The 5-year Performance Agreement for all the electricity distribution companies has hindered and sidelined President Buhari’s efforts in revamping power sector in Nigeria. The terms of the Performance Agreement provide for a 5-year tenure during which the core investors in the Discos were required to fully achieve far-reaching efficiency improvement targets.
President Buhari government has no definite road map to untangle the mess of 2013 power privatization because of the dubious associated performance agreements signed in August 2013 which was based on political patronage. President Buhari is sidelined by 2013 performance agreement which provided among other things performance indices that the core investors covenanted to achieve, agreed reduction targets of aggregate technical, commercial and collection losses. This means that operating licences of the hopelessly incompetent DisCos would not be cancelled based on this agreement. This agreement treats Discos very well that lack track record, technical and managerial expertise, financial capacity and transparency. Those that drafted and signed the power privatization agreement are also accusing President Buhari for inaction in the power sector. The discos that got billions of naira as bailout fund have accused President Buhari of not putting much investment to improve on power supply.
Privatisation was meant to attract foreign and local investments, create jobs, stimulate every other sector of the economy, transfer skills and technology and make local products competitive and the necessity of alternative power provision. Former President Jonathan dealt Nigeria a deadly blow on power privatization, but President Buhari is prevented and sidelined by the associated performance agreements signed in August 2013, which provided, among others, performance indices that the core investors covenanted to achieve agreed reduction targets of aggregate technical, commercial and collection losses. This agreement is preventing Buhari from taking action on power privatization.

Power supply today is an admission that the Goodluck Jonathan administration that superintended over the power sector privatisation dealt so selfishly, so cavalierly and so treacherously with Nigerians has been late in coming. Shamsuddeen Usman, a former National Planning Minister under that notoriously corrupt regime, confirmed recently that politicians and officials circumvented safeguards as they scrambled to corner stakes in the unbundled DisCos and GenCos. Usman, a former director-general of the TCPC, forerunner of the Bureau of Public Enterprises, recalled how transaction principles were “side-stepped and the outcome, therefore, influenced by political considerations as against economic and technical capacities of the eventual preferred bidders.”
BPE recently sets December 2019 for Final Performance Review of Discos as those that sold NEPA bought NEPA. NEPA was sold by the then PDP led federal government and bought by the business men within the then ruling party. They gave Nigerians fixed charge to pay whether you have power supply or not. DISCOS have created a dedicated line of power supply to serve the rich people and leave the poor people in darkness. Exactly four years since 11 power distribution and six generating firms were handed over to some “private investors,” it is a bleak anniversary, rendered gloomier still for Nigerians and businesses by the missteps and disarticulation of the power privatization. President Muhammadu Buhari government does not know what to do with the mess it inherited.
President Muhammadu Buhari government is considering reviewing the controversial power privatisation of 2013. The Bureau of Public Enterprises (BPE) has announced December 31, 2019 as the final performance review date of 10 of the 11 electricity distribution companies (Discos) in the country, with the exception of Kaduna Disco. The BPE Director General, Mr. Alex Okoh, who made the disclosure in a press statement, said the relevant agencies of government are conducting a periodic review of the performance of the Discos under the management of the core investors with a view to evaluating the achievement of the terms of covenants agreed with the federal government well ahead of the December 2019 dateline. He recalled that pursuant to the successful conclusion of the privatisation transaction for 10 of the Discos, the utility companies were handed over to the core investors on November 1, 2013.
Okoh noted that due to lack of adequate technical information relating to the state of the infrastructure at the time of concluding the transaction, the base level of losses in the utilities imputed in the performance agreements were based on provisional estimates. The terms of the performance agreements, he stressed, provide for a five-year tenor during which the core investors in the Discos were required to fully achieve far-reaching efficiency improvement targets.

“The performance agreement further provides that a study to establish the baseline level of aggregate technical, commercial and collection losses for the performance measurement would be carried out by the Discos within one year after takeover and the outcome presented to the Nigerian Electricity Regulatory Commission (NERC) for approval. “The approved loss level shall form the basis of determining the performance of the core investors by BPE and subsequent tariff computation by NERC,” he further disclosed.
According to him, NERC subsequently approved the outcome of the baseline loss study and issued a tariff order with an effective date of January 1, 2015, thus automatically commencing the five-year tenor of the performance agreements executed between the core investors and the BPE. The BPE chief executive pointed out that “in this regard, we wish to clarify that the five-year performance agreement for all the electricity distribution companies, with the exception of Kaduna DisCo, became effective on January 1, 2015 and the fifth year anniversary for final performance review would therefore be 31st December, 2019”.
The much-publicised power sector reforms in Nigeria, under the Electric Power Sector Reform Act of 2005, have yet to yield desired and anticipated fruits largely due to corruption and impunity of perpetrators, regulatory lapses and policy inconsistencies. Ordinary Nigerians continue to pay the price for corruption in the electricity sector–staying in darkness, but still made to pay crazy electricity bills.”
States and local governments have adjusted to the reality of power privatization in Nigeria. The reality that emerged after privatization for states and local governments to limit investment in power sector since 2013. A lot needs to be done in areas of reinforcing and re-strengthening the existing 33/11KV network. Over 80% of the distribution transformers, ranging from 100KVA to 500KVA are already overloaded were provided by states and local governments before power privatization. Consequently, the DISCOs have to embark on a daily load-shedding of these transformers in order to keep them in service and to meet its customers’ needs.

The undertakers of the privatization exercise as contained in the (EPSR Act 2005), only took cognizance of the legal framework, not minding the role of states and local governments investments in power sector and the engineering framework. The electricity industry was not ripe for privatization at that particular point in time; it was carried out in a hurry and haphazardly which led to the neglect of states and local governments investments in the power sector.
State and local government used to supply, carry out major rehabilitation work on obsolete equipment such as transformers, feeders, sub-stations and others, that need to be replaced with new ones by power distribution companies (DisCos) to adequately supply power to the consumers. President Muhammadu Buhari government is considering reviewing the controversial power privatisation of 2013. The Bureau of Public Enterprises (BPE) has announced December 31, 2019 as the final performance review date of 10 of the 11 electricity distribution companies (Discos) in the country, with the exception of Kaduna Disco. The BPE Director General

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Inwalomhe Donald writes from Benin City, [email protected]