Written by Ayo Ayodeji Tuesday, 20 November 2012 23:21
The first victims of the on going privatization of electricity in Nigeria are the ordinary consuming masses who have found their electricity bills go up multiple folds. Today, scores are incurring huge electricity bills as PHCN tariffs have continued to go up and leaving huge dent in the pockets of toiling masses.
Increment in tariffs and outright deregulation are part of the consequences of move towards the privatization of PHCN. The argument of the government is that price increment and total deregulation of electricity tariff would attract the “foreign investors”. However, the privatization program has already entered into major crises as anticipated. For one, we are not seeing the massive inflow of the so-called foreign investors who are supposed to come in with huge foreign exchange to save the electricity sector in Nigeria.
What we are witnessing are companies representing the crude and selfish interests of Nigerian elite class (past presidents, governors, ministers, top government contractors, etc). The same elements who were responsible for the crisis in the first instance. Most of these companies have no experience in the power sector and little or no capacity at all to manage the Nigerian power sector. No doubt, the move to privatize PHCN is going to land the country in darkness.
Billions have been spent on government propaganda to polish the fraudulent privatization, however, the objective realities point to the fact that the whole process is corrupt and would land the country in a much bigger crisis.
The fact that the Minister of Power, Barth Nnaji, who was probably the most vehement driver of the privatization process, had to be sacked due to his corrupt interests in the process is a major indictment.
The crude realities of the privatization process have thrown huge blows at the support base of the process within the society. A Russian proverb says, “Life Teaches”, many today are clearly seeing the true meaning of privatization of PHCN. The number of people who openly support the privatization of PHCN has reduced dramatically; it has now been restricted to elite class and the confused middle class elements (petty bourgeois). However, in the face of continual reports of high-level corruption, serious and open conflicts among the various greedy elements bidding for PHCN, support for privatization is bound to get even more isolated.
After announcing the ‘winners’ of the electricity generating plants and the distribution units, the government declared that it would be making about N600 billion from the sales. The Nigerian bourgeois media, which have been backing privatization program, tried to give the impression that this is good news for Nigeria. This claim is far from the truth; in fact, it is a highly fraudulent claim.
N600 billion, which is about $3.8 billion, is insignificant when compared to the actual value of PHCN; this is even if these bidders actually pay up, which is never the case in Nigeria. For one, over $30 billion have been spent on PHCN within the past ten years alone. Obasanjo regime alone spent over $16 billion on power plants the scandal is yet to be cleared up. Yar’dua – Goodluck regime have also spent billions of dollars. Since the inception of Goodluck regime over $8 billions have gone into PHCN.
In addition, the actual amount spent on building the power infrastructure over the past 52 years is in the tune of over a hundred billion dollars. Only the low level and corrupt mind can jubilate in the face of this obvious monumental rip off.
In addition, the pension bill of PHCN workers is in the tune of N500 billion and PHCN is documented to be currently broke having liabilities of over N600 billion. How can the N600 billion the government hopes to make from the sale of PHCN settle all the current liabilities of PHCN, which stands at over a trillion Naira?
The intentions of the government is to dupe PHCN workers by not paying their pensions and crudely handing them over to new employers who are not committed in any way to maintaining their jobs and trade union rights. Massive job losses are inevitable if the government is allowed to have their way.
In preparation for these attacks on PHCN workers, the government mobilized the military to invade PHCN offices and power plants nationwide since June. Billions of naira was spent on this violent attack, money that could have been invested in power sector. This invasion led to PHCN workers strikes and protest by workers months ago and the current trace is bound to give way in the face of sinister intentions of the government.
PHCN is no doubt the biggest public corporation in Nigeria. It is far bigger than Nitel, Nigerian Airways, etc. Privatizing it would induce more crises and come with much more terrible consequences. The privatizations of the past have led to the death of most of the privatized public corporation. This reality has been well document – only ten percent of the over 400 privatized government corporations survived.
The current PHCN privatization process is following the exact path that led to the death of those public corporations and utilities. The public corporations were undervalued and sold at give away price. In most cases, those that ‘buy’ these companies were directly responsible for their problems in the first instance. Privatization is no doubt the process of further plundering the collective wealth created by the working class.
Once these elements take over the companies, the first thing they do is to massively layoff workers and start crudely stripping the various assets of the company. Once the company is strip bare, they dump it and move on. Meanwhile, they paid only part of the amount the offered to buy the company. Hundreds of thousands of workers have been victims of these crimes.
PHCN workers instinctively know that privatization will lead to crisis and that they have to fight back in order to defend their lives. More layers in Nigeria are also coming to this realization.
Unmasking the Bidders
At the beginning of the privatization process of PHCN, the claim of the Goodluck regime and ruling elites was that big foreign multinationals were going to buy and invest in it. However, the reality is fundamentally different. The super big multinationals were no way to be found, only front companies representing the interests of several top government functionaries such as past heads of state, governors, top government contractors, etc. Most these companies lack the technical capacity to manage power companies but they claim they have foreign technical partners. Many of these companies are just some few months old.
Even key proponents of privatization have publicly condemned the privatization bidding process. These include several state governors and they all have concrete facts against many of the companies that emerged as the new owners of PHCN. This includes Adams Oshimhole the former president of the NLC and now the governor of Edo State. He too actively supported the full privatization of PHCN; this is a betrayal of the labour movement. The opposition and cries of these elements is because they lost out in the corrupt process. However, the facts about the corrupt processes that they point out are quite true.
The companies and the key individuals that emerged winners of the bid tell it all, for example, Femi Otedola, whose company is now to own Geregu Power plant is official the biggest debtor in Nigeria. He is owing bailed out banks more than N190 billion and yet his is on the economic team of the government. Some days after he was declared the winner of the bid, it was reported that he had entered a new deal with AMCON, the newly set up government institution managing the toxic debt of Nigerian banks. The deal was to pay N140 billion of the N190 billion he is owing. However, the deal with AMCON is been publicly challenged. Clearly, the essence of the deal is to cover up the scandal his company generated. As at the time his was maneuvering to buy PHCN, the Central Bank of Nigeria, CBN, and AMCON had publicly blacklisted him.
Transcorp PLC were involved in the death of Nitel; it won the bidding for Nitel but couldn’t make payment and the company is now to own Ughelli Power Plant.
Behind each one of the companies that were declared the winners of the corrupt biding process there is a scandal.
More Crisis Inevitable
The program of privatization of PHCN involves ‘unbundling’ (breaking up) of the corporation into 17 corporations and selling them off but the government would be retained the control of the company in charge of transmission and distribution of electricity called Transmission Company of Nigeria, TCN. The government intends to hand over the transmission company to a Canadian company Manitoba, to manage and pay them over $200 million. Already, the company has been paid $23 million but the arrangement is already in crisis due to various corrupt interests and most important, the justified opposition of PHCN workers. The contract is highly fraudulent.
The privatization is bound to create more crisis than solution and it is inevitable going to lead to more darkness in the country. The current conflicts breaking out among the various buyers and interests are just a tip of the iceberg.
For one, breaking up the company is quite irrational and bound to create numerous conflicts of interests. It is one thing to deal with one management board that is inept, it is another to deal with 17 greedy inept capitalists boards. The IMF/World Bank dictated this program.
The government divided companies into two categories: generating (Genco) and commercial distribution (Disco). On paper, the disco companies are to buy electricity from the generating companies at a deregulated rate and sell to the consumers at deregulated price. This is bound to lead to much higher electricity bills.
The generating companies are expected to repair or upgrade the power plants and buy gas from the oil companies at international market price. Most of electricity in Nigeria comes from gas and part of the crisis today is the government policy of deliberately supplying less gas to the power plants and totally neglecting maintenance. This accounts for the darkness nationwide.
The cost of production of electricity at the power plants would inevitable go up if privatization succeeds, and as electricity tariff increase, so will default from the ordinary masses who are already sucked to the bones and even company clients. This will inevitably lead to fall in profit and serious losses. This is if the business fronts that are declared the new owners of PHCN could function against all the odds such as their lack of technical knowhow and poor financial base.
Privatization will definitely not translate to improved power supply in Nigeria even with increases in price, as the numerous contradictions in the whole process will play out negatively.
All the greedy fat cats scheming to crudely takeover PHCN clearly have no interests in building new power plants or upgrading them, or investing in better distribution systems. They are majorly interested only in plundering PHCN further by stripping it of its assets.
Even if they intend to develop the power sector, the numerous contradictions of the capitalist arrangement would make it an impossible task. For instance, how can the owners of a power plant guarantee returns on their investments when they have no control over transmission and distribution of electricity, assuming they sincerely invested in the plant? This scenario applies to distribution companies too, as even if they want to sell electricity they cannot guarantee that they will receive supply from the power plants. This clearly implies that they cannot guarantee any serious returns on their investment in the end.
Electricity production has three components: power generation, transmission and distribution. They work hand in hand for effectiveness. Breaking down and separation of these components into different companies, as proposed by the privatization policy will no doubt lead to major crisis.
Clearly, privatization of PHCN will create much more problems. The fact that the so-called world-class power companies internationally are in no way interested in PHCN tells a lot. The local actors who are currently scheming to acquire PHCN clearly have no intentions in investing their funds transforming the company. They are only interested in plundering it further and exploiting the workers more. This is why top of their list of tasks is to disband the various workers’ unions in PHCN, and sacked workers in thousands without pensions.
Who is responsible for the Power Crisis
The government has been consciously promoting the idea that PHCN workers are responsible for the power crisis. They have been feeding on the age-old bias against PHCN workers by many in the society. Many have had terrible experience in the hands of some corrupt layers of PHCN workers. However, they actually constitute a minority, as the mass majority of PHCN workers don’t deal with the public. They are in the generating plants, transmission stations and repairs. Secondly, the corruption at the lower levels is a reflection of the monumental corruption and mismanagement taken place at the topmost management levels of PHCN.
Ministers of Power and top officials have been severally indicted of corruption over the years and in most cases, nothing was done to them. The bulk of the billions of dollars spent on PHCN were mismanaged and stolen by the management not workers who were also at the receiving end.
The responsibility of the crisis in the power sector solely rests on the head of the Nigeria government and the ruling elites who make up the topmost management of PHCN. The president or head of state appoint ministers and top management of PHCN not PHCN workers. They are responsible for the various mispolicies, corruption and conscious mismanagement of PHCN over the years, not workers.
Socialism Only Way Out
PHCN workers have fought back over the years, the attempt to privatize the company and for improved welfare. They have put enormous pressures on their union leaders to stand up and fight. This year, they struck against military invasion among other things and workers are still on their toes in the struggle against privatization. The struggle against mass sackings and duping them of their pensions is still on.
The NLC and TUC leaderships officially are backing the PHCN workers; however, they have not put forward a national plan of action to mobilize Nigerian workers against these attacks. The union leaderships have not concretely come to expose the numerous lies of the government against the workers and promote class solidarity. And till date both leadership have not come out with a concrete alternative to privatization.
In the case of PHCN unions, over the years, the leaderships of the unions tend to take responsibility for the management of PHCN by defending them publicly on several occasions, which should not have been the case. This is one of the reasons why many people tend to think that there is no difference between PHCN workers and PHCN management. The unions should have focused on defending the interests of workers and clearly expose the PHCN management.
Based on the pressure from rank and file workers, the PHCN unions have been forced to fight against privatization and attacks but unfortunately, the union leadership too didn’t put forward and working class alternative to privatization, which remains socialism.
The only workable alternative to privatization is full workers takeover and control with centralize plan i.e. socialism. Corrupt and hopeless management of the Nigerian ruling elites is the main problems of PHCN.
In weak neo-colonial capitalist countries like Nigeria, big and nationalized public corporations are necessary tools for development as the local bourgeois are in no way capable of developing industry. In fact, the power plants and infrastructure could never have been built based on the current free market program. The fact that no refineries have been built since over 20 years that license for refineries have been issued to so-called private investors confirms the serious impotence of Nigeria capitalism. It is the same in the power sector. Power generating dams, thermal plants, national power grid, local distribution network could never have been built on the basis of privatization.
However, nationalized corporations in the hands of the corrupt and backward elites are bound to enter into major crises, as the priority before them is never to develop industry but to enrich themselves crudely. In the process, they undermine the corporation.
It is only on the basis of working class democratic control and management that nationalized corporations can survive and move forward not privatization. Workers’ control and management of industry can only occur when the working class take political power.
In essence, the struggle against privatization, economic attacks and for better living conditions though are economic struggles can only succeed politically. As the Nigerian ruling elites have no other alternatives than the ones put forward by the World Bank and IMF, which remains privatization and economic attacks on the working class. All the political parties of the elites are committed to this program.
Therefore, the Nigerian workers must build and transform their own party, currently the Nigerian Labour Party, into an organization that can truly change Nigeria.
PHCN workers occupy a strategic position in Nigeria. Their unions are one of the strongest in the country. In spite of this reality, they still need the solidarity Nigerian workers in the struggle against privatization and economic attacks. The NLC and TUC must fully mobilize for national action against these attacks and also build the Labour Party as a tool to build up the political alternative.