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.

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.”