President Muhammadu Buhari on Thursday, October 12, offered reasons as to why his admininistration cannot cancel the privatisation of the power sector done by his predecessor, Goodluck Jonathan despite its obvious failings.
Speaking in Abuja at the closing plenary of the Nigerian Economic Summit, NES, the president said, “The privatisation is a complex investment that government cannot wake up to cancel the contract, because there are consequences.”
Mr. Buhari, who was represented by the Minister of State for Budget and National Planning, Zainab Ahmed, said his administration’s decision to review the power sector privatisation is to open up the sector for investors with the financial capacity and technical expertise to inject fresh investments to turn the sector around.
Since November 2013 when the Power Holding Company of Nigeria, PHCN successor companies were handed over to their new owners, Nigerians expected improved stable supply of electricity, with government targeting the generation capacity of 10,000 megawatts, MW.
At the closing plenary of the Nigerian Economic Summit on Thursday, Mr. Buhari said owners of privatised power companies have not been able to realize the objectives for which they acquired the assets.
“The power sector has been privatised. Investors are holding large portions of the shares. But the privatisation has not worked well, in the sense that what government sort to achieve, by way of development of the power sector, has not yet happened,” the President said.
The President said government has decided to meet with the operators of the sector, starting with the distribution companies, DISCOs, to restructure their equity holdings.
He said the restructuring would involve the government and other private operators ceding some of their holdings to new investors to inject fresh funds and expertise to help turn the sector around in a way that would serve Nigerians.
“The process is ongoing to negotiate with the existing owners to restructure the investment to determine the right level of holding to give up for another round of sales. The equities would be sold to investors with the resources and capacity to bring in the level of investment to turn around the sector.
He described as false the privatisation of assets, which saw the defunct PHCN broken into 11 distribution companies and nine generation companies as well as one transmission company, pointing out that false buyers of the power companies were owing more than they could pay.
The situation, the president said, has been so bad that if the banks were not strong, they could have gone under from the weight of the debt from the power sector.
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