The Road To Stable Power

Egbin Power Station:

Egbin Power Station:

Poor power supply situation in the country is becoming history, given the commitment of the Goodluck Jonathan administration to power reform

Egbin Power Station: Rehabilitation on-going.

About two months after President Goodluck Jonathan appointed him as Minister of Power, Professor Barth Nnaji paid a visit to the Olorunsogo Power Station in Ogun State. That day–and prior to that visit–only two out of the eight units of the plant, built by a Chinese firm, were working. According to the head of the station, the low performance and his inability to make the plant to work at full capacity was because the manual for the plant was written in Chinese. In other words, to the man and his lieutenants, the instructions were all hieroglyphics, decipherable only to ancient Egyptians!

Clearly, Nnaji realised that the officer did not have the right attitude to work or a good understanding of how the plant works. Pronto! the Minister recalled the man to the Power Holding Company of Nigeria, PHCN, headquarters in Abuja and replaced him with the most senior technical officer at the plant. That was on a Monday. Then something happened. Four days after this replacement, six, instead of two units of the plant, were working, with power generated trebling, from between 40 megawatts and 50 megawatts to 150 and 180MW, in that order.

What transpired that day showed everyone that cared to watch or listen that, in the power sector, things had changed. The usual civil service lethargy that everyone was used to has given way to a privated sector go-getting orientation, now encapsulated in the Power Sector Reform of the Jonathan government.

When he became President, even before he won the general election, Jonathan had been telling Nigerians that their days of woes with darkness would soon be over. Thus, on 26 August 2010, he launched Nigeria’s Power Sector Reform Roadmap. The Jonathan government put this on the solid foundation laid in 2001/2002 by the adoption of the National Electric Power Policy, and in 2005 with the promulgation of the Electric Power Sector Reform, EPSR Act.

The President, in his address, concluded thus: “In the same way that the reforms in telecommunications sector paved the way for the benefits we all enjoy today, we believe that with diligent implementation and meticulous application of what this Roadmap provides, we will see an end to the chronic electric power supply shortages we know too well, and witness the birth of a modern, efficient, customer-focused, private sector-driven electricity supply industry. We have the will. This Roadmap shows the way.”

In his Presidential Mandate on Power, Jonathan agreed with many critics that the availability of reliable electric power to the homes and businesses of the citizens had been one item in our national life that we have approached with so much hope and yet experienced so much frustration over the past decades. Various regimes in the distant past, in the words of the President, paid little attention to the sector but in the recent years, subsequent regimes have put in billions of naira to reverse the neglect and mismanagement, which has characterised the sector.

That is why critics have been passing comments on the inevitability of power in our lives in truckloads. Mr. Opaka Dokubo, Chairman of the Rivers State chapter of the Nigeria Union of Journalists, NUJ, captures it this way: “So many things we do, our lives revolve around power; it is as simple as the GSM, you cannot use it without power; you need to charge your phone. It (power) is so fundamental to our modern day lives; it is about the most basic infrastructure that we need to function well within the modern world. Power is everything.” Also, Prince Unyejit Asuk, a Port Harcourt-based legal practitioner, argued: “Power supply is the foundation of any business in the whole world; where there is no power there is nothing you can do. You are in the office you want to rush down to type your court proceedings, there is no light; we start looking for fuel to start up electricity generating set. Power is the bedrock of everything; business or anything you can think about, without power there is nothing you can do.”

That was why, conscious of the agitation for improved power supply, President Jonathan made it a cardinal premise on which he sought the people’s vote in the April 2011 general elections. He has not departed from that path.

The first thing the President did was to appoint Nnaji as Minister of Power. The matter between the two men is akin to what Chinua Achebe writes in his novel, Anthills of the Savannah: “A man is looking for something in the pocket of another man looking for something.” This is to say that the President wanted a man with a private sector dynamism. He saw this in Nnaji who, himself, wanted lieutenants that are not bogged down by officialdom but are focused on effective service delivery.

Given his antecedents, not a few Nigerians believe that Nnaji, a globally renowned engineering professor, is the right arrowhead of the power reform initiative. He is actually not a stranger on the terrain. As Special Adviser, Nnaji was Chairman of the Presidential Task Force on Power. For the past 10 years, he has been a major player in the power sector. For instance, in 2000 he became the first Nigerian to build a power station in Abuja (the 22MW Emergency Power Station) which was commissioned by Alhaji Atiku Abubakar as vice-president. He, thereafter, initiated the 188MW integrated power facility for Aba, the headquarters of local technology in Nigeria.

According to an analyst in the power sector, Nnaji, unlike some of his predecessors, came into the ministry with industry experience, a background that has equipped him for the task of dismantling the organisational inertia at the heart of the snail speed hitherto recorded in power supply. The minister, we are told, always believed that the human element was a major factor in efficient service delivery. He demonstrated this in the drama at the Olorunsogo Power Station and his drive to make industry managers accountable through negotiated benchmarks and targets. This gave rise to the Service Level Agreements with all the chief executive officers of the 18 companies from the unbundled PHCN. This, as a critic put it, “marked a paradigm shift in the work environment: retention of one’s job or reward was no longer based on who one knew, where the person came from, one’s lobbying skills or length of service. To retain one’s job, service delivery had become the watchword”.

Nnaji is quoted as always saying that the President demands no other explanation or favour except to “see regular power supply”! To demonstrate that he means business, Nnaji has removed four CEOs since he came on board as minister.

No wonder that the nation experienced the increase in power generation from 2,500MW to 3,800MW between June 2010 and August 201. Besides, the Ministry of Power under Nnaji has deployed its best strategy towards achieving 5,000 by the end of 2011.

In fact, Nnaji’s strategies are many. He motivated his CEOs and their men to achieve the recovery of idle capacity at many power installations all over the country. In Kainji, for instance, out of the 760MW installed capacity, only 450MW is generated by the plant built in 1968. Industry insiders attribute this largely to the fact that the station had not undergone any major overhaul since it was built. Some units are now undergoing rehabilitation to recover idle capacity.

Similarly, work is going on to recover the sixth unit of the Egbin Power Plant in Lagos. When this is concluded, within the next seven months, power generation at the plant will go up to 1,320MW theoretically as each of the units contributes 220MW.

According to a source, the rehabilitation is being handled by the original builders of the unit, Marubeni of Japan, at a cost of N1.5 billion. There are other recovery programmes: 100MW from Sapele Power plant by December 2011; 120MW from the Ughelli Power Plant by December 2011 and 215 (2 brand new units) from the Alaoji Power Plant by the first quarter of 2012.

In the area of transmission, according to PHCN sources, before Nnaji took over the helms at the Ministry of Power, there used to be an average of four systems failures in a month. But this has reduced drastically because, unlike in the past when nobody was held responsible, today somebody is.

Moreover, Nnaji’s insistence on regular maintenance of transmission lines accounts, largely, for the improved power supply now being witnessed. But an insider told this medium that it took an incident to jolt him to the magnitude of the problem. As a PHCN source revealed, at the point the country attained 3,800MW last year, the new load simply shattered the transmission capacity, causing a huge systems failure and throwing the country into darkness. This jolted the government to the realisation that enhanced transmission capacity had become urgent. The country’s transmission has run on traditional 132KV and 330KV lines.

But to improve the transmission capacity, President Jonathan approved the proposal for the installation of 765KV lines, a higher capacity line that will reduce the technical losses between generation and transmission by at least 40 per cent. Described in some places as the super-grid, “it is a more efficient line in use in a few countries, notably Russia, France, the UK and some states of America”.

There were other major steps taken by the Jonathan goverment towards achieving stable power generation. On 19 October 2011, the Minister of Power and the President of American EXIM Bank signed a $1.5 billion Memorandum of Understanding, MoU, for credit facility to provide credit to companies using American products and services in the reformed power sector. In fact, the total US EXIM credit to sub-Saharan Africa in 2010 was $1.4 billion, out of which $200 million went to Nigeria. But the MoU signed three weeks after Nnaji’s visit to the U.S is a whopping $1.5bn for the power sector alone! Similarly, the American Overseas Private Investment Corporation, OPIC; the African Development Bank ADB; European Investment Bank and other development bodies are making available $1.5bn and a $500mn credit respectively to Nigeria to support the power sector reform.

Another achievement of the Jonathan government is the restoration of the Rural Electrification Agency, REA––which had been closed down since 2009 when some National Assembly members and some top bureaucrats in the Ministry of Power were accused of stealing the agency’s N5.2 billion––and the provision of over N4bn in the 2012 budget for its take-off.

On Monday 15 November, the Federal Government announced its intention to revive it. Nnaji made the statement when he hosted representatives of Ihiala Local Government in Abuja. He said: “The condition which made the creation of REA inevitable was still largely there and about 2,000 communities across the country are yet to be provided with electricity.” Nnaji also noted that 1,946 projects being carried out by the REA were at different levels of completion and, therefore, should not be abandoned, adding that rural electrification contractors were still owed N3.4 billion.

There was also the prequalification (by the National Council on Privatisation headed by Vice President Namadi Sambo) of 212 of the 331 companies (from 38 countries) that submitted Expressions of Interest, EoIs, in the 18 PHCN successor companies, following advertisements for EoI by the Bureau of Public Enterprises, BPE. Some of the companies are of world class status and include TATA of India which recently bought over Rolls Royce of the UK; Essar, also of India, which pledged to invest $2 billion in Nigeria’s power if Nigeria continues with the power sector reform. Others include the Israeli Electricity Corporation and Manitoba Hydro Power of Canada.

However, it is not enough to drive the workforce hard without motivating them, through improved welfare. Thus, the Jonathan administration took certain steps to improve the welfare of PHCN workers under the power sector reform.

First, it paid the N57bn monetisation denied the workers since 2003 when the Federal Government introduced monetisation of fringe benefits. It set aside a percentage of shares of the 17 successor companies to be privatised for exclusive purchase by PHCN workers.

Apart from regularising the status of 11,000 casual workers in the PHCN to full employment with retroactive effect, the government effected a 50 per cent salary increase, thus bringing the monthly wage bill from N7bn to over N9bn. It also set aside N142bn since last year for prompt payment of retirement benefits of PHCN workers when change of ownership becomes effective, restored the structured training of PHCN employees abandoned since 1989, and aggressively expanded and developed the National Power Training Institute of Nigeria, NAPTIN, to become an internationally reputable institution.

In spite of the dreams of the government in the area of power reform, critics are apprehensive. Opponents of the Public Private Partnership, PPP, argue that power is a strategic sector to be left to the private sector alone. They further argue that private sector participation will make power too expensive for the poor and lead to job losses, the same arguments used against reform in the communications and aviation sectors.

Observers argued that if power is stable, Nigerians who have been spending money on generator fuel will be ready to pay for electricity. Just like what is happening in the telecoms sector, expanded employment opportunities and better welfare, access to service, enhanced capacity building opportunities are some of the benefits of the power sector reform to the people. Experts in the power sector are of the view that the current 47,000 staff strength of PHCN could quadruple within one year once the private sector steps in. They cite the rather exponential increase in telecoms jobs as an example. Just as telecoms workers now enjoy better conditions of service, experts say that power sector workers should expect no less as the 17 unbundled companies will compete for available expertise. In fact, apart from training opportunity, it is expected that workers will work in a better environment. Whereas the PHCN staff go through the tedium of obsolete equipment and manual technology, liberalisation would lead to automation thereby creating a more worker-friendly environment.

In fact, not everybody shares the apprehension of some labour leaders on the negative effect of privatisation. Mr. John Isemede, Director-General, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA, said: “If it is public-led, you cannot achieve the desired result. Tanker drivers will wake up one day and say they are going on strike. However, if it is private sector-led, you will not declare such strike, you will not declare public holiday and all others. So, PPP is ideal, government can only make regulation on enabling environment and allow others, the states and local governments to compete. Then the economy will not be growing at 6-7 per cent, but will be growing at the rate of 20 per cent.”

To Emeka Enechukwu, an engineer, first deputy president, Port Harcourt NACCIMA and the Chief Executive Officer, Morflex Energy and Power Limited: “Except the power sector is fully privatised, it will be very difficult to have steady power supply.”

Also, the Nigerian Union of Electricity Employees, NUEE, wanted the government to run its power plants alongside private sector initiatives. But as Professor Nnaji pointed out last November while speaking at the Second Annual Nigeria Energy and Power Summit held at TransCorp Hilton Hotel, Abuja, that model did not work for both the aviation and telecoms sectors. In both cases, the government entities––Nigeria Airways (aviation) and Nigeria Telecommunications Limited and M-TEL (telecoms)––crumbled under the weight of competition.

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—Ademola Adegbamigbe