FG Begins Winding Up Of PHCN

There are strong indications that the Federal Government has commenced the final winding up of the Power Holding Company of Nigeria (PHCN).

According to details made available by the Presidential Task Force (PTF) on Power, workers at the headquarters of the cooperation in Abuja have started  moving out either to the Ministry of Power or to successor companies, while the functions of PHCN are being transferred to individual successor companies.

The eventual winding-up is, however, expected to be a legal or court-ordered formality, occurring when ongoing workers’ movements and transfer of assets and  liabilities are concluded, before the end of April.

A report detailing measures to remove obstacles to private sector investment in Nigeria’s power sector was released last week by the PTF on Power and  contains major decisions to be taken in this regard.

Hinting that a new tariff system will be announced by April 2011, the task force said that the Federal Government might conclude the winding up of PHCN’s  operations by the first quarter of this year.

It stated that the process of winding up the company was already on and that it might be concluded by the end of the first quarter.

“This process is underway. Headquarters’ members of staff have started moving out to the Ministry of Power or to successor companies. Functions are being  transferred to individual successor companies. The eventual winding-up will be a legal or court-ordered formality, occurring when ongoing staff movements and  transfer of assets and liabilities are concluded, probably during Q1 2011,” the report stated.

It added that: “The 11 distribution, six generation and one transmission companies now have individual budgets. The companies are now de facto independent  entities, thus putting the PHCN in winding-up mode. All of the PHCN successor companies are set to enter the ‘Transition Stage’ of the reform when they will  buy and sell electricity based on contracts agreed with each other and stop operating as part of a government monopoly financed through a common budget and  obliged to provide power or electricity evacuation services to each other without payment.

“This will create incentives for the power companies to provide service to as many Nigerians as possible and as frequently as possible, so they can earn  money to pay for their inputs and operational costs.”

The task force stressed that the implementation of the reform would continue apace and that by mid-2011, an appreciable proportion of generating and  distribution capacities would have been transferred to the private sector.

“New private generating capacity would have been fully contracted and under procurement, the transmission grid would be privately managed and a reinvigorated  regulator would be actively ensuring long-term sustainability of a private sector-led Nigerian electricity supply industry.”

The task force said it was committed to replicating the success that Nigeria recorded with the liberalisation of the telecommunications sector in the power  sector with all the potential it had for a far more fundamental impact on job creation and economic growth.

It said that political support from the highest quarters of government had not flagged, noting that regardless of the increased tempo of electioneering,  there was continued pressure, not only from the government, but also from manufacturers, the media, civil society groups and others on the task force to  deliver tangible results to Nigerians.

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