Why Government, Investors Must Revisit Power Privatisation Contract

Why Government, Investors Must Revisit Power Privatisation Contract

This article was from an exclusive interview by Prof Adeola Adenikinju, the Director, Centre for Petroleum, Energy Economics and Law (CPEEL) with The Guardian News.

The poor state of electricity supply remains a major concern to every well meaning Nigerian including the government. The expectation from privatisation was that electricity supply would be more stable. However, Nigerians have witnessed more supply volatility and increase in electricity tariffs relative to any sustained improvement in electricity supply.
There is a need to actually do a critical review of the electricity supply industry in the light of current challenges faced by the sector.

There is a need to also ensure that the privatised companies and the government complied with the privatisation contract. We need to explore alternative electricity generation sources in addition to gas. The high dependence on gas for power generation is a major source of electricity supply insecurity. This is complicated by the fact that the gas is concentrated in a highly politically volatile geopolitical zone and that the country has no visible gas storage system to mitigate the effects of supply disruption.

Moreover, the high technical and commercial losses are yet to come down. Also, there is inadequate investment across the electricity supply value chain. The possibility of mergers and acquisition of some of the privatised companies with foreign companies, who would possibly bring in technical and additional investment should be explored and encouraged by the government.

There is no doubt that improved electricity supply will reduce the cost of electricity and improved competitiveness of the productive sectors of the economy. It will lower costs of production, lower costs of products, and boost demand and improve profits of firms. This will have a virtuous effect on employment and economic welfare of the citizens.

Read the full interviewhttp://guardian.ng/business-services/why-govt-investors-must-revisit-power-privatisation-contract/

Prof Adeola Adenikinju is the Director, Centre for Petroleum, Energy Economics and Law (CPEEL) at the University of Ibadan. Adenikinju has consulted for such organisations as the European Union, United Nations, the Nigeria LNG Limited, The African Economic Research Consortium, the World Bank, and the National Data Bank, among others. In the interview with Roseline Okere, he reiterated that undue interference crippled national resources and emphasised the need for Government to review the privatisation contracts with investors in the quest for regular electricity supply in the country.