Gencos Blame Senate Negligence for 99% of Power Sector Failures Post-Privatisation

Power generation companies (Gencos) have knocked the Senate, stating that 99 per cent of the failures in Nigeria’s power sector since the 2013 privatisation was caused by the lawmakers’ negligence of their oversight functions.

They made the assertions in a chat with THISDAY, in reaction to the Senate’s resolution on Thursday, where they described the privatisation of the power sector as total failure.

The senators’ position followed the presentation of a report by the Chairman, Senate Committee on Power, Senator Enyinnaya Abaribe, which investigated frequent national grid collapse and other issues relating to the non performance of the sector post privatisation.

The Senate had chided power sector operators, including Gencos, the Transmission Company of Nigeria (TCN), and Distribution Companies (Discos) for failing to deliver reliable electricity since 2013, warning that it might propose legislative measures to repeal the privatisation policy.

But reacting to the senate’s verdict, some members of the Gencos, who spoke to THISDAY, on Friday, on condition of anonymity, blamed 99 percent of the sector’s failure on the lawmakers’ refusal to discharge their oversight functions properly as enshrined in the extant electricity laws in the country.

They argued that the latest call was not the first time the Senate had called for the cancellation of the privatisation of the power sector, saying such a call has become an annual ritual for the lawmakers.

Under Nigeria’s electricity laws, the National Assembly, the Ministry of Power and the Presidency have the power of oversight and monitoring over the power sector. The law also provides that the Nigerian Electricity Regulatory Commission (NERC) submits quarterly reports of the performance of the sector to the three institutions.

But drawing attention to the alleged negligence of duty by the National Assembly since privatisation of the sector 11 years ago, the Gencos challenged the lawmakers to publish the report of their oversight and evaluation of the sector as well as their suggested corrections to the failings of the industry.

The Gencos argued: “Is their call for the reversal or cancellation of the privatisation predicated on the fact of their evaluation of this quarterly report that has been submitted to them from 2013 to date? If it is true, then they should publish it. That’s one.

“Two, if it is true that they’ve been reading those reports NERC has been submitting to them every quarter, why have they not corrected the errors in 11 years? Because every three months, a report is submitted to you. And if you review this report, what were your findings? Did you need to wait for 11 years before you declared cancellation? The National Assembly every year holds investigative public hearing on the power sector on various issues.

“Can they publish to the Nigerian public the outcome of those public hearings, annual public hearings, and investigative hearings, and oversight visits to all these power sector agencies? What are their reports? They should publish it. He who lives in a glass house should not throw stones. So if the sector has failed, 99 percent of it falls in the hands of the National Assembly.”

According to them, the senate’s verdict should not be taken seriously if they were failing in their own duties to the sector.

“Clearly, we want the sector to work but the National Assembly is not ignorant of what to do to make the sector move forward, they know it”, the Gencos stated.

They pointed out that part of the ills of the Nigerian power industry was the lack of transparency and accountability, revealing that NERC lacks capacity to account for Discos’ actual billings and collections in the market.

According to them, none of the National Assembly, the Ministry of Power and NERC can tell how much Discos collect, adding that NERC only relies on the utility firms’ billing and collection figures as their actual collection figures.

The Gencos further said, “So how can you be the regulator, or monitoring a sector that you don’t know how much is collected and billed?

“You only know how much is sold because that is what Gencos put on the grid for the transition company to transmit, but how this load is sold, nobody knows. In terms of billing, nobody knows the billing figure. Nobody knows the collection figure. There is no transparent method of knowing this.

“So how can we know how much is collected for the market, whether the market is capable of funding itself or sustaining itself. That is one critical thing.”

They also raised concerns about the lack of competence and capacity in the leadership of NERC, stating that only pliable persons backed by some interests were appointed into NERC and their appointment rubber-stamped by the National Assembly.

“All the commissioners of NERC are confirmed by the national assembly. All the papers were sent to them. So you see, the national assembly has the knife and the yam, and if the privatisation has failed, it’s because they refuse to cut the yam appropriately”, they added.

Boasting of their achievements in the sector since privatisation, the Gencos argued that they were the only ones that have performed by ramping up generation capacity from 3,427 megawatts (MW) in November 2013 when they were handed over to 8,000MW by 2020.

They however claimed that underutilisation of the 8,000MW available output led to the drop to about 5,000MW available output currently.

Also reacting to the senate’s resolution and intent to repeal the privatisation policy, Chief Executive Officer and Spokesman of the Association of Nigerian Electricity Distributors (ANED), Mr. Sunday Oduntan, told THISDAY that he will comment on the matter on behalf of Discos at the approximate time.

He said it was too early for anybody to preempt the senators by commenting on a matter that has not even started, adding that there will surely be public hearings where stakeholders will put their comments and positions forward.

Oduntan said, “My leaders are still talking. I will comment at the appropriate time on behalf of the Discos. But that comment will come when the legislation starts. When they want to make law, they will write it down, then we will all go through it, then there will be a public forum.

“The public hearing is the point where we can start to talk. Even a day before public hearing, we must not talk. I’m not bothered and I’ve never been bothered, but I’m saying that for now, it is premature to give any comment. We have to wait until our leaders in the Senate continue with their job to the point where we as their followers can comment. We cannot comment everytime our leaders pass a resolution.

“A resolution is still advisory in nature, that’s not law. It’s indicative of the next step. It’s to show us their mind, their thinking, which is good for the nation. It’s to send us a message. It’s to give us awareness, it’s also to advise us that look, this is what we are thinking. Until then, I, as the MD/CEO of ANED, I have no comment.”

Also weighing in on the issue, Lead Consultant on Power to the Nigerian Governors Forum (NGF), Mr. Odion Omonfoman, concurred with the Senate, saying privatisation had indeed not delivered the benefit it was expected in 2013.

He, however, blamed the failure partly on the government’s interference with the operations of NERC, saying there was need to end such interference with the regulator’s job in order to move the power sector forward.

He observed that the Nigerian power sector was beset with a plethora of challenges, ranging from poor infrastructure, lack of investment as well as operational inefficiency.

As a regulated business, Omonfoman said any failing of the sector means that there has been ineffective regulation, adding that “there has been serious political interference in the sector that sort of constrained the regulator in some cases”.

“So what needs to happen is first of all, let’s give the regulator free reign to do independent regulatory structures, empower the regulator to take necessary actions and sanctions devoid of political interference”.

Peter Uzoho

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