Power sector privatisation has failed – Senate

Power sector privatisation has failed – Senate

The senate on Wednesday called for a review of the process that lead to the privatisation of the of the power sector because according to them the exercise has collapsed.

The senators were responding to a motion tabled by senator Dino Malaye titled, ”Discos, electricity consumers and the burden of overbilling”.

Melaye while introducing the bill said the Senate was worried by the astronomical rise in the electricity bills across the country.

According to him, 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.”

“The Senate said 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 an 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.”

Senator Bukar Mustapha while seconding the motion said the sector is riddled with inefficiency.

Bukar 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 a non-available capacity of 5,300MW; we have a 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 a 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 percent. 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.”

According to Mustapha, if the sector had the capacity to generate 12,500MW but it could only deliver 4,000MW, it meant that more than 75 percent of the capacity had not been utilised.

He continued, “It means that we are sitting in 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,”  ”but because each meter has to be tested, but there is no capacity to test the millions of meters in Nigeria.”

”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 contributing to the debate 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.”

Senator Enyinnaya Abaribe, the chairman senate committee on power and steel development on his part informed his fellow lawmakers that his committee was already working on issues being raised on the floor concerning the power sector and urged that the debate be suspended.

Senator Ike Ekweremadu, the deputy senate president, who presided over Wednesdays sitting agreed with Senator Abaribe and ruled that the debate be stepped down.