Monday, January 13, 2014

Before we dump Manitoba


Minister of Power, Prof. Chinedu Nebo
BOWING as usual to pressure from vested interests, the Federal Government is sabotaging its own power sector reforms. With the unrelenting harassment of Manitoba Hydro International, the Canadian firm contracted to manage the Transmission Company of Nigeria, the ongoing liberalisation of the power sector is becoming murkier by the day. In the end, it is the Nigerian people and the economy that will be the worse off from the high-wire intrigues bedevilling the sector.
The omens are bad. First, the government, through the National Council on Privatisation, had somehow contrived to discourage the most reputable power operators from the West and South-East Asia from the bidding for the 17 generating and distribution companies unbundled from the Power Holding Company of Nigeria. Instead, little-known bit players in the market, along with some consortia and newly-formed special purpose vehicles cobbled together by the local political and business elite, had a field day. Only Kepco of South Korea, among the world’s reputable firms, managed to squeeze into the field, taking over the Egbin Thermal Power station it won years ago.
Power Minister, Chinedu Nebo, had recently cried out that the winning bidders, who have since taken over at the GenCos and DisCos, lack the financial muscle to raise funds for the urgently needed investments in machinery upgrades, new equipment and management systems. News from the sites are even more alarming. The staff tell of widespread ignorance of the business by the new managers; most of the new owners are even said to lack their own pools of technical experts and are relying on the PHCN employees who have been asked to stay on for now. In many parts of Nigeria, notably the industrial hub, Lagos, power supply appears to have ominously become worse.
But it is in Transyco that a macabre dance of brinksmanship is playing out. When Nebo declared last Tuesday that the Federal Government would review the three-year management contract it signed with Manitoba to whittle down its control, discerning observers knew that President Goodluck Jonathan had succumbed to the heckling of vested interests posing as national patriots. Those interests have always opposed the privatisation of the power sector at every turn and it is sad that Jonathan is not seeing through their wily schemes.
The war against Manitoba began immediately it beat Power Grid of India and ESB International of Ireland in the competitive bid to manage Transyco in 2012, the only one of the 18 companies uncoupled from the PHCN that will remain wholly state-owned. It had to wait until March 2013 before it formally signed a $23.7 million three-year management contract with the Bureau of Public Enterprises and was not handed the company until July. In between, Jonathan had been persuaded to revoke the contract until wiser counsel prevailed.
Reports in the press since then suggest that insiders and their supporters have sought to obstruct the Manitoba management team, sponsored negative reports about the Canadians and intensely lobbied Presidency officials and legislators, all in an effort to expel Manitoba. But there is no alternative to private sector control of the pivotal power sector.
How long will it take some outdated politicians to accept that the notion of government holding on to the “commanding heights” of the economy died in the 1980s along with the Soviet Union? Hamman Tukur, who recently resigned as chairman of Tranysco’s supervisory board, is living in the past. His complaint that Manitoba appointed a CEO instead of the President doing so is valid only if the contract forbids it. In the past, did the Senate approve CEOs of Transyco as he now suggests? Most odious of his complaints is that of wanting to be briefed on the day-to-day operations! No sir! The position of chairman, even without a management contract, is part time, not full time. The chairman has no business with the day-to-day affairs.
To the uninformed, his railing that “somebody from far-away Canada appointing a CEO for a company owned by the government of Nigeria” may stir patriotic feelings. But that is patently misguided. In today’s globalised world, countries readily concede key national assets to experts for efficient service delivery wherever they may come from. That is why ports, airports, including the Heathrow Airport, and power facilities are sold or given as concessions to foreign companies by the Americans and by European countries.  What matters is a strong regulatory framework to protect national interest. The new chairman, Ibrahim Waziri, should not toe Tukur’s retrogressive line.
Jonathan should not be swayed by the false nationalism of other interests that have no viable alternatives to offer except a return to the old order of multibillion naira contract awards and patronage that will continue to deliver darkness while enriching a few. He should not allow himself to be railroaded into scaring Manitoba away. It is the only globally reputable firm in our power sector today. He should not entrench our notoriety for policy reversals and disrespect for contracts. If the agreement with Manitoba is faulty, it should be renegotiated in line with international contractual norms. And if Manitoba is in any way not fulfilling its contractual obligations, only the procedures spelt out in the agreements for redress should apply. The Canadian firm must deliver in accordance with the agreement. Jonathan ought to stand firm and consider the additional damage this saga is doing to Nigeria’s global standing as one of the worst places to do business. A government must stand for principles, pursues the greatest good of the greatest number, and not bow continually to vested interests.

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