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Clearly, the leadership of the two unions in the electricity
industry think that being ideologues with regard to the privatisation of the
successor companies unbundled out of the Power Holding Company of Nigeria
(PHCN) would hold them in good stead with their followership. They are mistaken
as they are threatening the unique opportunities that will be available to the
workers in a liberalized environment in the industry.

This piece seeks to address most of the technical issues raised
so far by the unions. On behalf of the two unions in the industry, Joe Ajaero,
the General Secretary of National Union of Electricity Employees (NUEE), had
contended at a media session that “we see privatisation as jinxed. Besides
that, government has not informed us about the plan to privatise PHCN. Any time
they do, we can give them our position.” Mr. Ajaero added, “If we had been
invited to discuss privatisation or road map, we could have invited them to
take a cue from Nigeria Airways, Delta Steel, Daily Times, NITEL…We are
equally aware of what happened in the communication sector when MTN, Globacom,
Airtel came in, they never bought over NITEL.”

Fine sophistry? But the BPE will not allow the likes of Ajaero
to write its history. At the BPE, we do not claim to be perfect and we do not
pretend to have all the answers. Since 1999, over 120 transactions have been
consummated and only the four mentioned are the sore points. Can Ajaero inform
Nigerians about the successes of Eleme Petrochemical, Oando, Conoil, BCC (now
part of Dangote Cement), National Truck Manufacturing Co; Transcorp Hilton and
others?

On the matter that the unions have not been informed of
government’s intention to privatise PHCN (formerly NEPA), recall that
participation in the privatisation programme which is instituted in law through
the Public Enterprises (Privatization and Commercialization) Act No. 28 of 1999
was given tangible expression by the integration of the Nigeria Labour Congress
(NLC) into the membership of the National Council on Privatisation (NCP) which
is the highest policy and decision making body on privatisation and economic
reform in Nigeria. In the same vein, 22 labour leaders of some industrial
unions were made members of all the 11 technical and sector reforms
implementation committees of the NCP; thus, ensuring the attainment of the
desirable goals of vertical and horizontal integration of labor in the
privatisation process.

In fact, the electricity unions were members of the Electric
Power Implementation Committee of the NCP which produced the Electric Power
Policy and the Electric Power Sector Reform Bill. And Section 28 of the
Privatisation Act of 1999 lists NEPA as a candidate for privatisation. Furthermore,
the Electric Power Sector Reform Act 2005 provides for the privatisation of the
electricity utility. Let us say for the umpteenth time that BPE is implementing
the provisions of the EPSR Act.

In addition, when then Acting President Goodluck Jonathan met
with the leadership of two unions in the electricity sector last May, were they
not told about government’s desire to re-start the stalled power sector reform
programme?

Moreover, is it not disingenuous for the labour unions in the
electricity sector to, on the one hand accuse the BPE of not engaging them in
dialogue and when the opportunity is available for negotiation, they refuse to
meet with the privatisation agency? An example was on Tuesday, November 2, 2010
when the unions refused to engage with the Bureau at a meeting to discuss
labour matters under the chairmanship of the Minister of Labour.

NUEE had argued that “if the government is really serious about
the sector, it should allow the 25 licensed companies to operate alongside
PHCN, like the Nigeria Electricity Supply Company (NESCO.) NESCO has been
operating in Nigeria since 1929, generating its own electricity without taking
over PHCN.” The fact is that due to the structure of the electricity industry,
it is not possible for private operators to build their distribution facilities
to compete with the extant distribution network of Power Holding Company of
Nigeria (PHCN.)

Transmission versus
generation

It is important to note that the technology in power generation
allows for many participants unlike the technology for transmission and
distribution networks. One can set up separate generating plants using any fuel
source (hydro, gas, coal, etc) that is economically viable. At any point, you
can have many players. Transmission network is such that it is a natural
monopoly given that you cannot ask every operator to build its own transmission
network. It is uneconomic, not sensible and, in the end, counterproductive and
this is what Ajaero and NUEE is recommending to Nigeria.

In fact, the design of the Nigerian Electricity Supply Industry
(NESI) is such that the Transmission Service Provider (TSP) should give equal
access to generators in accordance with laid down rules. It is in order to
initiate this that the Federal Government has retained ownership of the
transmission network.

Indeed, the Electric Power Sector Reform Act of 2005 recognizes
the monopoly elements in the transmission and distribution chains of the
industry structure. That is why the law gave the Nigerian Electricity
Regulatory Commission (NERC) the power to set tariffs for both services so as
to prevent consumers from being exploited. This is what is done in all
electricity markets that are reforming.

It should be noted that the revenue that drives the entire value
chain (generation, distribution, transmission-market operator and system
operator) comes from consumers through the distribution companies. In this
regard, any reform that does not address the challenge in the distribution
network would collapse as there would not be adequate revenue to fund the rest
of the value chain (that is, generation and transmission.)

Ajaero had stated that “they claim that PHCN is inefficient and
obsolete but today, they are scrambling to take over the obsolete PHCN that
cannot deliver. Today, tariff has started going up and in the next few months,
it would go up to 300 per cent without commensurate improvement in the power
sector. We challenge the protagonists of privatisation to come and sign
agreement with the workers that tariff will remain the same for the number of
years till power generation and transmission situation improves.”

Given such comments, one wonders on whose side Ajaero and his
sympathisers are in the power sector reform programme. Is he on the side of
Nigerian consumers who are compelled to invest in self-generation, thereby
raising their tariff from an average of about eight naira per kilowatt-hour
charged by PHCN to a real cost of N80 per kilo watt hour? It is clear from
Ajaero’s remarks that he is not on the side of the long-suffering Nigerian
electricity workers and consumers but on the side of importers of generators
and diesel. Moreover, the current tariff structure has a subsidy element of
N177 billion over a three-year period (2008-2011.)

More funds needed

It is important to state that government’s annual capital outlay
(for all capital budgets) is about $6 billion whereas power alone requires $10
billion annually. In other words, annual funding requirement has already
outstripped the capacity of public sector funding. The funding requirement will
grow as the economy and population grows. And let us not forget that public
sector does poorly at efficient design, planning, funding and implementation of
any kind of infrastructure project.

The unions think they have a winner if they hinge their
opposition to privatization to tariff increases. On current tariffs, no private
operator will get involved as it is not attractive. It is only when the tariff
regime is made investor-friendly that the investments that will address our inadequacies
come on board. The unions have asserted that none of the 20 private power
companies issued licenses by the Nigerian Electricity Regulatory Commission
(NERC) to generate electricity has added a megawatt of electricity to the
national grid.

It needs to be stated that Shell, Agip and AES are all operating
IPPs and supplying power to the national grid. Shell is generating not less
than 450 MW; Agip generates 450 MW and AES produces 200MW. Shell and Agip are
oil companies who are not unduly concerned about being owed since they have
access to the oil revenue. AES is producing because they have a sovereign
guarantee. As such, if PHCN does not pay AES, the Federal Government does.
Thus, out of currently available power of 3, 500 MW, the three IPPs are generating
1,100 MW.

There is a pertinent question to also ask: who are the private
power generators going to sell to? Is it PHCN that is not financially viable
and would not be able to honour commitments? It is the recognition of this gap
in the industry structure that led the Federal Government to incorporate the
Nigerian Bulk Electricity Trading Plc, also known as the “Bulk Trader.”
Incorporated on July 29, 2010 by the BPE, the functions of the Bulk Trader are
to undertake the business of trading in the wholesale electricity market as
bulk purchaser and the bulk seller of electricity and ancillary services
pursuant to the Electric Power Sector Reform Act 2005; and to take over the
contract management and obligations of the Federal Government of Nigeria under existing
Power Purchase Agreements (PPA).

Chukwuma Nwokoh is Head of
Public Communications at the Bureau of Public Enterprises

Earlier this month,
there were text messages alerting people to leave the Motorway Centre,
Ikeja, Lagos. The message said there was a bomb ready to explode any
moment in the area and this caused a lot of panic among Lagos
residents. In a season of bombs, many took the text seriously and the
Police Anti Bomb Squad actually moved to the premises and combed the
entire area but no bomb was found.

This is one of the
ubiquitous messages that are common with cell phone users in our
country. Funny, foolish and sexually explicit messages now dot the
landscape and subscribers seem helpless in the way they flood their
phones.

Other examples
include, “MTN is celebrating their six years in Zaria, send it to other
six people and get free 750. It is free, be sure it is from MTN to
MTN”. “If you know anyone that has money in Oceanic, Unity and
Intercontinental Bank, tell them to go and withdraw their money within
24 hours because information reaching us is that they may go on
distress soon,” says another.

But some of these
messages have had great consequence as they don’t all end the way the
Motorway Centre message did. “I saw the pictures of people queuing up
to withdraw their funds from the bank when the messages warning
customers to withdraw their funds (went round),” said Bisi Adetunji, a
graphic artists.

“A friend of mine
was able to get shots of people actually queuing up to withdraw their
funds, I actually saw that. I did not know the effect those messages
could have until I saw those pictures. It is the affected banks that
can really tell you the cost of that message.”

Intercontinental,
one of the banks responded with text messages of its own, assuring
customers that their money in its custody is safe. The Central Bank
also followed with adverts asking Nigerians to ignore the text messages.

The Nigeria
Communications Commission said last year that a nationwide SIM cards
registration would be done in a bid to enhance security and related
crimes perpetrated through mobile phones.

This, Mohammed
Yusuf a staff of a private security firm said, will enhance security as
such messages cause inconvenience to many who receive them and some
even get to the stage of being scared to use their phones. “Some are
sent by fraudulent people with dubious motives. Others would send you
messages that they are expecting some goods from the port and just need
some money to pick it up.”

Mr Yusuf suggested
that mobile service providers step up their responsibility for their
customers’ phones security so as to help them from being swindled.

Different perspective

However, some
subscribers have a different perspective saying information sharing can
actually save lives. Emmanuel Tarfa, a financial consultant said he
thinks operators can monitor the source of such messages for security
reasons only and relay the details to the security agencies.

“In a case where a
message is controversial but true, not sharing it could be dangerous to
the public. In addition, the telecom providers do not have the absolute
moral power to determine what is true or false, because Nigeria is made
up of different religions and ethnic groups, whose rights should be
protected. Their interference could mark the beginning of a censorship
campaign that could undermine the integrity of our information system
in Nigeria. Let the system regulate itself – people will eventually
learn to determine what is true or false”.

Similarly, Jito
Ogunye, a lawyer, said receiving such messages is not an infringement
of one’s privacy because the right to privacy guarantee of the
constitution cannot be stressed to cover the receipt of such text
messages.

“We live in a world
of ICT. Telephoning has become wireless so anybody that subscribes to
wireless telephony has put himself in a position to receive such
blanket messages. Now, if anyone feels that he has spent much time and
energy deleting such calls, such a fellow can sue the service provider”

However, phone operators were silent on the issue. MTN and Glo
spokespersons did not respond to enquiries. Same goes for Reuben Morka,
the NCC spokesperson.

Last Friday, Nigeria made a successful debut at the
international bond market with the 10 year $500 million Eurobond massive
subscription. The issue was 2.5 times oversubscribed, translating to about
$1.25 billion. This is coming after initial apprehension about the
attractiveness of the bond on the back of mismanagement of huge income from oil
over the last one year.

In an interview before the deal closed that day, the finance
minister, Olusegun Aganga, said that he had spoken with over 40 investors and
the response to the bond had been overwhelmingly assuring. Mr. Aganga dismissed
reports that some investors had doubts about the viability of the issue. The
report suggested that the alleged mismanagement of Nigeria’s Excess Crude
Account (ECA) had caused potential investors to shun the country’s first bond
issue.

Mr. Aganga, who was in New York as part of the road show to market
the bond, said that the Excess Crude Account barely featured in the questions
the investors were asking. “There is absolutely no correlation between the
Excess Crude Account and what we have set out to achieve with the bond,” he
said. “In reality, 42 per cent of that goes into investment in power such as
the NIPP project which has been allocated N8 billion.”

Excess Crude Account

He said that the Excesss Crude Account was a necessity for
states to invest in major capital projects but refused to comment on
allegations that many states had not remitted the money accordingly.

“The investors were far more interested in economic and other
fiscal factors. They were fairly consistent in their questions which were
mostly about political stability, exchange rates, the budget, levels of
production and the quality of our loan book.”

He said that modern investors were extremely sophisticated and
Nigeria represented a very attractive opportunity for those looking for healthy
diversity in their portfolios.

The finance minister added that a large number showed interest
in the Euro Bond.

“However it is not just anybody with money that will be able to
invest. We need to vet each investor’s suitability as well.”

A highly elated Aganga, after the close of the book, said the
issue was a major milestone for Nigeria. “More remarkable is the exceptional
quality and diversity of investors from 18 countries spanning Europe, the US,
Asia and Africa.

Investors are impressed by Nigeria’s credit story and were very
keen to participate in the offering.”

Mr Aganga said Nigerian corporate can now more easily access
well-priced long term financing from the international capital markets to fund
economic opportunities such as infrastructural development.

“We now have a transparent and internationally observable
benchmark against which international investors can accurately price risk. My
expectation is for an increase in capital inflows and FDI (foreign direct
investment) into the economy.”

The accomplishment of the bond may not necessarily translate to
much unless local corporate are able to latch on to the success recorded.

“We will commence the process of educating Nigerians on the
benefits of this bond. It is a very good thing,” the minister said in a text
message.

William Wallace, the Africa Editor of the Financial Times said
the massive investor interest in Africa has rubbed-off well on Nigeria.

“Some of the world’s fastest growing economies are on the
continent, which looks set to grow in coming years at double or more what the
developed world is. Then there is a lack of supply of African sovereign debt.
Nigeria as the second largest economy is obviously going to attract interest.”

Fiscal prudence

Mr. Wallace said current mismanagement may be due to the
elections and that fiscal prudence will improve after April. “Nigeria’s debt
profile is still far more favourable than it was a few years ago even if both
domestic and external debt has been on the rise again.”

Standard & Poor’s Ratings Services on Tuesday assigned its
‘B+’ long-term senior unsecured debt rating to the bond. At the same time,
S&P assigned a recovery rating of ‘4′ to the proposed bond, indicating its
expectation of average (30 per cent to 50 per cent) recovery in the event of a
payment default.

According to S&P, the ratings are also constrained by a low
level of development and high dependence on the oil sector.

“Furthermore, we see residual risks in Nigeria’s financial
sector, although the Central Bank has addressed solvency and liquidity problems
in the banking sector,” it said.

S&P notes that even with mismanagement, Nigeria’s oil
revenues are such, with the price of oil rising, that over the 10 year period
the country will always be able to pay.

Click here for the full transcript

South Africa
government’s bonds fell sharply on Friday, driving yields to their
highest level in 7 months after Central Bank comments on rising
inflation pressures dented prospects of interest rates cuts.

The bond sell-off,
a day after the Reserve Bank left its repo rate steady at 5.5 percent,
weighed on the rand, pushing the currency to a near 8-week low against
the dollar at one stage.

Stocks ended
higher, snapping two days of declines as firmer commodity prices and
upbeat global equities lifted sentiment, with technicals pointing to
further gains.The yield on the benchmark 2015 bond soared to 7.905
percent, up 22.5 basis points from Thursday’s close and reaching its
highest level since early July 2010.“The Reserve Bank left rates
unchanged and the market feels they are now looking ahead and seeing
higher inflation. It looks like there will not be any more rate
cutting,” a bond dealer in Johannesburg said.

Consumer prices in
Djibouti rose by 0.5 percent in December, compared with a fall of 0.5
percent a month earlier, pushing the annual inflation rate to 2.8
percent, official data showed on Sunday.

The Statistics and
Demographic Studies Directorate said food prices in December rose by
0.1 percent against the previous month, while housing, water,
electricity, gas and fuel costs rose by 1.7 percent and transport costs
climbed by 0.8 percent.

The annual rate of inflation in 2009 came out at 2.2 percent.

Adamawa
Agricultural Development Programme (ADP) announced on Friday that the
state recorded more than 75 per cent of bumper harvest in 2010 compared
to 60 per cent achieved in 2009.

The Programme
Manager, Mustapha Raji, told the News Agency of Nigeria (NAN) in Yola,
that the achievement was recorded due to the support and intervention
projects introduced by the state government and other agencies.

‘‘The Sassakawa
Global 2000, the Fadama III, Component IV and CBARDP projects have
contributed immensely to the increase in agricultural production in the
state,” Mr Raji said.

He noted that the
progress was made in spite of the late rainfall which prevented early
planting. “In 2010, the rain came in late both in the northern and
southern parts of the state which affected early planting. Most farmers
planted in July when rain started and even those who planted early in
the southern part, they re-planted again due to inadequate moisture,’’
Mr Raji said.

Andreas Seiter, a
Senior Health Specialist with the World Bank, Washington, on Friday
pledged the bank’s support for the National Agency for Food and Drug
Administration and Control (NAFDAC).

Mr Seiter made the
pledge during a courtesy visit on the management of NAFDAC in Lagos,
saying the bank is ready to assist the agency to clean up the country’s
drug system.

The World Bank
official noted that Africa is the continent with the highest cases of
counterfeit drugs in the world. He said that the World Bank is willing
to render financial and technical assistance to the agency in order to
strengthen efforts to combat the sale of counterfeit drugs in Nigeria.

“A pharmaceutical
industry that comes from a country with a good regulatory body will
find it much easier to sell its drugs across the border,” he said.

Dr Dinesh Nair,
also with the World Bank, Nigeria, said that the partnership will
ensure that NAFDAC continue to play an effective role in certifying the
quality of imported drugs, food and cosmetics.

The Federal
Airports Authority of Nigeria (FAAN) has said that it will continue
with the grounding of domestic carriers indebted to it as the week
progresses.

Explaining that
airline operators in Nigeria are not responding positively in paying up
their dues, the airports authority disclosed that it will not hesitate
to shut down the operations of persistent defaulters in the sector,
adding that the grounding of airlines negatively impact on the
travelling public.“They are responding but the response is not
impressive, which means if we are not satisfied during the week days,
we will strike again,” said Akin Olukunle, General Manager, Public
Affairs for the authority on Sunday, adding, “we don’t want to keep
shutting their operations for it affects the industry, it affects the
stakeholders particularly the passengers.”

Mr Olukunle
disclosed that the authority had to carry out a temporary halt on the
operations of some indigenous carriers at the weekend, as he noted that
the affected airlines have the choice to commence flight services as
soon as they clear their debts.“It was a temporary action on our part;
it’s just a suspension, so they can resume anytime as far as they come
and clear themselves with us,” he said.

According to
reports, FAAN during the early hours of Sunday suspended the operations
of Aero Contractors, Dana Airlines, Chanchangi and IRS Airlines over
their inability to pay up their debts to the authority.

The grounding of
airlines last Sunday by the Federal Airports Authority became the
fourth time the agency would halt operations of domestic carriers in
Nigeria over issues of negligence in the prompt and adequate payment of
their debts.The issue of airlines’ indebtedness to various agencies in
the sector has been brought before the Airline Operators of Nigeria on
several occasions, and the association, while pleading on behalf of its
members, had called on the carriers to comply. The perpetual debt and
adamant nature of some of the carriers made the Nigerian Airspace
Management Agency (NAMA), another regulator in the sector, to embark on
what it called pay-as-you-go for terminal navigational charges.

Mr Olukunle,
however, disclosed that the authority will keep dialoguing with the
airlines until a meaningful outcome is achieved.“We will give them
enough room so that this will not disrupt total operations and
passengers will not be affected, but we are pleading with the concerned
airlines to pay up so that we can improve our facilities,” he said.

The National
Biotechnology Development Agency said it is working on a new technology
that will help Nigeria protect and conserve its environment through
re-vegetation and remediation.

Solomon Bamidele,
Director General of NABDA said on Wednesday in Abuja at a sensitisation
workshop on management of non degradable wastes that the project
entitled “Establishment of Centers of Excellence on Environmental
Protection and Conservation through Re-vegetation and Bioremediation”
embraces the major environmental problems that affect all parts of
Nigeria from the farthest North to the extreme Southern part of the
country.

“The Environmental
Protection and Conservation through Re-vegetation and Bioremediation
project is a multi institutional project involving the University of
Port-Harcourt (bioremediation), University of Maiduguri (combating
desertification), University of Nigeria, Nsukka (Gully soil erosion)
and NABDA ( non- biodegradable waste materials); NACGRAB(Tissue
Culture),” he said. “The project is an imperative step taken by
environmentalist and scientists alike to forestall degradation in the
environment.” He said biotechnology has a significant impact in the
bioremediation of polluted lands by breaking down oil molecules into
useful organic soil components; as well as in combating desertification
through the propagation of sustainable plantlets.

“What they plan to
do is use the technology to develop trees that can survive in the
desert and make the area more habitable. They will also come up with
trees that can stand erosion and also grow in an oil spill environment.

Unprecedented
population growth and emerging technologies have placed pressures on
the biophysical environment resulting in degradation that can sometimes
leave permanent impact on the environment.

The rapid growth of
urbanisation in addition to industrialisation has brought astronomical
increase in anthropogenic activities with their attendant huge
generation of wastes, thus the need for a systematic management of an
ever-increasing trend of municipal solid waste generation complicated
by complex waste characteristics has become an urban challenge.

The agency said it
is also looking at using biochemical processes to convert non-
biodegradable plastics to ethanol. This, the DG said will go a long way
in contributing to economic growth in the country.

Explaining further,
Christy Onyia, Director of Environmental Biotechnology at NABDA who
gave an overview of the project said management of non-degradable waste
materials, particularly plastic wastes in Nigerian environment is a
challenge.

According to her,
some of the problems involved in process of managing solid waste in the
developing world like Nigeria include huge solid waste generation from
all sectors of economy, absence of framework for waste collection,
transportation and disposal and inadequate solid waste dump sites.
Others are absence of engineered dump site, non-sorting and non
segregation of solid waste, legislative issues and enforcement of
regulations and limited available standard analytical laboratory for
research and development in environmental research and sample analyses.

“Now we are
introducing proper research and development into waste management in
Nigeria. We have a plant for biodegradable waste. We are now proposing
for this biodegradable waste gasification. It is another plant that
gasifies non biodegradable waste and produce ethanol from it. At this
stage it is at pilot scale.” The project is funded by the Science
Technology Post Basic (STEP-B) programme of the World Bank.