Ex-NERC boss and BPE wages war of words over ‘poor’ power sector reforms and privatisation

Despite its privatization and countless reforms, the Bureau of Public Enterprises and former chairman of the Nigerian Electricity Regulatory Commission, Sam Amadi, criticized the perceived bad performance of the energy industry.

In 2013, Nigeria’s former Power Holding Company (PHCN) was unbundled into 11 energy distribution firms (DISCos), six generating firms (GENCos), and one transmission firm (TCN).

Nigerians anticipated the sector’s effectiveness and optimum results in terms of improving ability in generating, distributing, and providing customers with electricity.

Despite privatization and reforms, however, the sector’s production continues to be low at an average of 3,600 megawatts.

Nigeria’s Transmission Company (TCN), the agency responsible for electricity consumer transmission, said last February the maximum production of 5,357 megawatts was reached.

The Power Ministry and the DISCOs traded blames on who should be held accountable for the sector’s bad results.

In an interview with The Cable newspaper, Mr Amadi said that the energy sector’s reforms and privatization were profoundly faulty.

The former NERC boss, now a lecturer at Baze University, Abuja, said the privatization procedures should be reviewed and the underlining error fixed if the industry is to operate and bring value to people.

“What I said was that after all the reforms and privatisation, the country has not got the desired result. We should review the processes adopted to see where things may have gone wrong,” he said on Saturday.

“I did not say anybody rigged the process, ‘chopped’ money, or was not transparent. What I said was that there must be something that was fundamentally wrong that the privatisation has not worked.

“If we do not rejig the context and the process, it will not work.”

A good government would institute a public inquiry in the energy industry, according to Mr Amadi, where all stakeholders will talk about what is wrong with the industry.

“I stand by my word that the privatisation of the power sector was badly designed to fail,” he said.

“The benchmark BPE used to get the DISCOs into the sector was not one that would have allowed them to do better than the government they took over from.

“The benchmark only allowed people with capacities that would allow them do marginally better than the government.

“There was no proper evaluation of those who took over the power assets. For instance, those technical partners, how much have they contributed so far? How much have the DISCOs budgeted to upgrade the system? After eight years, there is no SCADA to monitor the power distribution system.

“We did not even have the corporate governance structure. Up till now, there is no corporate governance code on how to manage the DISCOs. We do not even have any audited account. There is no customer enumeration data on the number of customers.

“These are the things that should have been in place before privatising. If it is going to work we could have set out the structures to make it work. But, we did not do it.

“If you continue this privatisation the way it is, without going back to where the mistake is, we will not get a good result. There is something really fundamentally wrong about the reform,” Mr Amadi said.

In its reaction, the BPE in a sequence of tweets released on Friday stated that the sector’s supposed failure must be a shared obligation with NERC, as the “Bureau worked closely with NERC in delivering the power sector transaction.”

“The design of the reform framework was never the exclusive work of the Bureau given that the power sector policy the Act that replaced the old NEPA Act and the eventual sector structure were subjected to stakeholder reviews through intensive workshops,” the bureau said.

According to the BPE, before being issued to bidders, all transaction documents, such as request for proposal (RFP), draft contracts, assessment criteria, etc., were all supported by NERC.

In addition, the evaluation of the technical bids received from bidders was conducted by a panel comprising representatives from NERC, the Federal Ministry of Power, NEXANT (funded by USAID), NIAF (funded by DFID), the Presidential Power Task Force (PTFP), CPCS (Transaction Advisers) and the Bureau.

Operators from anti-graft organizations and the DSS observed the assessment, the BPE said, “with members of the evaluation team having a combined experience of over 300 years in the relevant subject matter”.

“It, therefore, beggars belief that somebody who was appointed Chairman of NERC with zero years of experience in the power sector should sit in judgment over the outcome of PHCN successor company’s evaluation,” the BPE said.

Series of tweets by the BPE are as shown below:

https://twitter.com/BPENigeria/status/1147115578815123462

https://twitter.com/BPENigeria/status/1147115580304105472

https://twitter.com/BPENigeria/status/1147115581923106816

https://twitter.com/BPENigeria/status/1147115583474937856

https://twitter.com/BPENigeria/status/1147115585177903104

https://twitter.com/BPENigeria/status/1147115586914267136

https://twitter.com/BPENigeria/status/1147135843024416768

https://twitter.com/BPENigeria/status/1147135844672823296

https://twitter.com/BPENigeria/status/1147135850880389120

https://twitter.com/BPENigeria/status/1147135852449017861

https://twitter.com/BPENigeria/status/1147135854479122432