,” he added.
Speaking on the government’s plan to rework the exercise to get it to deliver on its targets, the minister explained: “This is what the Power Sector Reform Programme (PSRP) seeks to achieve.”
The PSRP, according to him was developed with the World Bank, to restore credibility; liquidity; transparency; efficiency; good governance; and improved service delivery to the power sector.

He noted that government would not cancel the exercise as recently repeatedly requested by people including the Chairman of Dangote Group, Mr. Aliko Dangote, because it would be too expensive to do.
“Because of the current transition challenges, some people have called for the cancellation of the privatisation, but such a course of action (which I do not support) has consequences.

“Government will be breaching its own contract in the same way we cancelled the privatisation of refineries in 2007 and will send a negative investment signal that we do not respect agreements; government will have to refund in dollars, all the monies paid by the Discos and Gencos most of which have been spent on almost 50,000 workers of PHCN who had to be paid; government will now have to re-employ those or other workers back to operate the assets and again increase salary and pension costs, when our recurrent cost is above 70 per cent of budget today.

“Instead of doing these, government believes that the lapses in the privatisation can be re-engineered, retrofitted or reformed to deliver. The PSRP is therefore a set of policies and actions aimed at restoring credibility; liquidity; transparency; efficiency; good governance; and improved service delivery to the power sector,” he added.