On the issue of reforms in the power sector

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By
SLEEK  M. O. OSHARE

Recently, the Federal Government announced the completion of a successful sale of 11 distribution companies (Discos) to some private investors by the Bureau of Public Enterprise (BPE). If truly this comes to be, President Jonathan must be congratulated and appreciated because this whole thing has been on for over a decade now without any headway.
Right from the time of late Bola Ige and Liyel Imoke no one in the public could actually place a hand on the direction it was going. The probes of the handling of the power sector reforms mysteriously ended without conclusion and without any reports. Billions highlighted to have been misapplied were no longer talked about. As usual, Nigerians, already used to such abracadabra in their public life and being the most tolerant and complacent people in such matters in the world,  went about their normal life. But now at last the unbundling of PHCN, which itself was a fluke contraption arising from NEPA, has truly begun.
But then, let us look at some of the issues involved in government’s desire to reform the power sector.
In the beginning, when the decision of the privatisation of NEPA came up, people wondered (many are still wondering) why privatise the lucrative part of the system which is transmission (upstream) rather than generation (downstream)? Well, PHCN came along and, all it is interested is bogus bills heaped upon consumers every month whether or not power was actually transmitted to them. All cries and protests from consumers fall on deaf ears, even protest from the National Assembly.
Having successfully come this far, certain salient issues need to be looked into with a view to really moving the reforms to a truly beneficial and sustainable level.
First, four State Governors have already protested the way and manner the companies covering areas were awarded by the BPE. The accused the BPE of lack of transparency in the entire process of the sale. Besides, the Governors are angry that their states  were not involved in the process. In a veiled threat, they opined that this will make it very difficult for those companies that won the bids to operate in their respective. This is serious and, should be looked into and resolved early.
However, the main issue of concern to this paper is the attitude of the Federal Government and the relevant agencies to the Independent Power Projects (IPP). Right from the beginning, government has indicated that independent power production would be an integral component of the power sector reforms. In this aspect, government was going to allow private businesses and even interested state governments to produce power and sell to the national grid.
Based on this thrust, some states and individuals embarked on investing in small-scale and not-too-small-scale independent power projects some of which have reached varying degrees of completion. These IPPs, having invested their money hugely to a large degree are facing unexpected frustrations from the relevant government agencies in moving these projects to completion.
They are either ignored or subjected to unwarranted bureaucracies or both.
Yet we shout everyday that we want private investors to help the impetus of development.
For example, there is this Dadinkowa Hydro Electric Power Project in Gombe in the Upper Benue River Basin Development Authority area being built by Mabon Energy Services Limited. Having won the concession for the development of the hydro electric power plant at Dadinkowa Mabon Limited signed a Concession Agreement with the Ministry of Water Resources in 2006 0n BOT basis. MABON also was granted a Licence to generate power by the Nigerian Electricity Regulatory Commission (NERC).
This lofty project is expected to generate 40 MW of power with 146 million kwh annually. It will irrigate agricultural land of about 44,000 hectares, release daily 1million gallons of water for domestic and industrial use, increase production of fisheries as well as contribute to flood controls and flow regulation along the Gongola and Benue Rivers.
As at this moment, this project is near 70% completed but has been stalled at this level for several months now due to the usual government bureaucries  and outright lack of encouragement for private investment that require some inevitable role of government for full realisation. Sometimes it is sheer wickedness on the part of the government officials to create bottle-necks for well-meaning projects without considering the enormous benefits of such projects to the people and government of Nigeria.
So much money has been expended by Mabon on this project, all necessary financial and contractual obligations have been concluded with all foreign technical partners and local obligations. In this  project, no government funds are needed, so one wonders why government will not jump at this and do all it can to fast-track this sort of project. Yet this project cannot progress because  the relevant government agency refuses to sign the required Power Purchase Agreement (PPA).
For this alone, the project is stalled. The belief is that if the PPA is signed, it will take just about 6 months to complete the project and put it into operation. The benefits of this project to the North-East in particular and Nigeria in general will be massive  – increase in power production, increased fisheries production, irrigated agriculture of 44,000 hectares, job creation in its thousands, and so on.
We are all calling for investments, especially foreign investments, to reduce the level of unemployment and poverty, yet the few who are answering this call are one way or the other being frustrated. This discourages other prospective investors. There is so much uncertainty in the investment climate of this country. The whims and caprices of powerful government officials and the MDAs they control are thwarting government’s efforts at development.
Governments come and go but these officials remain; it is the governments that takes the blame. This project and others like these should not be allowed to die.
Let us be faithful to and join hands with Jonathan to transform the country. Let us improve on the investment environment of the country for prospective private and foreign investors not by words of mouths, retreats and conferences/seminars alone but by real and concrete action. Let us build confidence in investors by doing all that we need to do in government circles.
God bless Nigeria.

OSHARE  (JP), is an Oil & Gas
Consultant

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