Megawatts Of Controversy

Posted: August 30, 2012 in Uncategorized

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The Verdict According To Olusegun Adeniyi

“I understand that Prof. Barth Nnaji is going to man the power sector. He is a man for whom I have tremendous respect (and he comes with impeccable credentials for the job). But he is also an operator in the sector which immediately raises a serious issue of conflict of interests…”

When I wrote the foregoing upon resuming this page after my return to the country in June last year, at a time names of ministerial nominees had just been sent to the Senate for confirmation, there were some angry reactions from supporters and friends of Prof Barth Nnaji. Yet it was obvious from the outset that his appointment as Minister of Power was fraught with risks. In terms of pedigree, he is one of the few round pegs in round holes in the Federal Executive Council. And he did the correct thing by resigning from Geometric Power and putting his interest in a blind trust, which is perfectly legal and transparent. The challenge, however, remained that in a society with a thriving rumour industry, Nnaji had unwittingly provided a weapon of blackmail for his enemies, especially in a high-stake sector like power where there are too many powerful interests to contend with.

Even when his efforts led to significant improvement in the power sector, and he was making the right calls, I have always believed that at some point Nnaji’s appointment would unravel. What I did not envisage is that it would unravel in such a dramatic fashion. By his own account, Nnaji was confronted on Tuesday afternoon by President Goodluck Jonathan with the allegation that he was using his company as a proxy to buy shares in one of the companies being privatized under his watch. Given my little experience in the corridor of power in Nigeria, when things get to that point for a minister, you either jump or be pushed. Nnaji, at least going by Aso Rock statement, was clever enough to opt for the former.

What happened, however, came as no surprise. Prior to Tuesday’s resignation, there had been reports that participation by two companies in which Nnaji has considerable interest had compelled the National Council on Privatisation (NCP) to cancel the technical bid evaluation process conducted for Afam power plant and Enugu Disco. To be fair to him, it was Nnaji who actually brought it to the attention of the council (of which he was a member) that O & M Solutions of Pakistan, one of the consortia bidding for Afam, had worked as a contractor for Geometric Power.

But aside the Afam Power station issue, Geometric Power equally has minority stake in Eastern Electric Nigeria Limited, which submitted technical and financial bids for Enugu Distribution Company Limited. So, effectively, Nnaji had interest, albeit indirectly, in two transactions in a sector which he superintended. There was no way that was not going to be a problem for the government.

What I find difficult to understand, however, is how Nnaji could imagine that all the intricacies surrounding these transactions would not have been exploited by government’s opponents (and his) if any of the companies to which he was associated had won the bid. When asked if Geometric Power would withdraw from the consortium bidding for Enugu Disco, Nnaji said: “As far as I am concerned, the bid is still alive. I know that they set up a new committee to re-evaluate the bids, but I don’t know if the process will still be fair after what has happened.”

What nobody should, however, take from Nnaji is his commitment to power sector reforms in Nigeria. It was this that, in the first place, led to his investment in Geometric. He was a hands-on Minister of Power who did the best he possibly could under a very hostile operating environment. Now that he has resigned, there is need for the president to move quickly to appoint a substantive, not acting, successor. Efforts should be made to get someone who not only understands the sector but who also has the capacity to drive the on-going reform in such a manner that will ensure transparency and quick consummation of the privatization exercise.

Whoever emerges as successor to Nnaji, there are still issues to contend with. The first one has to do with the ineffective coordination between stakeholders in the power and gas sectors, leading to delays in the implementation of the Independent Power Projects (IPP). The fact that the Minister of Power has no control over gas which is under the purview of the Minister of Petroleum has been a contending issue and the government must find a way to resolve that lacuna. To put it mildly, both Nnaji and Mrs Diezani Allison-Madueke had been working at cross-purposes in a sector as critical as power supply.

When THISDAY Editorial Board recently had an interview session with Nnaji, he alluded to this while speaking about his frustration concerning gas availability for which he has no control yet the Nigeria National Petroleum Corporation (NNPC) was quick to respond by disputing his claims. This lack of synergy between the two ministries would have to be addressed for the power reform exercise to work. If the government is serious, we may need to bundle electricity and gas administration as it is done in some other countries. For instance, the United Kingdom bundled the Office of Gas regulator and office of the electricity regulator in 2001 into OFGEN when it realized the inefficiency and lack of coordination of keeping the two intersecting points separate. This is more imperative in Nigeria given that most of the power projects depend almost entirely on gas for electricity. There is also need for the ministry to synergize better with the National Electricity Regulatory Commission (NERC).

What is perhaps the most serious issue and will require tact from whoever replaces Nnaji is that of labour. Union leaders in the sector, apparently with the support of Power Holding Company of Nigeria (PHCN) workers, are currently at loggerheads with the government and had fought Nnaji to a standstill. The National Union of Electricity Employees (NUEE) had claimed that government had been deducting 25 percent of the workers’ salaries as pension over the years. They are therefore demanding the payment of an outstanding N443 billion which the Ministry of Power strongly disputes. Clearly,the issues go beyond pension, as there are interests within the union working against the privatization exercise but it is also clear that there is a breach in the implementation of the National Pensions Act by the Ministry of Power on the entitlement due the workers. All these are urgent issues which make the appointment of a Minister for Power very compelling.

As we move on to privatized electricity market, it is also important that whoever succeeds Nnaji should focus on rural electrification and renewable sources of energy as well as other major policy issues about energy efficiency and security. Aside the issue of privatization, the current reform in the sector, especially by the NERC, is based on cross subsidies. This means that the industry maintains a discriminatory tariff structure for different categories of stakeholders. The essence is to redistribute income, create access for the poor and fix market imperfections.

Unfortunately, the timing of Nnaji’s resignation is most inauspicious as it may not give confidence to investors in what is clearly a very capital intensive sector. So whichever way we look at it, Nnaji’s exit and the other issues around the sector may yet be one of the most debilitating controversies faced by this government; except the president acts very quickly to appoint a worthy successor to the former minister.

Who Shall We Believe?

There is this joke that Nigerian security operatives can make a person to admit to a crime he/she did not commit and we have seen evidence to that over the years. But the current situation where two different groups would “confess” to killing one man on the same date, at the same time but for different reasons is a new feat. Last week, the State Security Service (SSS) paraded for the second time a group of six men who have allegedly confessed to killing Comrade Olaitan Oyerinde, the Principal Secretary to Governor Adams Oshiomhole in an armed robbery operation gone awry. And on the same day, as a sign of petty rivalry, the Police also reiterated its claim that the men in its custody indeed “confessed” to killing the same man in an assassination operation sponsored by Rev David Ugolor.

For me, there can be no greater evidence of the state of our national insecurity today than this shameful situation. What is so galling is that the two agencies are playing this sordid game in the public, disgracing themselves and our country with nobody calling the institutions to order. Even if one refuses to join issues with the security agencies over this bungled homicide investigation, what is very clear to sane people is that in this matter, both the SSS and the Police cannot be right. Yet both can even be wrong.

I sincerely believe that President Goodluck Jonathan should wade in by calling both the DG of SSS and the Inspector General of Police for a meeting over this matter. That should help in determining who is lying and Nigerians should enjoy the benefit of being told the truth. If the two agencies cannot collaborate on a murder investigation, how do we then expect them to work together on bigger issues like terrorism?

Congrats General Dambazau

Lt General Abdulrahman Bello Dambazau (trd), the immediate past Chief of Army Staff and a doctorate degree holder in Criminology, has joined the Harvard University Weatherhead Center for International Affairs on a one-year Fellows Programme. As one of the 20 distinguished personalities drawn from 15 countries, and the only African, Dambazau becomes the 7th Nigerian (and the second retired military officer after the late Joe Garba) to be selected for the programme this reporter attended in the 2010/2011 academic session. Aside other activities, he will be conducting his research on “Current conflicts over land in Nigeria and the impact on ethno-religious crisis”.

While I look forward to joining Dambazau and his new colleagues next April when Harvard will hold the first reunion of former Fellows of the 54-year old centre (“to audit classes, hear from accomplished Ph.D. candidates about their thesis research, attend a dinner and participate in a conference entitled Searching for Balance in an Unstable World”), I wish the General and his family a most rewarding experience in Cambridge, Massachusetts.

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