Power performance and post takeover supervision
THE National Council on Privatisation (NCP) undoubtedly played a critical role in the privatisation of Nigerian power utilities under the power sector reform. It was a role in which it supervised the Bureau of Public Enterprises (BPE), which serves as its secretariat or did so in the course of the privatisation of the power utilities.
But even if the post-privatisation or post-handover supervision of the new owners of the power utilities was not part of the agreements they signed with the Nigerian government, it would be necessary to monitor their performance through a government agency such as the BPE or the NCP. However, one has reliable information that the handover agreements made provision for such monitoring by the BPE and other relevant agencies of government – to ensure that the new owners of the utilities keep to the terms of the agreement, including investing in the upgrade of the utilities they purchased as part of the privatisation programme.
The need for such monitoring cannot be overstated. There has been a case in the past where the new owner of a privatised public concern – in the media industry – was accused by some stakeholders of asset stripping. The accusers had expected the new owner to invest in the privatised company and revive it from a moribund state. The seeming gap between the expectations of the accusers and the performance of the new owner led to a lawsuit by the former – intent on reversing the latter’s ownership of the privatised concern. Needless to say that the suit became a drain on the new owner and distracted it from the goal – assuming it had such a goal – to put the new company to the better service of the public.
No one can deny that the power sector is far more strategic, and that the country cannot risk poor performance by the new owners of the privatised power utilities even for a short period as that can lead to the unravelling of perhaps the most critical sector of the economy, the driver of manufacturing and other forms of economic productivity. Besides, the period between the acquisition of the privatised power utilities by the new owners, their transfer and the mastering of their management under a new private regime could have been marked by fragility. And such supervision was necessary to strengthen the new owners and stabilise the power utilities in particular and the power sector in general under a new regime defined by private-sector ownership and management.
This is why too much emphasis cannot be placed on the need to supervise the owners of the privatised power utilities – specifically the generation companies and the distribution companies. And that we have maintained a higher and steadily increasing level of generated and distributed power since the conclusion of the privatisation of the power utilities is arguably a reason to believe that the supervision, for which the Bureau of Public Enterprises is responsible, has so far progressed well, while of course leaving the necessary room for improvement.
The generation companies seem to have been the most responsive to the supervision and have in turn reciprocated with constant, even if marginal, improvements in power generation. For instance, prior to the privatisation of Egbin power plant in November 2013, the plant averaged a sub-500 megawatts generation value as a result of the poor state of its six units. Only two of the six generator Units were operational at its lowest point. Also, most of its auxiliaries – like its demineralisation plant – were not functioning; and major spares needed for the plants and for preventive maintenance were not available. Storage of available materials was poor, and such materials were largely obsolete, a desperate situation compounded by largely old and dysfunctional mobile equipment.
However, since its takeover after privatisation, investments by the new owners have resulted in the overhaul of generator Units 1, 4 and 5, resulting in each of these units peaking at its 220 megawatts capacity. The plant had not witnessed such major overhaul in its 30 years of operation. Also, its generator Unit 6 has been restored, having been virtually out-of-service for 10 years. The post takeover period has also witnessed the replacement of the station’s turbine vibration monitoring systems which help to regulate the speed of the turbine in the event of a vibration to forestall a disastrous failure.
In addition, the Distribution Control System (DCS) to Units 1, 4, and 5 has been ungraded to the latest available modern technology, and major spare parts have been identified and ordered to prevent prolonged shutdown of the Units. The demineralisation of the plant has also been achieved, while a new, more effective means of cataloguing materials and equipment have been devised and implemented.
However, that the supervision has recorded such success in the case of Egbin is a critical reference point, given that it is the country’s biggest power generating outfit, the leader by size and output of its pack of power plants.
• Akanbi wrote from Lagos.