How Nigeria sold ageing, unserviced electrical assets to investors in 2013 – Fashola

The Minister of Power, Works and Housing, Mr. Babatunde Fashola on Thursday said Nigeria under the leadership of former President Goodluck Jonathan handed over ageing, unserviced electricity generation and distribution assets to private investors who participated in the country’s power sector privatisation exercise in 2013.

Fashola, who has had running battles with operators of the generation and distribution assets – especially the distribution companies (Discos), over reports of operational underperformance amongst others, told an audience at the Punuka Annual Lecture Series, that Nigeria adopted power privatisation models from Europe but handed over rundown assets to investors.

He also stated at the annual lecture series organised by Punuka Attorneys and Solicitors as its corporate social responsibility (CSR), that most Nigerians were either unaware of this sad realities in the sector, or chose to ignore them.

“In this sector, one area of difference between our privatisation model and what I know of the European models is that the assets were privatised as on-going and functional undertakings requiring only private sector managerial models to optimise commercial value.

“In our case the assets sold were not viable on-going concerns, they were in many cases ageing, de-rated and unserviced assets; and the service was disappointing. This is what led us to privatisation,” said Fashola.

He then explained: “The difference is that our model requires more private capital injection to achieve reliable service while capital injection in the EU will improve already reliable service.”

Power supply in Nigeria has reportedly remained abysmal with frequent supply shortages and complaints of inefficiency by consumers, however, Fashola said: “When people call me to complain about the level of service either of power supply, bad equipment, excessive billing, they do so without adverting their minds to our reality or are in total ignorance of the reality.”

“The reality before privatisation is that the ministry of power had over 50,000 staff, owned trucks, employed electricians who went out to repair faults, the ministry controlled power stations like Jebba, Kainji, Shiroro, Egbin to mention a few and the ministry employed all of those who worked in distribution,” he added.

The minister equally said that calls for a review of the 2013 privatisation were unclear to him, but that the responsibility for such was that of the Nigerian Electricity Regulatory Commission (NERC), which he noted has processes for such to happen.

“To those who call for a review of the privatisation for example, I have asked them to step out of the context of that nebulous term called a review and specify what they mean.

“For advocates of review who think that licenses of Discos should not be renewed (or should be cancelled), that power exists but is not vested in the ministry or the minister.

“The power is vested in the regulator under sections 73 and 74 of the EPSRA (Electric Power Sector Reform Act). While the case may exist for the exercise of that power to amend or cancel a license for non-performance, I am of the clear view that ministerial action is not contemplated by this provision of the law,” he stated.

Fashola also noted that contrary to popular view that state governments could not engage in the business of electricity production and distribution, the country’s 1999 Constitution as amended, empowered them to do so. He thus called on them to get involved in the business of providing electricity for residents of their states.