Nigeria’s power generation and distribution industry is to be handled exclusively by the private sector as part of key reforms announced by President Goodluck Jonathan to improve electricity supply in the country.
The government, Jonathan said, would however retain the transmission business, which is often considered too sensitive to be left solely in the hands of the private sector.

“Government will disengage from generation and distribution of electricity in the country and will encourage private sector participation in these areas,” the President said while unveiling his “Roadmap for Power Sector Reforms” in Lagos on Thursday.

“The private sector will be responsible for the generation and distribution of electricity, but government will still own transmission but with private sector management,” headed. Accordingly, the President said, government would hands-off the various unbundled transmission and distribution firms currently being supervise or managed by the Power Holding Company of Nigeria (PHCN) to the private sector.

The announcement ended years of speculation on the possible privatisation of PHCN and Jonathan assured citizens that the reforms was the best solution to Nigeria’s epileptic power generation and supply crisis.
“The new private-sector driven electricity industry is the panacea for progress and growth of the sector and the nation,” he said.

The President, who did not hide the possibility of job losses by PHCN workers under the new reform structure said government through a supplementary budget had earmarked N57 billion to settle outstanding monitisation arrears owned PHCN staff. He said while the bulk of staff of the new privatised firms would obviously come from PHCN workers, those likely to be affected by any form of retrenchment need not fear as funds had also been provided to address their needs.

“We are providing funds from the supplementary budget to address the workers severance, pension and gratuity payments from the privatised firms,” he said. “It should be obvious that the electricity industry can only expand like the telecoms industry after the introduction of a liberalisation policy,” he added. Plans to effect the reform of the industry kick started by former President Olusegun Obasanjo had been stalled by President Yar’Adua on assumption of office.

Nigeria’s power generation remains abysmal at about 3,500 average generation capacity throwing up most part of the country into darkness with industries and commerce badly affected due to high cost of production associated with running business on diesel and petrol powered generators.

The recent reforms provides a climate that allows changes in tariffs, a key demand of private sector investors who want to ensure timely cost recovery and Jonathan acknowledged this in his speech when he said “in drawaing up the roadmap we identified tariff as critical factor in resolving the entire value chain of the supply of electricity and the idea is to achieve a tariff structure that is attractive to investors.”

He said more independent power producers and even International Oil Companies (IOCs) are expected to take advantage of the reforms and invest in additional generation capacity of 5,000megawatts in the next four years.

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