Senators on Wednesday strongly criticised the privatisation
of the power sector, saying the model adopted in the transfer of the assets
from the Federal Government to private operators had failed.
The Senate, therefore, called for a review of the
privatisation process to maximise the capacity of the sector.
The lawmakers, while speaking on a motion by Senator Dino
Melaye titled: ‘Discos, electricity consumers and the burden of overbilling’,
lamented the failure of the power sector even after it had been privatised.
Seconding the motion, Senator Bukar Mustapha stated that the
problem with the sector was inefficiency.
He said, “The problem we have is the inefficiency within the
system, which we have actually, so far, not decided to address. I will give you
a small example: Nigeria has an installed capacity of 12,522 megawatts of
power; we have non-available capacity of 5,300MW; we have non-operational
capacity of 3,180MW; meaning that the amount that is actually available is just
over 4,000MW out of 12,500MW.
“We have transmission loss of 228MW and we have distribution
loss of 447MW. At the end of the day, only 3,800MW reaches the consumer, and we
have commercial loss of more than 36 per cent. So, what is actually being paid
for out of the over 3,000MW is only 1,800MW.
“So, unless and until we decide to look at this inefficiency
within the value chain, there is no way we can have better electricity
generation, distribution and also billing system in the country. So, I agree
that the model they have used for the privatisation has not worked. And unless
and until this inefficiency is looked at, it will not work.”
The senator further stated that if the sector had the
capacity to generate 12,500MW but it could only deliver 4,000MW, it meant that
more than 75 per cent of the capacity had not been utilised.
Mustapha added, “It means that we are sitting on an
emergency situation and something has to be done drastically to address this
problem.
“The value chain is weakest at the distribution companies’
level, because they are the ones who collect the money and you will never know
how much money is being collected, because they have failed to install the
meters that are needed. We need millions of meters.”
He recalled that some lawmakers visited a meter testing
facility on Monday “because each meter has to be tested, but there is no
capacity to test the millions of meters in Nigeria.”
According to him, the Discos are supposed to provide the
meters but lack the funds and technical capacity to provide the devices,
adding, “So, it means we have to revisit this as urgently as possible.”
Senator Ben Murray-Bruce said the power generation and
distribution companies were privatised on the premise that they would charge
cost-reflective tariffs and make the business profitable.
Murray-Bruce said, “Those who privatised the sector did not
imagine that the naira will be devalued from N160 to N500 (to a dollar). Those
who invested in the business thought it was like a company where they would
make a lot of money. I believe they only had enough money to pay the Federal
Government and make the initial investment; they did not have the capacity to
run a power sector company in a modern economy.
“This is a serious problem. The way the privatisation
process took place and the difficulties we have, there is no solution in sight.
They don’t have the money to buy the meters. They are technically bankrupt.
Unless we revisit the entire privatisation process and unless we understand and
dissect what went wrong, we will still get estimated billings.”
“We have a catastrophe in our hands. There will be no light
in Nigeria under the current structure. No hope in sight unless we revisit the
process and try to understand what went wrong and bring in new players with the
requisite capacity.”
In the motion, Melaye said the Senate was worried by the
astronomical rise in the electricity bills across the country.
He added that years after the privatisation of the power
sector, the Discos, which were retailing and marketing electricity, “have not
been able to effectively meter their customers, thereby leaving millions of
their customers at their mercy through estimated billing.”
Melaye further said, “The Senate notes also that with the
privatisation of the power sector, many Nigerians hoped that things would get
better, especially with regards to the improvement of power supply and the
quality of services to be rendered.
“The customers had expected, upon the takeover by the new
owners, that metering would be one of the issues that would be urgently
addressed to restore confidence in the industry, as this is the only way to
determine actual consumption. Instead, the Discos came with astronomical
monthly increase in the name of cost-reflective tariffs.
“The Senate is saddened that the Discos prefer to hound
consumers with jaw-dropping estimated bills by devising means and ways of
smartly retrieving meters from customers in order to realise targeted profit
margins through the imposition of arbitrary billing system usually referred to
as ‘crazy bills’ by customers.”
But before the prayers of the motion were considered, the
Chairman, Senate Committee on Power, Steel Development and Metallurgy, Senator
Enyinnaya Abaribe, said the panel was already working on the issues in the
power sector.
He urged the Senate to suspend debate on the motion pending
the presentation of his committee’s report.
The Deputy President of the Senate, Senator Ike Ekweremadu,
who presided over the plenary, ruled that the motion be stepped down pending
the outcome of the probe by the Abaribe-led panel.
“It makes better sense that we consider the report and be
free to make our comment based on the recommendations by the committee,” he
said.
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