NIGERIA-ECONOMY: Clamour for Privatisation of Electricity Supply

By Toye Olori Reprint | | Print |

Toye Olori

LAGOS, Feb 13 1997 (IPS) - Electricity cables supplying power from the main overhead lines to homes littered the front of most houses in the Ikeja suburb here on Wednesday afternoon.

The cables were yanked off the main overhead lines by the National Electric Power Authority (NEPA) in its bid to collect the huge amounts left unpaid by its consumers.

Debts owed NEPA nationwide by individuals, ministries and state governments are estimated at nine billion naira (about 112 million U.S. dollars). Lagos area alone owes about 1.8 billion naira (about 22.5 million U.S. dollars).

But consumers, too, have their complaints. In Bariga, another suburb of this former capital, residents have been without electricity for the past two months. The main transformer in the area was faulty and so NEPA officials removed it for repairs in December last year.

“Each house was mandated to pay 400 naira, (about five U.S. dollars) as a bribe to NEPA officials to effect quick repairs of the damaged transformer or to buy a new one for the area,” says Duru Nnaji, a banker who resides in Bariga. “This is not the first time it is happening in this area,” Nnaji tells IPS.

NEPA officials say that, in most cases, overloading due to illegal connections has been responsible for the constant power interruptions.

“The problem lies in distribution due to lack of transformers as owners of new houses do illegal connections without informing NEPA which results in overloading and damage to transformers,” says Emeka Asiodu, NEPA’s Assistant General Manager, Public Relations.

“Most transformers are overloaded and the cost of procurring a new one is exhorbitant,” he says.

The many problems besetting NEPA are felt across Nigeria, leading to clamours for the privatisation of the utility to make it more efficient.

Frequent blackouts and the widespread perception that NEPA is inefficient and poorly run had led Nigerians to support — in 1988 — plans by the government to commercialise and privatise the corporation along with other state companies.

A technical committee on privatisation was set up that year following the promulgation of a decree on privatisation and commercialisation (Decree 25).

The exercise was to be done in two phases, in the first of which, the government sold its shares in 73 companies.

NEPA however is still in state hands, and the government has made no policy statements about selling it, even though it has been slated for privatisation since 1988.

When he announced the 1997 budget last month, Finance Minister Anthony Ani said the government would pursue its commercialisation and privatisation policy this year. “The groundwork previously started will continue and a wide range of consultation will be undertaken this year,” Ani said.

But he did not mention which state companies would be sold, to the surprise of economists here, who had expected the budget announcement to include how and when NEPA would be privatised.

“It will do well for the government to privatise its utilities especially now that government monopoly is becoming quite embarassing as a result of inefficiency and poor management,” economist Tunde Awala says.

More than 90 percent of materials and tools required for electricity supply are procured abroad while other inputs obtained locally are also very costly, officials say.

“NEPA as an enterprise is a capital intensive organisation. Its generators, turbines and other equipment need periodical overhaul and maintenance and at huge costs,” says one official who declined to be named.

“At present, most of the equipment is being used at maximum capacity with no back-up installations,” the official adds.

NEPA has a combined installed capacity of more than 6,000 megawatts while consumption at peak time is 2,500 megawatts per day.

Sadly, the excess is wasted due to a poor maintenance culture, poor level of manpower and neglect of the distribution newtwork. Today, NEPA can only generate 2,760 megawatts of electricity.

The World Bank last year estimated that Nigeria’s power sector needed capital investment of 1.73 billion U.S. dollars in the transmission and distribution network to achieve the provision of reliable and uninterrupted electricity supply.

In view of the heavy investment involved in generating electricity, Nigerians argue it is not likely that individuals or local firms would be in a position to acquire the organisation and run it efficiently without foreign involvement.

Minister of Steel and Power, Bashir Dalhatu, recently confirmed this view when he explained that the privatisation of NEPA and the Nigeria Telecoms was put on hold, because there would be an outcry by Nigerians if they were taken-over by foreigners.