Teaching Comparative Government and Politics

Thursday, January 18, 2018

Efficiencies of privatization

Nigeria has long suffered from a lack of electricity. Black outs in urban areas have been normal. Anyone who can afford one, has a generator. When there was a black out, the sound of generators was very loud. How to fix the problem?

It's claimed that privatization results in more efficient production and thus lower costs. For some reason, that doesn't seem to be the case in the production of electricity in Nigeria. From The Guardian, Abuja.

Electricity - the High Cost of Living in Darkness
AS was often the case in the past, officials of the Eko Electricity Distribution Company, EKEDC, recently stormed the popular Festac Town in Lagos for another round of mass disconnection due to what they claimed was the continued refusal by the residents to pay their electricity bills. But it was a mission that almost turned into a tragic misadventure.

Unknown to the disconnection team before it embarked on this mission, information had earlier filtered to the residents about what was in the offing and they proceeded to lay an ambush. So, as soon as the EKEDC officials arrived the estate, they were confronted by a group of irate residents who promptly demobilised their vehicle and seized their ladders and other tools they brought along with them for the purpose of electricity disconnection. And while the confrontation lasted, members of the disconnection team were manhandled and held incommunicado as they were prevented from making phone calls.

However, the timely intervention of security agents probably prevented the EKEDC disconnection team from getting the mob treatment. The bitterly aggrieved residents had used the opportunity to give vent to their grouse which bordered on extortion of residents by the EKEDC through outrageous estimated bills, refusal of the electricity company to provide pre-paid meters as requested by residents, frequent mass disconnection, endless power outage, etc.

Incidentally this confrontational drama over electricity supply is not limited to Festac Town, it plays out rather too often across the country. Indeed most electricity consumers across the country are angry. They are angry because power supply has continued to deteriorate while tariffs have increased way beyond reason.

Privatization of the electricity sector

All that have happened after the privatisation of the electricity sector…

After decades of inefficient service delivery by the defunct National Electric Power Authority, NEPA… the Federal Government under former President Olusegun Obasanjo decided to privatise the electricity sector…

Although the Obasanjo administration made a significant progress in the power reform process, it dragged on until the Goodluck Jonathan administration completed the privatisation exercise in 2013… However, four years after, the companies were either sold or given to private firms to manage, the Nigerian public continues to suffer the same inefficient service delivery…

There is no correlation between current tariffs and quality of service delivery. For instance, many residents in medium density areas of Abuja pay between N8, 000 to 15, 000 [$22-40], up from an average of N3,000 to N6, 000 [$8-16] pre-privatisation. However, there has been no significant improvement in service delivery…

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