Anyone will tell you Nigeria is crying out for structural reforms. Some, like the Finance Minister, Ngozi Okonjo-Iweala, have hinted at just how difficult reforms are with her book Reforming The Unreformable. Thankfully, the difficulty doesnt stop anyone from attempting reform. The problem is a bit more, what’s the word now, mundane.
Power reform can be classed as a pretty much successful government reform so let’s use that as an example. When did it all begin? It might surprise you that it all started under IBB. This suggests that as far back as 1985 – 1993, at the highest levels of the Nigerian government, people knew that government simply couldn’t run our power sector anywhere near optimally. Also, the IBB government may have been influenced by the wave of privatisation that was being pushed by Margaret Thatcher in the UK (which began in 1979).
So some dates below. It’s possible I miss something out so please use the comments to let me know
1989 – 1993 – IBB
Decree 25 of 1988 had been passed the year before. This decree established the Technical Committee on Privatisation and Commercialisation (TCPC). I cannot remember correctly if he was the first ever Chairman of the committee, but I do recall that Dr Hamza Zayyad ran the TCPC for much of the time under IBB. The first thing the TCPC was to do was to ‘commercialise’ NRC (railways), NEPA and NITEL.
But Nigeria had nowhere near the kind of private sector we have today that can mobilise capital in the way that we have seen recently. So whatever was done was obviously limited.
1993 – 1999 – Abacha (and Abdulsalami)
This one was funny. Decree 78 of 1993 established the Bureau for Public Enterprises (BPE) presumably to take over from the TCPC. But nothing - absolutely nothing – was privatised in this period. The decree listed over 120 companies to be privatised (including power companies) but nothing was done. In other words, whatever was gained under IBB (82 companies privatised and others ‘commercialised’) was either halted or reversed under Abacha (we’ll excuse Abdulsalami for being distracted with the hot potato of power in his hand).
As you know, General Sani Abacha was recently honoured as part of the centenary celebration. As bad as that honour was, what makes it even funnier is this excerpt from the statement released by the government justifying the award:
The Federal Government also said Mr. Abacha oversaw an increase in the country’s foreign exchange reserves from $494 million in 1993 to $9.6 billion by the middle of 1997; and reduced the external debt of Nigeria from $36 billion in 1993 to $27 billion in 1997.
Mr. Abacha, the government noted, had brought all the controversial privatisation programs of the Babangida administration to a halt, reduced an inflation rate of 54 per cent inherited from the Ibrahim Babangida administration to 8.5 per cent between 1993 and 1998, while the nation’s primary commodity, oil, was at an average of $9 per barrel.
This is LWKMD-esque indeed. For setting us back 5 years or even more, we gave him an award. Genius.
1999 – 2007 – Obasanjo
The whole thing came back alive in this period. Previous decrees had made provision for the establishment of a National Council of Privatisation (NCP) but never seemed to happen. It finally happened in this period. In 2000, the Electricity Power Implementation Committee (EPIC!) was established. One year later, EPIC delivered the National Electric Power Policy (NEPP) which in turn took another 4 years to become the Electricity Power Sector Reform Act 2005 (EPSRA). This was the big one – it made power reform the law of the land meaning that from here it could be delayed but not denied.
EPSRA broke up NEPA into 11 DISCOs, 6 GENCOs and one Transmission Company (TCN). It also transmogrified (apologies Igodomigodo) NEPA into a public holding company called PHCN. All of these were the first steps to the eventual sell off of these companies.
If these companies were to be privatised, then they needed to be regulated being utilities. The smart people who wrote EPSRA made provision for the National Electricity Regulatory Commission (NERC) and this was established in 2005.
By the way, in 2004, the National Integrated Power Project (NIPP) was launched as a way of government stabilising power supply while the power sector was going through change. This was no more complicated than government building fast track power plants (7 gas-powered plants around the gas-producing states in total) to boost supply. The first funding of $2.5bn was released from the Excess Crude Account (ECA) in 2005 (back in those days we could shake body and drop billions of dollars). The Niger Delta Power Holding Company (NDPHC) was established to hold the assets of the 7 NIPPs (even I am getting tired of these acronyms).
Things were going according to plan. Life was good. We were unstoppable. You could excuse us if we took time out to kiss the sky even.
So if you are President Obasanjo who managed to achieve all these things, who do you hand over such a delicate legacy to?
2007 – 2009 – Yar’Adua
Imagine this whole being a baton, the final leg was to be run by Yar’Adua. What was required of him was to sell off the companies. The framework was already in place and all the hard work had been done. So what do you if you are Yar’Adua? You suspend the process for 2 years.
For reasons that remain unclear till today, Yar’Adua went hostile to the reforms and all sorts of probes into the power sector began. by 2007, NDPHC had already spent close to $3bn and had close to another $2bn in letters of credit out of its almost $8bn commitments i.e. even though Yar’Adua suspended funding to them, work continued using the $2bn from letters of credit. There was much strife in the land and after so much noise, the Yar’Adua government released another $5bn+ from the ECA to continue the work.
Yar’Adua claimed that Obasanjo wasted $10bn ‘with little or nothing to show for it’. Dimeji Bankole and the House said it was even higher – they put their figure at $16bn (no one knows how they arrived at this figure. Jonathan’s later probe put the total amount spent at $3.08bn). Whatever the figure was, the ‘polity’ was sufficiently ‘heated’ guaranteeing that no sensible debate could be had. There was so much probing going on and people were being fingered here and there as culprits behind the theft of this (imaginary) money.
2010 – 2013 – Jonathan
After pausing for breath in the previous 2 years, President Jonathan kick started the process. I will speculate that he had an advantage here – the NCP is traditionally headed by the Vice President so he would have been familiar with the process to an extent while Yar’Adua was President. He knew what exactly needed to be restarted.
If you are following, you will remember that what was left to do here was to sell of the DISCOs and GENCOs, finish the NIPPs and hope for the best. He set up the Presidential Task Force on Power (PTFP) and the Presidential Action Committee on Power (PACP). President Jonathan headed PACP while Barth Nnaji, the former power minister, headed PTFP. The job of these two bodies was to implement EPSRA fully so a body like Nigeria Bulk Electricity Trading (NBET) was incorporated in July 2010.
Much of the rest of the process is recent history so I wont bore you with the details but suffice to say that the sale of the DISCOs and GENCOs was finalised in November 2013. The NIPP project resumed and have been mostly completed. The plan was always for the government to stabilise power supply with the NIPPs but some of this has now overlapped somewhat. In any case, buyers have been found for the 10 NIPPs and they now have 6 months to come up with the money. The FG has sold 80% of the NIPPs for a total of $5.8bn suggesting they were worth $7.3bn. Just by looking at the figures above, you can see we’ve lost some money on the deal but let us be thankful.
After some needless quarrelling with Manitoba, TCN also seems to have stabilised (if we take silence to mean that everything is going ok). It’s all out of the government’s hands now so what’s left is for the new owners to run the companies like serious businesses. This can only happen if they deliver power of course and get customers to pay for said power.
In The Final Analysis
If we take Decree 25 of 1988 as the starting point of all this, it’s taken us 26 years (7 of which were totally wasted) to get to a reasonable point in the process where we can say we’ve wrapped it up. I don’t want to sound mean but in that time, the reform has had to be rescued from near death by ‘death’ itself (Abacha and Yar’Adua). There have also been so many times when we have taken the gun of reform, loaded it with bullets, pointed it at our own foot and then fired it. Given that we lack strong institutions, reforms are very much still subject to the whims of the Oga At the Top (OATT) and which side of the bed he wakes up on. Even if he cant kill the reforms, as we have seen, he can certainly delay it.
But most of all, what this shows is that the whole thing is a process that, given our general bad behaviour, is almost impossible for one person to complete. Let us take EPSRA in 2005 as the point of no return for the process – it has taken almost 9 years after that point to finish up the work. It is best to have something to work with when you come into office i.e. government, for the sake of Nigerians, ought to be a continuous exercise.
Which brings me to the final point. In April 2000, President Obasanjo constituted the Oil and Gas Sector Reform Implementation Committee (OGRIC) headed by Professor Rilwan Lukman. The job of these guys was basically to restructure the whole damn oil sector. The NNPC is a deadlier beast than NEPA and it wasnt until 2007 that the National Oil and Gas Policy (NOP) was published. One year later, Lukman’s OGRIC came up with a ‘final’ document that was to be submitted to the NASS i.e. the EPSRA for the oil industry. This is what has come to be known as the Petroleum Industry Bill (PIB) today.
There are similarities with EPSRA – the PIB seeks to commercialise and break up the NNPC into various bodies as a first step towards privatisation. It will also create new regulatory bodies for the oil sector just like EPSRA created NERC for power. Oil and gas is above my pay grade so I will leave the details to the experts. What I do know is that Yar’Adua didn’t pass the PIB in 2008 (obviously) and Jonathan changed it in 2012. As we speak, it continues to gather dust in the NASS.
Now we know that the stakes are higher for oil and gas and NNPC is more complex than NEPA so it’s not unreasonable to imagine that it will take at least 10 years to properly implement the PIB from whenever it is passed – give or take another anti-reform President dying in office. It will not be done by Jonathan certainly and it might not even be done by whoever succeeds him. But take heart, by that time our oil industry may have been gutted by shale oil, electric cars might have become mass market, every African country would have discovered oil or some other technology might have arrived to disrupt the whole thing. In short, reform will become by force and we will have no choice.
If we want to get anything done, we need to start early and be in a hurry.
P.S This is by no means a complete account of the power reform process. I have glossed over a few things but you get the gist. I have used so many sources to write this that I am unable to put them all in here. Sorry. But they were all from Google (if that helps).