Experts seek review, audit of power sector privatisation

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The lingering crisis in the nation’s power sector, three years after it was privatised, has renewed calls from industry experts and other stakeholders for a review and proper audit of the system.

They noted that the privatisation of the generation and distribution companies in November 2013 had yet to achieve its objectives as investments by the operators remained low.

Power generation and supply in the country have worsened in recent times due largely to gas shortages, with many consumers decrying the non-provision of prepaid meters by the distribution companies.

The Director, Centre for Petroleum, Energy Economics and Law, University of Ibadan, Prof. Adeola Adenikinju, noted that there were some agreements before the assets were handed over to the private investors, adding, “It is for both parties to revisit those agreements to know who is not doing its own parts and the sanctions that must be meted out.

“We need to revise the whole process, to look at the whole sale over again, not in terms of cancelling it, but to know what we have learnt since the privatisation in 2013 and what needs to be changed. What are those things that were not anticipated in those contracts that we have to look at? The expectations of everybody have not been met.”

He stressed the need to sit together and take a second look at the entire sector, saying, “For instance, how do we treat the issue of gas supply that is very unstable? How do we treat the issue of metering that has been extremely slow? How do we treat the issue of the exchange rate, gas prices, inflation rate and other changes in government policies that have occurred since the agreements were signed?”

Adenikinju noted that right from the beginning, there had been concerns over the sale of the assets in terms of the experience, technical and financial capabilities of the buyers.

“In my view, we cannot blame one party entirely. I think all the parties have their own blame and the way to resolve it is not to shift blame, but to sit together and then renegotiate the contracts and anyone that violates the contracts should be sanctioned,” he said.

The Director-General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, said the reason the sector was privatised was to bring efficiency into the system.

He said, “That is the whole essence of privatisation: to bring added value. And the way the whole power sector reform has gone, it is almost giving privatisation a bad name.

“If you compare what we have now and what we had before the power reform, what will you say is the difference? Nothing really to celebrate about it, apart from the fact that it has moved from the public sector to the private sector.

“So, we need to look at the entire value chain so that whatever we need to fix, let’s fix it. Let us do a proper audit of the system; let’s do an audit of the capacities of all the major stakeholders and locate where the gaps are.”

An energy research analyst at Ecobank Capital, Mr. Kareem Jubril, said a lot of things had gone wrong in the sector.

According to him, there are a lot of contractual issues that the government has not addressed, which have made most of the investors not to meet their own contractual obligations as well.

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