COVER
Why FG Can’t Reverse Power Sector Privatization -Sen Suswam
Former governor of Benue State and Chairman, Senate Committee on Power, Senator Gabriel Suswam has said that despite calls from certain quarters to reverse the privatization of the nation’s power sector, it would not be possible for the Federal Government to cancel the already privatized sector.
This is even as the senator disclosed that the full implementation of the reviewed 2020 budget Act may not be feasible saying that over 60 percent of the budget was deficit.
The senate Committee Chairman on Power, also faulted the Federal Government for privatizing all segments of the electricity company at the same time arguing that no country in the whole world has ever done such.
Speaking in an exclusive interview with a team of DAILY ASSET Editors at the weekend in Abuja, he said that “there were a lot of things needed to be done before the privatization, which were not done.”
Suswam said that any attempt to reverse the privatization of the power sector would be “like operating in the jungle..”
“You know, this sector has been privatized since 2013, and then in 2020, you say we should review it because there are problems. These are teething problems that anywhere in developing economies where sectors have been privatized, they have encountered these issues.
“So there is nothing peculiar about what is happening to us here. It is just for us to focus. Like I said, if we properly allign ourselves, these problems will go eventually.
“But everywhere in developing economies; if you go to India, they had a worse crisis than what we are experiencing when they decided to privatize.
“If you go to Mexico, to mention but a few. The only place where performance was a bit better is South Africa. Otherwise, most developing economies have experienced this kind of problem.
“The reason being that, there are three theories of privatization. There is the Big Bang Theory, which is that you privatize Everything, generation, transmission, distribution, at the same time.
“The second one, is privatize only Generation. The third one; privatize only distribution. Unfortunately for us here, why our problems seem compounded, is that we chose the first theory, which is the Big Bang Theory, of privatizing the whole thing.
“No country has done that and gotten away with it. And so, that is why our problems are compounded. Now, if we have done that, we will now have to contend with the problems that have arisen from it, and that is what we are facing now.
“What we need to do now is to align ourselves; both the private sector who have these entities, and the ones in the hands of Government need to sit down and align themselves. That is what we have discovered. Misalignment in the power sector is a major problem.
“You will agree with me that over the years, successive governments have expended a lot of money on the power Sector. The reason being that they want to ensure the delivery of power to Nigerians. President Obasanjo was the one who thickened that efficiency in the power sector, privatizing it.
His reason was that, since power being the public sector has not yielded the desired results to Nigerians. So there was a need for the power sector to be in private hands. So people who operate it as a business would be able to execute more efficiently.
“Unfortunately, the manner of the privatization has become a problem. There were a lot of things needing to be done before the privatization which were not done. Rules were not really put in place, and so the people who bought it bought based on false parameters put in place by Government then.
“So the assumptions used in purchase of these entities, were assumptions that were faulty. That is the beginning of the problem.
“Instead of enhanced delivery, problems have arisen that have compounded the situation in the power sector.
“When this administration came into power, they promised they would change the entire perspective in the power sector Without knowing what was on ground. So when they came into the power sector, they started putting in money, believing that just putting money can solve the problem.
“It has been proven that it has not, because there are fundamentals that have not been touched. And what are these fundamentals? First, when they privatized the entities, some of the calculations, especially with the aggregate technical and collection and commercial losses, were faulty. Those losses at the time, were about 40% but the Government put about 20-22%. Which means that if I’m buying an entity that has losses of about 40%, and I’m told it’s only 20%, there is a problem. And those problems have subsisted, making it possible for the private owners of these entities to break through or break even.
“That is one. The people who are on the network of the power Sector; there is no quality data or statistics to show that; these are the number of people connected, these are the number of people metered. Lack of that data makes it impossible for the new owners to determine whether they can make profit or not.
“They didn’t know this; they rushed into it because they were promised Eldorado – that this would make them a lot of money.
“They should have been intelligent enough to weigh their options and determine all of these. So, they bought it and are confronted with these problems. How many Nigerians are metered? How many Nigerians are actually registered on these networks? That is not known to anybody.
“It’s all in the basis of speculations. Even If you go to the regulator, which is NERC, they only will speculate that about 10 million Nigerians are registered, and out of these 10 million, only 4 million are metered.
“For you to efficiently collect, you must meter People and know the amount you’ve metered, for you to even be able to make projections in terms of revenue.
“Unfortunately, none of the DisCOs has that kind of data with them, neither do NERC. So, it is difficult to plan. Now, that is one.
“If you go back to transmission, transmission is like a pipe between GENCOs and DISCOs. So transmission picks power, from generators and transmits to distributors.
“Unfortunately, the capacity of that transmission is lacking. They have no capacity to perform. And transmission performs the most important function in the entire value chain of the power sector. Unfortunately they don’t have that kind of capacity.
“Now you go to GenCos – the Power generators, at the time of privatization, in the power purchase agreement, it was indicated that they (GENCOs), when they buy, will ramp up power to certain levels. Most of them have not been able to do that. Some have done very well, but most of them have been unable to do that.
“So, there is a whole lot of complications when you come to the issue of tariff itself. Now, for you to be successful in the power sector, you must charge the cost reflective tariff.
“That is, Tariff that is consonance with the cost of producing that power. Unfortunately, the Government said, okay, the cost that will cover you is N50, but you can only charge N30. Which means there is a N20 naira difference. And who pays that? That is the money that Government have been expending; more like a subsidy. And so, people hear that so much money, amounting to trillions has been expended in the power sector, and they are expecting efficiency. No. That money is power already consumed.
“It’s not money put in to enhance Power. Government is only putting in subsidy, otherwise, people would have been paying much higher.
On the total amount the government has expended on the sector since the privatization, said “it is yearly. For instance, 701 Billion was the initial amount that was given to address that gap, that 20 naira gap that I talked about.
“Since privatization, N600 billion was also given. Like I said, all this money is just to subsidize that difference in Tariff. So even if we keep paying it, it’s not money that is going to address any problems in the power sector. It’s just like when Government was paying subsidy for PMS (Premium Motor Spirit). So much money was said to have been expended on subsidy; that is the problem. That is why a lot of people had issues with it.
“They’re spending so much money and you’re not seeing it. But it is subsidy. When you pay money to subsidize a product, that money cannot achieve anything because it’s like paying debt. So it’s not money that is going to enhance the infrastructural deficit in the power Sector.
“Those monies have been expended and nothing is coming. So we decided, in the Senate, that let us look at the issues in the power Sector, and so we can put them on the table and focus on them; to know what the issue is. Why so much money being expended and nothing is happening. And so we had that investigative public hearing.
“All the issues I’ve mentioned here were put on the table. All the stakeholders agreed that yes, there is a problem. And if the power sector, the entire power sector, sit down together– that is, sitting down with the executive, with the private owners, and of course the National Assembly– all of us agree that yes, there is a need to increase tariff to make the sector liquid.
“There is also the need for us to have quality data, enumerate all that are on the network, and meter at least 80% of those people, there must be alignment between what the generators are given; what is being transmitted and what is being delivered to the customers. That alignment is also not there.
“All of us agree that there is a misalignment in the value chain of the power sector, and so if we put all of this together, there would be enhancement in the delivery of power to Nigerians.
“I have just mentioned a few on what we discovered and what we came up with, and we’re going to present a report before the tenure ends, and I believe that report will be taken to the president for him to take some actions.
“You see sale of assets as a financing item, the processes have not started, so how achieve that objective, it only show that it is not realistic because once you don’t realize the profits from the sale of those assets, it adds to the deficit. So we are in a deep problem. So for me this year is going to be difficult and what we should do is to manage what we can manage because things are standing on their heads. Look at the price of oil, that was the first problem, and then look at commercial activities, that too is down and so people no longer have the means to pay what they should pay in term of tax, and so to get enough money to finance the budget is not practicable. So I think that government should do whatever they can just to see the year through and then plan ourselves in 2021, otherwise what is on ground now is not sustainable.
On what the National Assembly has done to cushion the effect of the COVID -19 pandemic on Nigerians, he said, “when the body saddled with regulating the power Sector intended to increase tariff – what the consumers are paying– the National Assembly intervened on behalf of Nigerians, especially giving the circumstances of the COVID -19 virus that it should be shifted until the first quarter of next year, when hopefully the economy would have recovered, and there would be money in the hands of people, giving them the power to pay.”
By Mike Odiakose, Abuja
Immediate past governor of Kogi State, Yahaya Bello will spend the 2024 Christmas and 2025 New Year days in Kuje prison, Abuja, following refusal of his bail application by the Federal Capital Territory High Court.
Justice Maryann Anenih yesterday adjourned the case until Jan.
29, Feb. 25, and Feb. 27, 2025 for the continuation of the hearing.The former governor is standing trial, along with two others, in an N110 billion money laundering charge brought against him by the Economic and Financial Crimes Commission (EFCC).
Justice Anenih had refused to grant a bail application filed by Bello, saying it was filed prematurely.
The judge admitted Umar Oricha and Abdulsalam Hudu, to bail in the sum of N 300 million each with two sureties.
Justice Anenih, while delivering a ruling said, having been filed when Bello was neither in custody nor before the court, the instant application was incompetent.
“Consequently, the instant application having been filed prematurely is hereby refused,” she said.
Recalling the arguments before the court on the bail application, the judge had said, “before the court is a motion on notice, dated and filed on Nov. 22.
“The 1st Defendant seeks an order of this honourable court admitting him to bail pending the hearing and determination of the charge.
“That he became aware of the instant charge through the public summons. That he is a two-term governor of Kogi State. That if released on bail, he would not interfere with the witnesses and not jump bail.”
She said the Defendant’s Counsel, JB Daudu, SAN, had told the court that he had submitted sufficient facts to grant the bail.
He urged the court to exercise its discretion judicially and judiciously to grant the bail.
Opposing the bail application, the Prosecution Counsel, Kemi Pinheiro, SAN, argued that the instant application was grossly incompetent, having been filed before arraignment.
He said it ought to be filed after arraignment but the 1st Defendant’s Counsel disagreed, saying there was no authority
“That says that an application can only be filed when it is ripe for hearing.”
Justice Anenih held that the instant application for bail showed that it was filed several days after the 1st defendant was taken into custody.”
Citing the ACJA, the judge said the provision provided that an application for bail could be made when a defendant had been arrested, detained, arraigned or brought before the court.
Bello had filed an application for his bail on November 22 but was taken into custody on November 26 and arraigned on Nov. 27.
From Jude Dangwam, Jos
Conference of Autochthonous Ethnic Nationalities Community Development Association (CONAECDA) has called on the federal government to intensify efforts in the resettlement of displaced persons in their ancestral homes.
The organization made this call at the end of its conference held in Jos, the Plateau State Capital weekend.
Thirty resolutions were passed covering security, economy, politics, governance, culture, languages, human rights and indigenous peoples’ rights among others.
The Conference President, Samuel Achie and Secretary Suleman Sukukum in a communique noted that the conference received and discussed reports from communities based on which resolutions were reached on securing, reconstruction, rehabilitation and returning communities displaced by violence across the Middle Belt.
“After considering the reports from communities displaced by violent conflicts, conference resolved, and called on government to focus on providing security to deter further displacements.
“Call on government to provide security to enable communities to return. Government and donor partners should assist in reconstructing and returning displaced communities,” the communique stated.
The GOC 3 Armoured Division Nigeria Army represented by Lt Col Abdullahi Mohammed said the Nigerian Army is committed to working closely with communities to achieve a crime-free society, urging communities to support them with credible information.
“Security is a collective effort, and we cannot do it alone, the community plays a crucial role in ensuring safety.
“We urge everyone here not to shield or protect individuals involved in criminal activities. Transparency and collaboration, together, with maximum cooperation, we can achieve peace, security, and prosperity for our society,” the GOC stated.
The National Coordinator of CONECDA, Dr. Zuwaghu Bonat in his address at the gathering noted that the theme of this year’s program, Returning, Resettling, and Rehabilitating Displaced Communities, was chosen as a wakeup call on the federal government.
He maintained that the organization is aware that President Bola Tinubu has expressed a commitment to ensuring that displaced communities return to their ancestral lands.
He said similarly, some state governments, including Plateau State, have set up committees to address the lingering matter.
The coordinator however cautioned, “It is critical that we avoid generalizations or profiling. For instance, Not all Muslims are involved in terrorism. The overwhelming majority of Muslims in Nigeria are peaceful and reject extremist ideologies.
“We also know that some terrorists exploit religion to mobilize support or rationalize their actions. However, their atrocities – slaughtering women, cutting open pregnant mothers, and killing children show a profound disregard for humanity and God. Normal human beings would not commit such acts.
“We must also be cautious about lumping banditry with terrorism. While statistics indicate that many bandits and kidnappers may share similar ethnic backgrounds, kidnapping has now evolved into a profit-driven enterprise. This distinction is vital to address the root causes effectively,” he stated.
The Governor of Plateau State, Caleb Mutfwang represented by his Senior Special Assistant (SSA) on Middle Belt Nationalities, Hon Daniel Kwada noted that the conference was apt to addressed the various underlying issues bedeviling the region and its people.
“We in the Middle Belt have long been standing at the crossroads of Nigeria’s complex history. Despite our tireless efforts to stabilize this nation, we have faced immense challenges, including underdevelopment, security issues, and marginalization.
“Often, we are unfairly maligned, but gatherings like this offer a chance to change the narrative.
“Such conferences set the tone for better discussions. They allow us to drive processes that bring development, ensure security, and elevate our people to greater heights,” Mutfwang noted.
Securities and Exchange Commission (SEC) has called on banks to reinforce their corporate governance principles and risk management frameworks to boost investor confidence during the ongoing recapitalisation exercise.
Dr Emomotimi Agama, Director-General, SEC, said this at the yearly workshop of the Capital Market Correspondents Association of Nigeria (CAMCAN) held in Lagos.
The theme of the workshop is: “Recapitalisation: Bridging the Gap between Investors and Issuers in the Nigerian Capital Market”.
Agama, represented by the Divisional Head of Legal and Enforcement at the SEC, Mr John Achile, stated that the 2024–2026 banking sector recapitalisation framework offers clear guidance for issuers while prioritising the protection of investors’ interests
He restated the commission’s commitment towards ensuring transparency and efficiency in the recapitalisation process.
The director-general stated that the key to bridging the gap between issuers and investors remained the harnessing of innovation for inclusive growth.
In view of this, Agama said, “SEC, through the aid of digital platform, is exploring the integration of blockchain technology for secure and transparent transaction processing to redefine trust in the market.”
He added that the oversubscription of most recapitalisation offers in 2024 reflects strong investor confidence.
To sustain this momentum, the director-general said that SEC had intensified efforts to enhance disclosure standards and corporate governance practices.
According to him, expanding financial literacy campaigns and collaborating with fintech companies to provide low-entry investment options will democratise access to the capital market.
He assured stakeholders of the commission’s steadfastness in achieving its mission of creating an enabling environment for seamless and transparent capital formation.
“Our efforts are anchored on providing issuers with clear guidelines and maintaining open lines of communication with all market stakeholders, reducing bureaucratic bottlenecks through digitalisation.
“We also ensure timely review and approval of applications, and enhancing regulatory oversight to protect investors while promoting market integrity,” he added.
Agama listed constraints to the exercise to include: addressing market volatility, systemic risks, limited retail participation as well as combating skepticism among investors who demand greater transparency and accountability.
He said: “We are equally presented with opportunities which include leveraging technology to deepen financial inclusion and enhance market liquidity.
“It also involves developing innovative financial products, such as green bonds and sukuk, to attract diverse investor segments.
“The success of recapitalisation efforts depends on collaboration among regulators, issuers, and investors.”
Speaking on market infrastructure at the panel session, Achile said SEC provides oversight to every operations in the market, ranging from technology innovations to market.
He stated that the commission is committed to transparency and being mindful of the benefits and risks associated with technology adoption.
Achile noted that SEC does due diligence to all the innovative ideas that comes into the market to ensure adequate compliance with the requirements.
On the rising unclaimed dividend figure, Achile blamed the inability of investors to comply with regulatory requirements and information gap.
He noted that SEC had done everything within its powers to ensure that investors receive their dividend at the appropriate time.
He, however, assured that the commission would continue to strengthen its dual role of market regulation and investor protection to boost confidence in the market.
In her welcome address, the Chairman of CAMCAN, Mrs Chinyere Joel-Nwokeoma, said banks’ recapitalisation is not just a regulatory requirement, but an opportunity to rebuild trust, strengthen the capital market, and drive sustainable growth.
Joel-Nwokeoma stated that the recent recapitalisation in the banking sector had brought to the fore the need for a more robust and inclusive capital market.
She added that as banks seek to strengthen their balance sheets and improve their capital adequacy ratios, it is imperative to create an environment that fosters trust, transparency, and cooperation between investors and issuers.
The chairman called for collaboration to bridge the gap between investors and issuers to create a more inclusive and vibrant Nigerian capital market.She said: “we must work together to strengthen corporate governance and risk management practices in banks, enhance disclosure and transparency requirements for issuers.” NAN
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