Nigeria: Power Transformation - No Longer Business as Usual

Since the Federal Government adopted the National Electric Power Policy as far back as 2001 and the subsequent passage of the Electric Power Sector Reform (EPSR) Act 2005, the comprehensive reform and reengineering of the electricity supply industry has been central to its thinking.

The key objectives of the act comprised ensuring an efficient and equitable system of generation, transmission, distribution and marketing of electricity to the ordinary Nigerian; ensuring that the power sector attracts private investment both from Nigeria and from overseas; developing and enhancing indigenous capacity in electric power generation and distribution; participating effectively in international power sector activities in order to promote electric power development in Nigeria, meet the country's international obligations and derive maximum benefit from international cooperation.

It is a fact of life that things can only work effectively and efficiently if they are so thought out, planned and pre-determined. The likelihood of the nation's power policy to yield the set targets as highlighted above is no doubt a function of carefully designed enabling framework and process. The fundamental questions that need to be answered therefore are:

1. Is the process tele-guided by the powers that be or devoid of any tinge of government interference?

2. Is it transparent and credible?

3. Is it in tandem with the fundamental principles of justice - due process?

4. Does it measure up to international best practices?

In recent times, the government of President Goodluck Jonathan has through its agencies - the Bureau of Public Enterprises (BPE), the National Council on Privatisation (NCP) and the Nigerian Electricity Regulatory Commission (NERC) made concerted efforts geared towards engendering a power privatisation programme that is not only enduring, but also transformational.

As widely reported, President Jonathan not only insulated himself from the entire process of selecting potential investors in this all-important sector of the economy, he charged the NCP, BPE and NERC to ensure that whoever emerges the preferred bidder for any of the eleven Distribution Companies (DISCOs) is the best and the most credible.

As widely reported, President Jonathan not only insulated himself from the entire process of selecting potential investors in this all-important sector of the economy, he charged the NCP, BPE and NERC to ensure that whoever emerges the preferred bidder for any of the eleven Distribution Companies (DISCOs) is the best and the most credible.

The Director General (DG) of BPE, Ms. Bolanle Onagoruwa once noted that the objectives of the privatization of the power distribution companies include improving efficiency by increasing collections, reducing technical/non-technical losses, reducing costs, increasing access to electricity, improving infrastructure through private sector investment, ensuring fair tariffs to all end-users, increasing commercial viability of the power sector, and improving customer service.

She has repeatedly pointed out at different fora that the selection of the Distribution Companies Investors/Operators would evolve through three key stages: the Expression of Interest (EOI) stage; the Technical and Commercial Bids stage; and two-step bid evaluation process: (i) technical and (ii) commercial.

In specific terms, Section 118 of the Request for Proposals (RFP) for the Distribution Companies issued by the BPE to the bidders states:

"The commercial evaluation will be carried out solely on the basis of the ATC&C (aggregate technical, commercial and collection) loss reduction targets committed by bidders. All bidders who have successfully passed the technical evaluation will be considered equally strong and eligible contenders, and their results of the technical evaluation will not be considered in establishing the final ranking of the bidders for each distribution company."

In the words of the BPE DG, "The bidder who passes the technical evaluation and offers the highest discounted value of ATC & C will be designated the preferred bidder."

The commercial bids were duly and publicly opened on the 16th day of October, 2012 and preferred bidders emerged through a process that was not only transparent, but also unequivocally credible with the following manifest indices of due process:

- Teeming consultants worked round the clock to ensure that every bidder was given a fair shot at winning the bids;

- Pre-qualified bidders were given access to the virtual data room from September 1, 2011 to the proposal submission date of 31st July, 2012;

- Pre-qualified bidders were allowed to visit the DISCOs and physical data rooms that were located within the franchise area of each Distribution Company; and

- The debt profile of bidders was subjected to strict and rigid scrutiny to ascertain their suitability.

What more can a credible bid selection process offer? The very accountable and transparent manner through which the preferred bidders emerged has in no small measure given the ordinary Nigerian a ray of hope that better days are not only coming, but already here via a transformational revolution that seeks a turnaround in the country's power sector. Among the six firms that won the bids to operate ten electricity distribution companies across the country are Integrated Energy Distribution and Marketing Limited, Interstate Electrics Limited, and Vigeo Power Consortium.

In the foreword to the Roadmap Power Sector Reform (2010), President Goodluck Jonathan said:

The availability of reliable electric power to the homes and businesses of our citizens has been one item in our national life that we have approached with so much hope and yet experienced so much frustration over the past decades... As President and Commander-in-Chief of the Armed Forces, I and my Vice President, Arc. Namadi Sambo, are conscious that what we do with the Nigerian electricity supply industry will go a long way in determining whether Nigeria remains in darkness or joins the rest of the world in the race for development.

Our commitment is to bring an end to our nation's stunted growth and usher in the fresh air of prosperity by pursuing a new era of sector-wide reform which is driven by improved service delivery to every class of customers in the Nigerian electricity sector. ...In the same way that the reforms in the telecommunications sector paved the way for the benefits we all enjoy today, we believe that with diligent implementation and meticulous application of what this Roadmap provides, we will see an end to the chronic electric power supply shortages we know too well, and witness the birth of a modern, efficient, customer focused, private sector driven electricity supply industry.

By ensuring the non-interference of government in the DISCO bidding process, Mr President has indeed matched his avowed commitment "to bring an end to our nation's stunted growth and usher in the fresh air of prosperity by pursuing a new era of sector-wide reform which is driven by improved service delivery to every class of customers in the Nigerian electricity sector" with milestone actions. Without mincing words, the winners of the power DISCO bids emerged from the most transparent and credible process in the nation's privatisation history.

While President Jonathan has by no means claimed to be a paragon of excellence, he however, deserves to be heartily commended for this singular achievement that will serve as a progenitor of a more robust private-sector driven power distribution market. Whereas Mr. President no doubt gets the overall accolade of this transparent process, we must not fail to commend the indomitable effort, strength of character, and seriousness of purpose exhibited by the BPE, the NCP and the NERC for refusing to be influenced by the popular "Nigerian factor" sentiments, the evils of the past privatisation process, and manipulation by prospective bidders.

With the almost unanimous perception that the process was highly transparent and credible, especially by the international community, the government has no doubt manifested its unequivocal intention of enhancing the inflow of a large volume of private sector investment through the creation of new power generation and distribution entities and the subsequent development of a competitive electricity market in the country. This process is certainly far-reaching in building the confidence of foreign investors in Nigeria's power sector.

Government's resolve to privatise all the distribution companies in order to induce efficiency and professional management in a sector that has, hitherto, been an easy source of leakage as highlighted in Chapter 1 of the Roadmap Power Sector Reform (2010) and in consonance with the Electric Power Sector Reform (EPSR) Act (2005) has received an impressive approbation by the credible process that threw up the preferred bidders.

As the NCP meets in the weeks ahead, it owes Nigerians a patriotic and unflinching duty to uphold and manage this credible process to its logical conclusion. The government is on the verge of making landmark history of reassurance to Nigerians that there can after all, be light at the end of the tunnel and that better things lie ahead. Thus, one can herald the beginning of a new era in our journey for constant power supply, especially as the BPE has shown that the power transformation process is no longer business as usual in Nigeria.

History beckons the man who surmounts all odds to achieve the common good and greater happiness for the greatest number of the ordinary people! Nigerians can now get ready to jettison their "I better pass my neighbour" generators for a steady and enduring power supply. History is certainly in the making. Only time will tell. Goodluck Nigeria!