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Footsteps in the Dark-
The failure of a Power Holding Company
by
Abi Bilesanmi
‘My reputation grows with every failure.’
George Bernard Shaw
Google the acronym NEPA and you get pages of information
on the North East Productivity Alliance - a UK regional
business improvement initiative that helps manufacturing
companies drive down lead times, reduce waste and stock
and generally improve productivity to stay competitive;
the National Educational Printer Agreement - open to
all institutions of Higher Education, the Research
Councils and HE consortia-affiliated Colleges of Further
Education; The New England Press Association - promotes
growth and excellence in New England newspapers through
technology, networking, education and recognition among
its members. Wikipedia shows various acronyms which
include the United States National Environmental Policy
Act (1970); the North Eastern Pirates Association - a
large group specializing in pirating games for the video
gaming community.
There was reference to Nigeria’s National Electric Power
Authority - the organisation governing the use of
electricity in Nigeria but appears to have more kudos
for running a football team. It was Ashley Montagu - a
British-American anthropologist who said the deepest
ignominy we suffer is constituted by the difference
between what one was capable of becoming and what one
has in fact become. This could not be more apt if NEPA
is better recognised as football team rather than
providing electricity.
But of course NEPA is now the Power Holding Company of
Nigeria. If NEPA was a bigger failure than ECN (and it
was) then the logical extension is that PHCN would be a
bigger failure. But the signs on PHCN's website point to
the contrary. There is an informative website which
allows you request for a meter, submit a complaint check
and pay your electricity bill even e-mail your
district. On a graded scale it raises a chuckle to a
roar of laughter. Who the hell are these guys? The clues
are obvious. They surely elevate presentation over
reality, they definitely know nothing about the reality
of electricity supply in Nigeria; they certainly
blind-built this website from the template of another
company or, more likely, a combination of all of the
above.
How much did all these cost? We hardly know how much is
being put on this electricity privatisation tab, but we
can deduce from this all-singing and dancing website
with certainty that the numbers are massive and the
result in terms of electricity supply - its primary
objective - has deteriorated.
This is because a host of companies are on the gravy
train handsomely paid from the privatisation fee i.e the
government sale of its stake in NEPA which is millions
of £ of taxpayers money. Their fees would of course have
been factored in (in an ITT-esque fashion)
'miscellaneous' cost which would include kickbacks and
hidden costs to those under whose auspices contracts
were awarded. In this atmosphere of reciprocal back
scratching, it is easy to overlook the inconvenient fact
that most households have little or no electricity
supply. If these spivs and financiers were local, they
would know that after 25 years of power failure (in a
plethora of forms), Nigerians tend not to complain –
especially not about failure of any kind. Failure has
permeated into the national consciousness manifested as
unbridled optimism and/or resignation often met with
customary shrug of apathy. Even if there were a culture
of complaining, who do they suppose customers complain
to? Surely not to the self-serving officials who,
according to Waheed Majekodunmi play God as to who
enjoys electricity supply and who does not. I wonder if
these guys care to know that in areas like Agege it is
alleged that PHCN officials defuse transformers plunging
the whole areas into darkness rather than maintain an
already unacceptable power sharing arrangement. I wonder
if they knew that for the residents of Isale Oja and
Papa-Uku for whom there has been no power for 3 months,
e-mailing their respective complaints is not really a
viable option. And of course it bodes well for customer
service when officialdom of PHCN, it is said, claim that
residents of the areas are ‘chronic debtors’ and
undeserving of the luxury of electricity? Under such
circumstances one wonders what would such a complaint
achieve. If PHCN brands these residents 'chronic
debtors' one is prompted to ask what exactly are these
residents supposed to be paying for? Non-existent or
poor service it would appear but demanding for a service
not provided -is that what is defined as demanding
payment under false pretences a.ka extortion?
On this website it is interesting to see that new
customers can request for a electricity meter.
Discounting the fact in the UK for example it is
adjudged that the less well off and more vulnerable, via
meter pay more than other users and there is a concerted
campaign this system described as ‘a complete rip-off’,
one is confronted by the somewhat obscure fact that
electricity meters actually work on electricity consumed
and should one need to complain about one’s non-existent
service by e-mail, one will need to have a computer
which works on er..electricity. Nigerian homes are
insecure enough without having some device that keeps
cash ...in the house!
Below this PR facade, running like a list of credits
from your favourite movie, is a list of banks from
Afribank through GTBank to Wema rolling across your
screen. Their job is to grease the machinery of
privatisation by facilitating who the nation’s asset has
been pawned to as well as create the illusion that the
‘new broom sweeps clean.’ But you can not fool all the
people all the time. The 'impracticalities' demonstrate
the 'incompleteness' of thought in procedure and
application, but there an even bigger and more worrying
absence of forethought in the ideology underpinning a
wider privatisation agenda. This ‘ideology’ has been
based on a narrow perspective on the simple premise that
governments have neither the aptitude nor expertise to
run industries and therefore need to hand these to
private sector. It forms a segment of policy initiatives
imposed, primarily by the IMF (aptly referred to as the
International Monsters Fraternity), as part of its
dogmatic approach for laissez faire principles of market
deregulation and public sector privatisation i.e - as
the prescribed panacea for economic development where
there is less (or abandonment) of governance by the
governments in the provision of services and on economic
issues.
Largely this ideology has been a failure and done
nothing but burden the underdeveloped countries in the
areas of socio-economic development and international
trade.
The nation’s electricity (not exactly the family silver
as it was non-existent at the best of times) has gone
like Malaysia’s water system, India’s healthcare,
education and airports infrastructure, Pakistan’s
electricity, banks, and hundreds of state-owned
enterprises in the underdeveloped world which have been
placed on the market. The result of this rushed and
flawed privatisation agenda is universal. A sizeable
controversy quotient. Students are up in arms, unions
are crying foul, poor and rural communities are vocal
because they disproportionately bear the brunt of the
failure and uncertainties of privatisation while the
private companies exclusively enjoy the benefits
-monopoly profits.
To fully understand this, you only need to look at the
address by Atiku Abubakar at the inauguration of the
Board of Directors of PHCN Plc on 31st May 2005 when he
hailed the inauguration as ‘another significant event
in our journey to a reformed, financially viable power
sector for Nigeria’ and lauded the Government’s
efforts ‘at meeting the present and future electricity
needs of our country’ by the President's signing the
Electric Power Sector Reform Act 2005 into law on March
11th 2005. The preoccupation of this act is not reform
of the totally inefficient NEPA but rather that the
National Council on Privatisation (NCP), in accordance
with the powers conferred on it, take steps to establish
the initial holding company to take over the functions,
and more importantly the assets, of NEPA within one year
be transferred to the successor companies. Time is
obviously of the essence.
Take an even closer look at the corporate
responsibilities of the board which include overseeing
the management of operational and reform matters,
assessment and approval of major budgetary
expenditures, strategic issues in the restructuring of
the company, consideration of all major decisions
necessary for the expedited transition of the Holding
Company to successor companies and recommend to the NCP
for approval; setting operational goals and targets for
management of the Holding Company; ensuring proper
corporate and legal transition from NEPA financial
statements, budgets, schedules of assets, liabilities
and employees are prepared on a timely basis; ensuring
that the true and accurate position of NEPA’s
indebtedness and financial exposure is established with
a feasible plan for addressing the indebtedness
Conspicuous in its absence is any reference to the
government's regulatory framework not even 'light touch'
regulation. Without this regulatory framework where
successor companies have basic service level agreement,
targets in the discharge of their corporate
responsibilities and any possible consequences should
they not be met, Abubakar simply said the board must
ensure ‘that the Holding Company is fully committed to
building a new electricity sector for Nigeria’ and
‘adhere strictly to the best principles of ethical
corporate governance.’ He said the company stood ‘on
the threshold of history and the dawn of a new era in
the Nigerian electricity sector’ and 'should ensure
fairness and transparency as individual Directors and
collectively as a Board.' He reminded that their task
was difficult (no kidding). However he had 'no doubt
that were able to meet the challenges with dedication,
sacrifice, honesty and hard work' and they 'will be able
to do us proud'. Really?
And with the customary 'thank you, good luck and God
bless',declared the Board of Directors of the PHCN Plc
inaugurated leaving an overwhelming perception that the
government completely washes its hands of this failing
organisation, 'do with it as you deem fit.'
Is failure of privatisation inevitable? Not necessarily.
But the assumption that the private sector (the
successor companies) would immediately and adequately
fill the gap hitherto occupied by the government is
misplaced. In ideal world the objective of the
government, particularly in this case, ought to be
ensure that services are improved while simultaneously
safeguarding the national interest and securing the best
value for its taxpayers in, considering what PHCN was
getting, was essentially a bargain basement sale. On the
other of this equation are the private companies. Their
objective is the bottom line - profit. This divergence
in objective has grave implications. They are less
attuned to altruism of service provision or social costs
and will do what they have to including breaking up the
organisation, laying off staff in other words they will
morph into any position if it guarantees the bottom
line. To understand this modus operandi, it is worthy of
note a parallel situation going on in the telecoms
industry where NITEL is up for sale and the allure of
rich pickings (hence expanding profits) is prompting
prospective buyers and their cohorts to claim the value
of NITEL’s assets might have plummeted (what a
surprise). Highlighting this kind of chicanery has
fallen to those in the know like Titi Omo-Ettu, a
telecommunications engineer and consultant who argue
NITEL (like NEPA) as the First National Operator’, is
where its incontrovertible true value resides, it is the
First National Operator’s License that is attraction for
prospective buyers and according to Engr Omo-Ettu,
‘makes a world of difference.’ Prospective buyers are
adhering to the simple principle of ‘buy cheap’ with
monopoly powers will allow them to charge whatever they
want.
The failure of this kind of this privatisation rests on
a conflation of ideological, implementational and
strategic failures. Firstly the fervour at which the
privatisation agenda is pursued is based on a misplaced
ideal of triumph of ideology over evidence-based policy
– a defunct ideology that the private sector can quickly
meet everybody’s needs with an obstinate disregard that
profit and not ‘meeting everybody’s needs’ is their main
objective and that for the very fact that in
underdeveloped countries it is because markets fail in
the provision of essential services that government
undertake these activities. The entrepreneurial class is
unable to purchase the NEPA’s operator’s license,
infrastructure and liabilities, in the absence of
government enterprise, acquisition inevitably falls to
foreign companies (exactly what the IMF want) who will
do their level best (as we saw with telecoms) to get
their hands on a country’s electricity lock, stock and
barrel for pittance. If according to the PHCN chairman,
$10 billion is needed to revamp the power sector for
uninterrupted electricity supply and investors are
bemoaning $6 million funds that they say are now
‘trapped’ in PHCN Plc, without the government we have a
clear indication of who is capable of investing and the
intent of those who have invested in this privatised
industry. Secondly this is also flawed on implementation
grounds in that privatisation, as in the case, proceeds
and precedes any regulatory or competition framework –
Atiku Abubakar’s speech attests as much. To these
companies, once they acquire such state assets (on the
cheap) their monopoly is effectively a license to print
money as they can maintain their monopoly by raising
prices so high with scant regard for the fact that the
majority are prised out. In Cote d’Ivoire where such
privatisation proceeded, there was a monopoly of both
telephone and cellular services and the ‘lucky’ firm
raised prices so high that internet connection became
unaffordable. If privatisation is the only way to get
the investment that poor countries need in the provision
of services like, telecommunications, electricity and
water, then it is imperative that it accompanied by good
regulatory arrangements. Thirdly and strategically, this
kind of privatisation is dubious for the simple reason –
corruption. Customarily privatisation of an unregulated
monopoly yield more money for the government. Hence the
drive to privatise quickly because of vested interests
and no guesses for what happens to the money for the
government – yes you are right. It is not privatisation
but rather ‘briberization’. In society like ours where
the government (and the people one must add) are
corrupt, a below market price sale ensures that those in
power can appropriate more for themselves rather than
augment the public purse while its advocates falsely
maintain that assets would be better managed. It did not
work with rail privatisation in the UK, electricity
privatisation in California telecoms privatisation in
Cote d’Ivoire, or water privatisation in Guinea, Gambia
nor Ghana. There are no grounds for optimism that it
will work in Nigeria and so far PHCN have not convinced
us otherwise.
What Now?
We need to understand this privatisation for what it is.
It is part of the ideologically and operationally flawed
structural adjustment programme which, according to my
recollection marked the beginning of Nigeria’s economic
woes. 25years of implementing structural-adjustment
programmes, Nigeria’s r economy remains weak and in
terminal decline incapable of transformation to sustain
accelerated growth and development with widespread
poverty, high unemployment declining manufacturing and
agriculture and our external and domestic debts much too
heavy a burden to bear. Since then the World Bank pushed
the Nigerian Government to develop specific options to
privatize the country's assets. Customarily it is the
poor who have been systematically deprived of their
right of access to electricity.. Pro-privatization
consultants hand-picked by the multilateral financial
institutions doing the bidding on behalf of the
transnational corporations interested in taking over
Nigeria's electicity. Designing a business framework
that divides the country into regions for generation and
distribution facilitates cherry-picking the lucrative
regions of service for the incoming corporations,
leaving the lucrative bits for state authorities and
communities worried about their service levels . That is
why after a sustained period of poor electricity supply
being experienced currently by consumers and . in its
determination to ensure that residents of the state who
are connected to the national grid enjoy steady supply
of electricity, Nasarawa State Government has purchased
twenty 500 KVA transformers valued at over one hundred
million and donated to Power Holding Company of Nigeria
(PHCN). So after the false promise of privatisation and
the pofit motive delivering efficiency, we have a clear
case of the state subsidising a private company But
herein lies the problem. Governor Doma rather than
admonish and ask questions of PHCN for the poor supply
of electricity which has hindered smooth operation of
commercial activities in his state has has used the
state’s taxpayers money to buy transformers (for which
the Business Manager of the company in Lafia,Dr Halidu
Balami must be eternally grateful who described it as a
‘kind gesture’) and donates (with no regulatory
agreement, stipulated target or service level) to PHCN
‘urging’ them to reciprocate his administration’s effort
by improving on the supply of electricity! And what can
the taxpayers of Nasarawa expect for this expensive
‘kind’ gesture? ‘Judicious use’ according to Dr Balami
which will deliver 12 hours power supply – the
equivalent of what they get in Baghdad despite being in
the middle of a full scale war!
What is required is utilization of the groundswell of
resistance to the privatization agenda, global financial
institutions, their corporate allies and in particular
the poor delivery of service from PHCN. Teachers,
students, NGOs, churches, farmers need to be more vocal
that they are increasingly unable to cope with this
poor service. The medical and other lawyers, accountants
and community leaders, the urban working-class
population need to form coalitions against further
privatization. The the largest unionized labour
organizations need to be at the forefront of the
struggle. In other countries like Ghana and Bolivia,
pressure exerted by the people has led to the revision
of bids and in some cases a complete reversal of the
privatisation process. We need to make PHCN’s success
and its profit motive reliant on a preparedness to
engage with the public and the delivery of service and
send a clear message to the management of PHCN f the
current 12-hourly nationwide power rationing
arrangement, nor its reversal is acceptable.
In a statement on Tuesday the PHCN said rotational
rationing from 12 midnight to 12 noon and 12 noon to 12
midnight, the schedule will be reversed starting from
Thursday September 11, 2008.
. We need to deny the Government a silent and
dignified bow out. The degree of mobilization against
PHCN locally and nationally should push electricity
supply high on the electoral and political agenda. Let
the government know that there is a price to pay at the
ballot box for inactivity.
To put in stark terms, there is a war here. Electricity
is vital to our very existence. We are therefore not
going to surrender our lives on a silver platter
neither would they expect us to. The least they can
expect from us is a fight that is comensurate to that
they will be putting up in the fight for their expected
profits; since we will be fighting for our very lives,
we have desperation (not to talk of morality) on our
side. The genie can not wait to get out of the bottle if
only we will give it the proverbial rub
Abi Bilesanmi is a politics graduate and an activist for
social, political and economic justice.
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