…Says NBET should go
By Emma Ujah, AbujaBureau Chief & Chris Ochayi
As the debate over the privatization of the nation’s electricity sector rages, the Chairman of Mainstream Energy Solutions Limited, Col. Sani Bello (retd) says, in this interview, that the nation would have been thrown into total darkness by now if the government had held unto the sector. He also calls for the scrapping of the Nigeria Bulk Electricity Trading Company (NBET).
What is your assessment of the power sector, especially after the reforms that brought about the privatisation?
The power sector from my own perception, as a GENCO operator I think we are doing well, especially in the hydro section, especially in my company. When we took over the two hydro plants, Kainji and Jebba were generating about only 460 Megawatts.
Today we have increased the capacity to over 920 Megawatts. Despite all the difficulties and the odds we are still able to survive the storm in the industry. I think the reform has done its good and certainly in the GENCOs I think it has been a success. I know that the DISCOs have got their own problems. But what I gathered in the DISCOs is the problem of tariff. The tariff they are charging now is certainly not economical. There’s no way they can continue to maintain the tariff. Hopefully, I’m just reading that NERC has allowed DISCO to increase the tariff by 50%. That may help. It will definitely reduce the liability.
What is your evaluation of the three segments of the sector- generation, transmission and distribution?
I think the GENCOs are doing well. I will like to divide them into GENCO hydro and GENCO thermal plants. Because I know next to nothing about thermal plants.
But in the hydro, I think we have done well. I believe we can do a lot more.
The DISCOs are having problem, the DISCOs’ problem like I mentioned earlier is tariff. The tariff and also investment the DISCOs have not done much about investment especially in providing meters, transformers and other infrastructures which are necessary.
If you do that, I believe it could be a success. It may interest you to note that we at Mainstream are investing now into DISCOs, because we believe we can make discos work better if we are involved because our objective is to have an end to end solution from generation, transmissions to the distribution. I must say that the Transmission Company is doing well, but it can do better.
As soon or later, I presume, the transmission may be concessioned and if at any time its concessioned, I can assure you if I’m still in the power sector I will like us to take a part in the transmission so that we should also control the transmission.
I will like to see end to end solution in the power sector because if we do that, it is done elsewhere,countries like Turkey do it. I see no reason why the power sector will not succeed. I believe we can generate power and if we are allowed we can distribute it efficiently.
Are you suggesting that government should not have monopoly of transmission?
No. Just like they have given out the generation,I think they should also concession the transmission. The world of today is changing, government, are not good managers of resources.
They should create an enabling environment and allow business people to run the business. Government has too much problem already to run the government, than to get involved in business.
They are meant to provide an enabling environment for business people whose duty it is to manage the businesses more efficiently.
Some stakeholders are suggesting that the Discos should be recapitalized are you in support of that?
I agree to some extent because many people don’t know the difficulties the discos are going through. They don’t know that the tariff they are charging is very low. It’s not competitive in the market.
They don’t know that because the tariff is too low, they can’t do some of the things which they are supposed to do. They don’t know that because they have a very low tariff they couldn’t invest a lot in other things which will make them more efficient. A lot of people are talking based on ignorance.
He who wears the shoe knows where it pinches. I believe the DISCOs are doing reasonably well despite all the odds which against them. When people talk about the power sector they don’t seem to differentiate between the DISCOs and the GENCOs.
In my own case I generate power which the DISCOs cannot take but too much power, every day I lose over200 mega watts of power, and you know what that cost? N200 million every day. Because it’s stranded capacity nobody takes it. You can’t store it. So this is the kind of problem we are facing.
People don’t appreciate the GENCOs,especially the hydro power. Let me continue to insist, when I talk about the GENCO I don’t want people to hold me to say after all the thermal plants are doing theirs. No, I don’t know much about thermal plants. But hydro, where we have two major hydro plants in Nigeria is what I can talk about.
There have been calls for the revocation of the privatisation exercise in the power sector due to the general perception of poor performance. The National Economic Council has even set up the El-Rufai Committee to review it . what is you take on this?
I don’t think revoking the licenses of the DISCOs or the GENCOs is the solution. Is government going to expropriate assets of its nationals? Most of the people who own these DISCOs and GENCOs are Nigerians. We bided. Those of us in my company put over $237million which we gave to the federal government.
If they decide to cancel mylicense today, they should pay me $237million, not me only not to mention other companies, will government be prepared to pay this kind of money to cancel the privatization?
Is it going to be cancellation or expropriation -seizing the assets of nationals? If the government wants to expropriate our assets, it is not right. That will kill the country as a whole because nobody will invest in Nigeria again. It’s not just cancelling the thing, it’s not that easy.
We need to be compensated if it is to be cancelled, we put money, it was never given to us free. Many people have the wrong notion that we got it free, we competed I did not know anybody in government when we bided for the GENCO.
I did not see one single person in government to help me. Before the bidding, they were so many road shows in Abuja, Lagos, Dubai, London, Washington, Johannesburg.
My people went to Abuja,we went to Lagos we went to London and we went to Dubai to show how serious we were. How many people who were complaining outside went to these places and they didn’t win?
During the roadshows, the government was very keen. They did it right. They said we are going to have road shows for everybody to know what is happening and they did and we followed them. So other people could know the details of the concession of what the power sector was going to be all about.
So its not true that it was given to people free of charge, we bided for $237 million and we paid. Is it small money? Even when they knew clearly it was not a Dollar-based business.
It’s a Naira-based business,yet they insisted we should pay in Dollars. The VP then insisted we must pay in Dollars. When we bided, the exchange rate was N157/$1. Now we are buying dollars at 360 we are not complaining. Who is to complain?
What do you expect the El-Rufai Committee to do?
Before we bided, the government promised us xyz, for instance they promised to pay us a 100%capacity. By 100% capacity which means,like now whether we put 900 megawatts on the grind or we don’t put on the grid the government was duty bound to pay me 100%. So I would have got no stranded capacity like I’ve told you.
They didn’t. After we came in they said we are not going to pay, we will only pay you based on what is on the grid and they don’t control the grid, somebody else controls the grid and he tells meput 100 megawatts. Even though I have capacityfor 900 megawatts, the person controlling the National Grid will tell me to putonly 500megawatts. I don’t control it.
Even if you ask me to put 100megawatts and I put 100megawatts but my capacity is 900megawatts it means that day I have lost 800 megawatts, for instance. It is not as bad as that. I’m just giving examples. That was one default from that angle.
Second default, they said they are going to put Partial Guarantee by World Bank. When we came they said, no there will be no Partial Guarantee, the world bank never came. So they allowed us and they said, they wanted to be able to control to make sure that the partial guarantee works. That the World Bank gets their money, they are going to put NBET to collect money like an aggregator. They put NBET but there was no guarantee.
That time they also promise us that after five years, NBET would fall out. Because they assume that after five years, the partial guarantee will have been paid. Therefore it would be willing buyer- willing seller. Each of the DISCOs would have come to me to say sir I want to buy ten megawatts. I’ll say fine, here is my price.
Today six years or seven years after, NBET is still there. They are institutionalizing now. What are they doing? They have no value to us. And that’s because of NBET they are making Discos to be lazy- they are protected. But without NBET, mind you, NBET is only a pile of debts for government, there is a provision for eligible customer programme.
We are having problem. Its not done. And if we have eligible customer program, we will be reducing the continuous liability of government.
So there are so many things like this which we feel must be addressed. If I tell you today our asset liability against government is all worth about N100 billion. We are not the only ones. I believe others too have similar stories to tell. It is therefore very important that people get to know the story before they begin to criticize. Many people don’t know the actual story about the power sector. Power sector has got so many stories which unless you are involved, you will not know.
But I believe the government is getting it right. In 2014 I think CBN some billion which people talk about, which is true. They did not lend me money that time, they paid me for services I rendered out of that money.
In2017, 2018, there was also another N701billion . That one too I was not borrowed money from government, they were paying for services rendered. They did not even pay me all. For the two years they were paying me only about 80% of my invoices, what happens to 20%,they have not told me up to today.
Now I understood the N601billion. We hope we’ll start being paid. I gathered we are going to be paid. So we Hope the N601 billion will come and probably wipe out substantial part of my outstanding liabilities. If it does, that will be good.
So mainly these are the kind of problems which we have. But otherwise by and large, to me the power sector reform or privatization of the power sector is a saviour for Nigerians. Otherwise, by now, probably in Nigeria would have been in total darkness. If not because it has been taken over by private people. I don’t know if you were there, you saw howwe took over Kainji. Kainji by the time we took it, out of 760 megawatts it was designed to generate, was not generating 1kilowatt of power.
You were also there when I said that 2G6 which is a unit in Jebba was burnt 2009. Nothing was done about it. It’s just now that we are trying to put it back. So I think the private sector is doing fairly. It may be slow but we are getting there. I don’t know what else you think we should do. If you feel you have ideas of where we are failing in any part you are always welcome, but I think the power sector reform has saved Nigeria electricity industry, if the government had kept it up till now, I believe it would have been a different story all together.
In average of every month how much is your two hydro power plants losing to stranded power. How much does the government owe Mainstream Energy Solution?
N100 billion,for all invoices issued it’s about N83. 89 billion. But if you add the unpaid interest it’s about 113billion. Just put about 80billion, invoices issued that have not been paid. One of the agreements was that we are supposed to be paid in 45days after invoices are submitted, but now we have to wait for 90daysand more.
What is the way forward for the power sector?
I think number one should remove their hands from the power sector completely. How do they do that? Remove NBET and allow the DISCOs to come and ask the GENCOs if they want to buy power and then they negotiate price. But as long as NBET is there as gatekeeper, as a policeman, the power sector will continue to have problem. I think at a point in time they should concession TCN preferably to GENCOs.
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