Power Sector Reforms: Killing Many Birds with One Stone
By Moshood Isah

Lauded by many, loathed by countless Nigerians; the privatization of the Power Holding Company of Nigeria (PHCN) may continue to generate reactions and comment until when the new owners prove their worth.

The federal Government once again took a "giant stride" towards the refurbishment of the power sector, by fully handing over the electricity company to private firms with the mandate to provide uninterrupted and quality power supply in the country.

It could be recalled that, a partial takeover started in 2005 when the Government fully controlled National Electric Power Authority (NEPA) sold a percentage of the company to private individuals. This was due to the high level corruption that ravaged the sector where it exposed its abysmal performances to the discontentment of Nigerians.

Major effort to sanitize the sector proved abortive, even after partially handing over to private hands. As a matter of fact, power output dropped drastically, as megawatts dropped on a daily basis. Black-outs were order of the day, businesses collapsed, and sounds of generators became common scene in many vicinities. Rumors were also abounding about top managers in PHCN who were alleged to sabotage the energy sector by promoting and dealing in the business of sales of generators.

It is believed that private investment yield more output compared to Government controlled organizations which are usually in the hands of nonchalant personnel. But perhaps, only if the investment is fully privatized would the desired impact be felt.

Probably in view of the above negative scenarios, President Goodluck Jonathan must have realize the need to finally relinquish the sector to the hands of private investors who have skills, expertise, competence and financial muscles to rescue the sector from further collapse.

It was therefore not surprising when the National Council on Privatization (NCP), chaired by Vice President Namadi Sambo approved “core investor” sale strategy for the privatization of the 11 distribution companies created out of Power Holding Company of Nigeria (PHCN.)

Recently, President Goodluck Jonathan handed over the share certificates and licenses to 14 new core owners of the Power Holding Company of Nigeria (PHCN) successor companies with an assurance that things can only get better in the power sector. Jonathan described the process of the privatization as most transparent in the history of privatization in the country and that government is working out modalities to tackle the challenges such as the payment of severance allowances to the PHCN staff.


Five generating companies and 10 distribution companies received share certificates from President Goodluck Jonathan who also promised that the physical hand over of the assets would be undertaken soon. He added: “Going forward, this administration is committed to providing all elements are necessary for our private sector partners to succeed in providing Nigerians with uninterrupted power supply. To start with, the Nigeria Bulk Electricity Trading Company, NBET, the off-taker, has been provided with a capitalization of over $750 million, positioning it to carry out its mandate without financial constraints.”


It is also gratifying to note that the government has promised that PHCN workers would get their full entitlements. This will surely prevent any attempt by labour to derail the process. In partnership with the labour unions, the government should be able to come up with an outcome that is beneficial for all stakeholders. Labour leaders are therefore urged not to nurse a feeling of displacement, but dwell on the tremendous possibilities partnering with the government through the reform process and urge them to continue in this spirit for the greater good of all Nigerians.

Some pundits believe that, means of production is still been controlled by corrupt politicians. Thus it is another stratagem to milk the economy. Be that as it may, economists have it that, fixing electricity could reduce business costs by up to 40%, add 3% to GDP and cut the mass unemployment, which is the major nucleus behind security issues around the nation. More so, the issue of kidnapping will be reduced to the barest minimum, as close circuit cameras will become a common sight on our major streets. This will help checkmate all sort of social vices and delinquent acts commonly found due to blackouts on our streets. Without doubt, if the takeover is genuine which I think it is, local businesses, local industries will spring up; local raw materials will be harnessed to the optimum.

Apart from the fact that, it will reduce unemployment, it will boost the economy as locally manufactured products will take over the imported ones. The economy will be streamlined and self-sufficient. Rather than channel a large chunk of the budget on importation of products, the Government will generate revenue from tax levied on such local industries. In a similar vein, the revenue can be diverted towards creating better road network, thus locally manufactured product will be accessible in most if not all parts of the country.

Though it will not be out of place to nurse the fear of increase in the electricity tariff; the new power owners should assure and ensure that consumers will enjoy better and affordable services. Thus when cost of production is minimal as a result of constant power supply, output will be optimum, and individuals and industries will afford to pay the new electricity tariff.

Moshood Isah
Sapele Street
Garki Abuja