Over a period of two decades Nigeria invested about $100bn in public enterprises with subsequent transfers to these enterprises amounting to $3bn (1998), $800m (1999), $1.4bn (2000), $4bn (2001). Yet returns over the period were 0.5 percent.
It is unquantifiable what the Nigerian economy loses every year due to the inefficiency of the public power supply. The consequence of this inefficiency is borne by the Nigerian worker and the economy as a whole. The reform programme for the power sector, therefore, is designed to substantially reverse the frustrating experience Nigerians have had to endure in service delivery in this sector.
The programme for the reform of the power sector has led to the unbundling of Power Holding Company of Nigeria (PHCN) into six generating companies, one transmission company and 11 distribution companies. The successor companies are slated for privatisation. The idea is to continuously inject private capital into the various operations of the privatised companies. Such capital injection and efficiency have been inadequate in PHCN over the years, resulting in grossly unreliable/non-provision of adequate power supply to the economy.
It must be stated that while the BPE labour policy takes care of the direct and immediate needs of workers, the reform and privatisation programme rightly focuses on the big picture, that is, the impact on the economy as a whole and ultimately the greatest good for the 'opening up of hitherto government dominated sectors to the private sector as well as divestiture of government interest in such sectors.
BPE has taken the informed position to involve workers and their unions in programme design and implementation, in the full realisation of the strategic and indispensable place occupied by labour in the economy. We are also intimately aware that Nigeria is a very vast, heterogeneous and complex country. That being the case, workers' perception and understanding of government's reform programmes like privatisation is invariably influenced by the perception of the likely impact of such programmes on their welfare.
In line with this policy, the BPE has between 2000 and date made good the following liabilities in favour of Nigerian workers:
Salary arrears: N13.756 billion; Terminal benefits: N162.577 billion; Total: N176.334billion
That said, there is the need to address certain ideas being canvassed by the unions in the electricity sector and their sympathisers. The Nigeria Union of Electricity Employees (NUEE) had argued that "if the government is really serious about the sector, it should allow the 25 licensed companies to operate alongside PHCN, like the Nigeria Electricity Supply Company (NESCO.) NESCO has been operating in Nigeria since 1929, generating its own electricity without taking over PHCN." The fact is that due to the structure of the electricity industry, it is not possible for private operators to build their distribution facilities to compete with the extant distribution network of Power Holding Company of Nigeria (PHCN.)
NESCO as a private company has generated and distributed electricity (through separate licenses) efficiently for many years in Jos to the satisfaction of its customers; this is a case in point to support private sector investment. However, there is need to establish a structure for private-public partnership to prevent what we may elegantly describe as turf wars. There are examples in Jos where both PHCN and NESCO are laying parallel distribution facilities in the same neighbourhood. Aside from health and safety issues, what this means is that consumers will be compelled to pay for the cost of multiple infrastructure; whereas one set of infrastructure would have served the populace at a far-reduced cost.
The second issue raised by the unions is that "since 2005, through the power sector reform, the monopoly of NEPA/PHCN was supposed to have been broken with the unbundling of NEPA into 18 companies to work alongside PHCN, yet none of those companies founded by private investors has generated a single megawatt of electricity."
The EPSR Act does not provide for the 18 successor companies to work alongside PHCN. When the companies are privatised, PHCN, which was established as a holding company, will cease to exist.
On the assertion that none of the 20 private power companies issued license by the Nigerian Electricity Regulatory Commission (NERC) to generate electricity has added a megawatt of electricity to the national grid, it needs to be stated that the enabling environment has been harsh and uninviting. In particular, the tariff regime has not been encouraging and the companies are not charity organisations. Suffice to say that the tariff regime is being addressed by NERC to make it investor-friendly.
Nonetheless, it needs to be stated that Shell, Agip and AES are all operating IPPs and supplying power to the national grid. Shell is generating not less than 450 MW; Agip generates 450 MW and AES produces 200MW. Shell and Agip are oil companies who are not unduly concerned about being owed since they have access to the oil revenue. AES is producing because they have a sovereign guarantee. As such, if PHCN does not pay AES, the Federal Government does. Perhaps, it is lost on these agitators that the three private investors are generating 1,100 MW into the national grid. Out of currently available power of 3,500 MW, the three IPPs are generating about 31 per cent.
The third matter deals with the claim that the unions have not been informed of government's intention to privatise PHCN (formerly NEPA.) Recall that stakeholder participation in the privatisation programme which is instituted in law through the Public Enterprises (Privatisation and Commercialisation) Act No. 28 of 1999 was given tangible expression by the integration of the Nigeria Labour Congress (NLC) into the membership of the National Council on Privatisation (NCP) which is the highest policy and decision making body on privatisation and economic reform in Nigeria.
In the same vein, 22 labour leaders of some relevant industrial unions were made members of all the 11 Technical and Sector Reforms Implementation Committees of the NCP; thus, ensuring the attainment of the desirable goals of vertical and horizontal integration of labour in the privatisation process.
However, the good faith of the government has been evident. Unlike in previous privatisation transactions, President Goodluck Jonathan had approved that N130billion be set aside in the 2010 supplementary budget to serve as financial base provision for the full payment of all financial benefits that would accrue to PHCN workers that would be affected in the process of the reform in the sector. It is apt to point out that the provision of N130 billion by the Federal Government was based on consultants' assessment of likely liability in the determination of pension claims of all workers of the Power Holding Company of Nigeria (PHCN.) In other words, it is only after negotiations that the final figures will be manifest.
Bearing in mind the possibility of job losses following privatisation, the BPE has instituted a labour policy to take care of such eventualities in a fair, affordable, efficient and transparent manner. The policy has been applied in concluded transactions with positive results. Given its acceptance by affected Nigerian workers, the policy would continue to be adopted in future privatisation transactions.
• Ms. Onagoruwa is the Director General of Bureau of Public Enterprise
Labour and the privatisation of the power sector (http://thenationonlineng.net/web3/editorial/21192.html)