Teaching Comparative Government and Politics

Tuesday, November 02, 2010

Another kind of power

In the 1970s, a friend of mine spent a year teaching in Nigeria. One of the stories he told was about how private electrical generators roared noisily to life several times a day when the main power went out. Things are not better today. But, President Jonathan is promising big change and has plans for privatization.

The whole thing is complicated by the upcoming presidential election and the fight within the president's dominant party. Privatization sounds like the way to go, but few companies or countries are likely to invest in Nigeria until political stability is more assured.

Let there be light

President Goodluck Jonathan, who early next year will stand in an election that could split his party and spark violent protests, has asked investors to participate in a grandiose privatisation programme meant to raise $35 billion over ten years. He wants to flog state power-generation and distribution companies, and put the grid under private management.

The scheme may be his—and his country’s—best hope of salvation from chronic power cuts. At a prayer meeting on October 4th Mr Jonathan was reading a biblical passage in front of many of the country’s elite when the grid failed and his microphone cut out. He walked off in a huff…

The problem is not new. Nigeria’s power supply has been stagnant for 30 years… One result is a laughably small manufacturing sector, about 4% of GDP…

The Power Holding Company of Nigeria (PHCN), the monopoly supplier, is known to consumers as Please Have Candle Nearby. Five years ago it replaced the National Electric Power Authority (NEPA), nicknamed Never Expect Power Again…

To survive, many Nigerians have their own power plants, creating the world’s highest concentration of small-scale generators. Two-thirds of all electricity is produced in basements and backyards…

There are reasons to be optimistic. The programme has a sound legal basis. It follows a conventional privatisation model. Its pricing scheme seems transparent. That has reassured investors. They also welcome the easy access to local-currency loans in Nigeria, one of Africa’s most developed capital markets. And they like the country’s strong GDP growth, expected to top 7% this year…

Even more worrying, the corrupt state bureaucracy is drooling in anticipation. The influx of billions of dollars will create long queues at the trough. Observers warn of the “rascality” of Nigerian officials…

The strongest pitch the government could make would be its own re-election. Voting is due early next year and for the first time in recent history the outcome is uncertain. The president’s party—dominant since the end of military rule 11 years ago—cannot agree on a nominee. The losers in a forthcoming primary may break away. One-party rule could end...