Nigeria Power Reform plans overshadowed by Power Sector Strike
| August 27, 2010 | Posted by Fred Nwonwu under News |
Goodluck in Lagos.
Nigerian president Goodluck Jonathan is today expected to unveil a roadmap for ending chronic power shortages but the event has been overshadowed by a strike embarked upon by the workers of the state power utility Power Holding Company of Nigeria (PHCN).
The strike started Wednesday and was called off early Thursday.
The workers under the National Union of Electricity Employees had embarked on the strike to protest the non-payment of their monetisation arrears, and the increase pay they claim the government promised them a month ago.
The workers say they are not favourable to governments plan for large-scale privatisation of state-owned power firms as part of the broad terms of liberalising the sector.
The government had on Monday put up for sale 11 power firms, saying that this would open up the sector and attract the sort private investing that turned around the fortunes of the telecommunications sector.
President Jonathan has made constant electricity supply cornerstone of his administration and is expected unfold his administration’s blue print for the revival of the power sector today.
Nigeria, Africa’s biggest oil producer, suffers from Constant power outages that leave most business and homes in the country reliant on diesel generators.
According to the country’s central bank 60 million people rely on generators and spend $13 billion a year fuelling them.
Though the government have severally pledged to fix the problem, vested interests, mostly of billionaire tycoons who import diesel and generators as well as chronic mismanagement of state-run utilities has greatly undermined the efforts.
“Stable power is a number one priority for Nigerians and Nigerian companies … His predecessors have promised to sort out the power problem, but to no avail,” said Kayode Akindele, a director at consultancy Greengate Strategic Partners.
“President Jonathan has made it a key pledge … There is no time to assess his performance in this sector with elections in a few months, but it will definitely be a key plank of any presidential bid by him,” Mr. Kayode said.
Hoping to increase gas supply to power stations, the government announced in May that state power company PHCN would increase the amount it pays energy firms such as Royal Dutch Shell and Exxon Mobil for their gas, the main source for electricity generation, over the coming years.
The energy companies had argued that the previous gas-pricing regime gave too little incentive to provide gas for domestic power generation.
In the same vein, the government announced plans for a $3.5 billion “supergrid” to be financed with the private sector and development agencies, which would boost generating capacity to over 14,000 megawatts (MW) by the end of 2013.
The central bank said on Wednesday it was ready to release $2 billion in funding to stimulate lending, much of it to help the development of projects in the power sector.
Analysts say the strike by PHCN workers points to administrative decays and could mean that the reforms should also extend to the management level.
“We are on strike and we told our members to stay at home,” Temple Iworima, the Abuja Zonal organizing secretary told reporters yesterday outside the office complex as workers milled around.
According to union officials, the strike is to force government to heed agreements entered into by both parties in July 2010, to pay the workers outstanding allowances within 30 days and the automatic employment of over 10,000 casual staff in the sector.
The agreement was to forestall an earlier threat to down tools in July,
Special Adviser to the President on Power, Barth Nnaji, said, “Government has done everything it needs to do to meet the Labour union’s demands. The arrears of the monetised benefits for workers totalling about N67 billion has been released by government into the Power Holding Company of Nigeria account. We have started paying several thousands of the workers. But, while the payment is going on, the records have to be verified to ensure that the beneficiaries are legitimate. I think it would be foolhardy for anybody to say the verification is not necessary as the payment is ongoing.”
The 11 power firms, whose sale Mr. Jonathan approved on Monday, were subsidiaries of the power company. The president had also approved the construction of a new National SuperGrid to replace the aging national grid and reduce current power transmission problems.
The new grid will help check high technical, commercial, and collection losses suffered in the course of electricity generation and distribution in the country.
Power generation in Nigeria plunges to below 1,000 megawatts (MW), about a tenth of the needed capacity, at times, largely due to non-maintenance of power stations.
South Africa, with a third of Nigeria’s population, has ten times the capacity.
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