Power sector should be allowed to grow like telecoms – Peterside

In this interview with Udeme Ekwere, the Chairman, Technical Committee, National Council on Privatisation, Mr. Atedo Peterside, says that power reforms will boost the production level of Nigerian businesses, and help them to compete favourably with foreign firms. Could you give us an update on the power sector reform?
Well, I can say that the power sector is a critical element in the overall National Transformation Agenda but there are also other elements apart from power, which is part of physical infrastructure. So one has to move beyond just the power sector to transportation and this is where we talk about roads, rail and so on. This is very important because one of the things that hinder businesses in Nigeria is that the business man has to provide his own infrastructure;  and that’s what we want to correct because it should not be. If you have to provide your own infrastructure then you cannot compete with the outside world because they do not have to do the same. The government should focus at federal and state levels in helping the business man to meet his infrastructural needs; be it power or water or the provision of motorable roads, railway to move goods to the ports and get goods out of the ports efficiently, be it imports or exports. This is what government owes the individuals, getting the infrastructure moving efficiently.
The whole agenda to transform also embraces all of the above and you are not going to transform some of those sectors relying only on government resources. You also have to open up the sectors so that  private firms can invest. That is why when I gave an example of the power sector, I said it is even more important that we have cost reflective tariffs.  We had a regulator that was serious and credible and then we had arrangements like the bulk trader that would make it possible for people to come in, establish their own IPPs, have an agreement with the bulk trader, provide power to him, they deliver and get paid. When you have that kind of arrangement that is transparent and people have confidence in you, then you can get massive inflow of funds from the private sector to invest in this same power sector.
If you do not have that kind of clarity, you can make all the noise in the world, no private sector person is going to put his money into a sector when he thinks that he is going to walk into a trap or where there is going to be an obvious failure. So then the arrangements must make business sense. I think the arrangements we have for power, if they are allowed to function, make business sense.
Please shed more light on all these companies you have dealt with that you think will be coming for listing on the Nigerian Stock Exchange and how soon that would be?
Yes, I explained that for the distribution companies in particular which is where the focus is concentrated, we are not selling 100 per cent to the core investors; it is only 60 per cent. The balance of 40 per cent would be held by the Federal Government, state governments and staff and so on. We can make quick arrangements to sell those shares to the public and even if that fails or if it does not happen in some cases, it is possible that the core investor himself in due course may want to raise revenue to service his needs to expand his business. Sometimes, when you are trying to raise money to grow the business, then you want to take money from outside so that some of the current investors may opt out eventually through raising more capital or dilute their share holding from 60 per cent to 51 per cent that would still give them control, so it’s a possibility. What I am saying is that we are making remarkable progress.
For the winners of gencos, do you think that is there  a possibility of  fast-tracking the delivery of power even before that target period given to them?
If you look at the documentation carefully the next step after they negotiate and pay 25 per cent, they will pay the balance within six months. They didn’t say after six months . They said within so that somebody that has sorted out everything can pay earlier than the six months and take possession and move on. Then and again some of them are eager to move as fast as possible. Why would you want to pay for something partially and allow it drag? Once you take money out, you take money out, you only begin to get money in after you step in there and take possession.
Like I explained, the beauty of this for me and why this should succeed is because there is now a proper alignment of goals which we never had between those in charge of the power sector and the consumers. I explained earlier that inside the old arrangement the government employee in PHCN, whether he gives you power or not, gets his salary which is assured. Even if you are in darkness, he collects his money and goes home. Now the union is fighting for their entitlements  and nobody is asking if they gave you light or not they are just demanding whatever they think they were promised. And when you move to this arrangement that is privatised then there is alignment of goals in the sense that the only time a distribution company gets money is when there is power supply and the meter is running. So he is the one that is more interested than even myself to keep the meter running, same as with telecoms sector. If the system is down they would put it back up because they want to charge you and they cannot charge you when things are down; they can only charge you when you can make a phone call. So we are moving into a system that is market-oriented but there is a regulator to ensure discipline and there are rules that would make it possible for the private sector to come in and invest massively. We need massive investment from the private sector to leap forward once and for all, and break out of this vicious circle and then allow the power situation in Nigeria to improve dramatically in the next two to three years and upwards.
Sir, what effect do you think that stable power  supply can have on the economy?
I believe that power supply remains the single and most important incubator to economic growth in Nigeria in terms of people’s businesses. The lack of this is the reason that businesses have not been able to compete favourably. Power has to be number one, you can talk about number two as transportation or something else. But do not forget that when you do not give people power from the national grid, they have to get power by themselves; they buy generators, run them on diesel or petrol. Look, the most efficient generator you can buy for yourself is about four/five/six times more expensive than power from the grid. If you are a business man,  doing any kind of business, if you can move away from wasting your money on generators, maintaining them and fueling them to just paying your bills to a disco and bring your cost down, there are possibilities that you can compete and create more jobs etc.  So when the cost of generating electricity personally is out of the way, a business man can expand his business because he has brought his cost down and has been able to compete more and grow his business. So when he grows his business, he employs more people, thus creating jobs, so it is all linked.
Culled: Punchng