By Idowu Oyebanjo
The last few weeks have been full of controversies around the dismal performance of the operators in the Nigerian Electricity Supply Industry (NESI) following the Privatization of the Industry in November 2013. There is no better time to take stock as it will soon be exactly five years, since November 2013, that PHCN/NEPA was privatized.
No situation in the history of Nigeria would demonstrate the impact of celebrating mediocrity, parochialism, anachronism and corruption – all included in the Quota System syndrome, practised in Nigeria, than the outcome of the power sector. What do you expect when corruption is rife at every stage of the privatization of an already corrupt entity? To start with, the subject of power systems is unique and it is not for those who ran away from Mathematics whilst in Secondary School. Those who mediated the privatization of the power sector assumed that its privatization would be similar to what obtained in the telecommunication sector earlier. In their lack of knowledge, they consulted fake consultants who paraded themselves as expatriates and were led astray. More than that, the qualifications of those who mediated the privatization showed us what the outcome would be. Non-Power Systems Engineers, especially Lawyers, Economists, Bankers and Accountants, made decisions on power systems that were and will always be best taken by Power Engineers. It is not to say these technocrats are not proficient in themselves, but it can and will always be to the level of their profession. How can someone who lacks numerical ability offer to lead the privatization let alone the regulation of a highly technical and analytically dependent subject like power systems?
What was wrong?
The problems of the NESI are numerous but that is what excites Engineers. When there is no problem, an Engineer has to be worried. By training, we solve complex problems and should have been allowed to take a leading role in the privatization of the power system. For example, the technical evaluation of potential investors would be weighted more seriously by power engineers who know and understand the problems and lead time for maintenance and repairs of power assets. During the ill-fated privatization, no physical and technical asset audits were carried out due to the fierce opposition of labour. This in itself is a fatal flaw. Availability of data approximated to zero. The assets that were sold were in decrepit condition, far worse than the image painted to the “investor” whose only alternative was to defraud, extort and exploit Nigerians via estimated billing.
The main basis for the privatization of the power assets was the ability or otherwise of an investor to reduce the amount of aggregate technical, commercial and collection (ATC&C) losses in the power networks. However, the baseline losses were assumed by incompetent and corrupt consultants that were assigned the task of determining the baseline loss levels. The lack of know-how on the part of the Principals at the time meant accepting hook, line and sinker, the report on the baseline loss levels as the basis for setting key performance indicators. Sadly, the baseline loss levels were far higher than assumed.
Power Systems is highly technical and once the technical partners with whom the so called investors submitted and won their bids abandoned many of them, their rights to the assets should have been forfeited but this did not happen.
To be able to have a functional electricity market, there are several conditions precedents. The very first one is the independence of the regulator. The Nigerian Electricity Regulatory Commission (NERC) has to be fully independent and any undue interference by government or its agencies sends a wrong signal to genuine investors who could potentially turn around the woes of the power sector.
Worse still, the appointment of Lawyers, Accountants, Economists, and others who have no idea of what a power system is as NERC Commissioners from 2005 to 2015 made Nigeria go wider off-the-mark. That has gradually being corrected following our appeal to the current administration. The appointment into NERC of cronies and political affiliates based on the Quota System misnomer will not work for realizing a successful power system. Other factors to be considered as pre-conditions for an electricity market include but not limited to the sacrosanctity of contracts, elimination of corruption and electricity theft, reduction in the ATC&C losses, metering and enumeration of consumers, deliberate intervention to improve the quality of customer service delivery, the availability of robust data and communication backbone in a consolidated and centralized high-fidelity data capture of consumers and assets, technical policies for the successful operation of power assets and systems, specifications for plants, components and devices, research and development (R&D), investigation into failures and recommendations etc.
The next step for NERC in the direction of full-scale competition within the NESI will involve the separation of the “wire” services from the energy supply services to allow DisCos to carry lower risks and focus on the required investment in the operation and maintenance of the weak network infrastructure while reducing the aggregate technical and non-technical losses in the distribution network. The Federal Government or partner financial organizations like the World Bank will have to fund the wire business in a way that the power sector becomes a viable and bankable project. This has to be led by power engineers who have demonstrable experience, technical knowledge and practise in power systems.
The full implementation of both the Eligible Customer (EC) and Meter Asset Provider (MAP) Regulations by NERC has become all the more important for the survival of the NESI.
Idowu Oyebanjo is the MD/CEO of Idfon Power Engineering Consultants (iPEC) Limited.
For further information on the solutions to the problems bedevilling the Nigerian Power Sector, please visit www.nigerianpowersystem.wordpress.com; www.ipecng.com
