The government’s determination to privatise the national electric power authority by the end of this year has suffered a major setback following the national assembly’s rejection of the electricity reform bill prepared by the Bureau of Public Enterprises.
The bill’s passage is vital because it creates the Nigerian Electricity Regulatory Commission to supervise the deregulated electricity sector. It is doubly important because of the necessity to attract IPP’s into Nigeria following the government’s failure so far to interest foreign investors in the existing plant, most of which are in a bad state of repair. It is not known why the Assembly has rejected the Bill. President Obasanjo’s programme, originally scheduled for completion in December 2001, has already been delayed once, because the BPE failed to get in place the enabling legislation necessary to bring in private investors, causing the Federal Executive Council to set a new date of end-2002. Now the privatisation hangs in the balance.
Government plans to privatise NEPA arose from its acceptance, confirmed officially by vice-president Atiku Abubaker, that the power industry in Nigeria can only effectively be managed by the private sector. An expanding power supply is necessary for economic growth, and the government cannot afford the N100 billion (about $1 billion) required to re-engineer the system. It is estimated that Nigeria needs 6000 MW fully to meet demand with suitable margins.
The failure of the public sector authority became apparent when it was announced in March that load shedding on account of low levels of power generation is likely to persist for some time. The country’s generation and distribution system has suffered widespread setbacks and a 2000 MW shortfall owing to failed generators, low rainfall leading to depleted reservoirs and outages due to maintenance work. Because of neglect going back three decades, huge investment is needed immediately to re-engineer the system. What money is available from government is, in view of the parlous state of the economy, needed more urgently elsewhere.
The government is blaming the failure on the public sector and says it now has no option but to privatise NEPA. Before privatisation, it is to be split into three parts, namely generation, distribution and transmission.
The 2000 MW shortfall compared to last years’ achievement of 4 163 MW has made nonsense of the president’s pledge at that time that power outages would end by December 31 2001. The reduction of available power to little over 2000 MW has been brought about mainly by the loss of major plant at Egbin, in Lagos, and Shiroro. The collapse of units four and six at Egbin, with the loss of 660 MW, will not be made good for up to 20 weeks and in that time another unit will be taken off line for urgent maintenance work. Meanwhile at Shiroro hydro plant only one of the four units are on line, owing to the low level of the lake, a loss of 450 MW. Other units at the Kainji, Jebba and Afan plants are also off line for maintenance. The failure of the two steam turbines at the Lagos plant has reportedly caused some public unrest, since it is known that the government recently spent $7 m renovating them.