BusinessDay... the voice of business: Government aims at less role in power

Government aims at less role in power
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Nse Akpan &   Olusola Bello on 30 March, 2008 12:00:00
 
Two weeks ago, the presidential committee on power completed its work three days
ahead of schedule but the minister will not say if the government’s new
thinking flowed from the committee’s report which was submitted to the
president on Monday March 17 as exclusively report in that day’s edition of
Business Day.
“President Yar’Adua will soon announce a novel approach to dealing with the
power problem and this approach will have limited role for the government”,
Usman told business leaders in Lagos at a post AGM luncheon organised by the
Nigerian Economic Summit.
The minister was, however, quick to add that the new policy framework will not
amount to an abandonment of the controversial National Integrayed Power Projects
(NIPPs) for which the last administration squandered $16 billion, according to
some estimates.
“The government will not abandon the NIPPs,” he assured. “We will proceed
with their completion but when the president unfolds his programme, you will
find that the private sector will be asked to play a leading role.”
Business Day has learnt that the presidential committee on power which
conducted what one senior government official in Abuja described as a “quick
fire audit” on the NIPPs sees an honest and speedy completion of the plants as
the best way to guarantee quick wins for the government and for Nigerians who
just want power regardless of whether the power comes from projects initiated by
a corrupt regime.
According to our investigation, because the projects were initiated by several
agencies in government including the Niger Delta Independent Power Company and
Power Holding Company of Nigeria (PHCN) and also because government would need
to raise up to $2-3 billion to complete them, the committee suggested the
creation of a special purpose vehicle (SPV) to be driven by the private sector
as is the case in the highly successful liquefied natural gas sector which is
now the envy of the whole world.
According to a senior government source, “the committee reasoned that because
the president has said he will not break the law by disbursing funds from the
excess crude account like the past administration did, urgently needed funding
for the IPPs will have to come from the private sector and you will need an SPV
with the credibility to attract private sector funding.”
Our reporters gathered that even if the president were inclined to going back
to the excess crude account, the state governors will not let him.
“So the fastest way to complete the IPPs and secure the low hanging
fruits”, one source said, “is through borrowed funds. The question is who in
the private sector will lend money to a bankrupt PHCN or the controversial Niger
Delta power company in the light of the outrageous accounts we now hear of how
they blew $16 billion to inflict more darkness on the nation.”
The committee on power expects that the SPV will have the authority of the
president to manage all the projects, create tight controls with adequate speed
and have as its head a credible figure with independence of mind and who is
known not have any ambition to make a career out of the power sector.
Business Day reported three weeks ago the government has asked General Electric
of the USA to conduct an audit of the NIPPs and it is understood that this audit
will give government an understanding of the extent of work done by the
contractors but most importantly, the level of funding required for their speedy
completion.
Questions are already being asked how long the president will take to give his
pronouncement on the power committee’s report knowing the desperation of
Nigerians and their businesses in the face of a total collapse in public power
supply.
The president was not just presented with the main report, the committee also
gave the president and some of his close aides, a power point presentation of
its diagnosis and recommendations and government sources have told Business Day
the president was quite impressed.
The committee chaired by the minister of state for power was charged with
creating a blueprint for raising power generation capacity to 6,000 megawatts in
the next 18 months and 11,000 megawatts by 2011.
Power generation in Nigeria has sunk to an all time low of around 2,500
megawatts at a time China which Nigeria hopes to join in the club of the
world’s top 20 economies by 2020, is opening one coal fired power plant a
week. The United States which China hopes to overtake as the number one economy,
today generates 875,000 megawatts of power from a variety of sources.
If the government goes ahead to roll back its involvement in the power sector,
it will be seeking to replicate the success achieved in the telecoms sector but
the challenge will remain how to attract to power private sector investment
which many acknowledge as perhaps the most critical factor in the celebrated
success in telecoms.
As the finance minister told his audience in Lagos, “if Nigerians are unhappy
with telephone services today, they do not face the government. They criticise
the GSM companies.”