’Femi Asu
Power distribution companies have expressed shock over the call by Alhaji Aliko Dangote for the reversal of the privatisation of the nation’s power assets.
The Association of Nigerian Electricity Distributors, an umbrella body of the Discos, said its attention had been drawn to a number of statements credited to Dangote from a speech he delivered at the National Institute of Policy and Strategic Studies, Kuru, Plateau State.
ANED, at a press conference on Tuesday in Lagos, refuted what it described as “the inaccuracies of Alhaji Dangote’s assertions,” saying, “These assertions are all the more troubling, given his pre-eminence in the private sector, his role and history of being a major beneficiary of previous government privatisations and the clearly uninformed conclusions that have been credited to him.”
The Executive Director, ANED, Mr. Sunday Oduntan, said anyone who had followed the privatisation of the Nigerian Electricity Supply Industry would recognise that the sector had been bedevilled by a number of challenges that would make the most hardened risk-seeking investor to run in the opposite direction.
He said, “In fairness, we note that Alhaji Dangote’s company did put in a bid during the privatisation, but his bid was delivered late, after the bid deadline, and was rejected,” he said, adding that the privatisation exercise was universally deemed to be one of the fairest and transparent exercise of its kind.
On the issue of the lack of injection of adequate capital by the investors, he said, “With a tariff that does not allow for a complete cost recovery, no lender will be willing to provide the required financing for the sector.
“An additional assertion by Alhaji Dangote is that the investors ‘went in without even understanding what they were doing…’ It would be difficult for anyone to suggest that people, seasoned and successful investors, who committed $2.3bn of their money, 30 per cent or $690m of which is equity, did so without knowing what they were doing.
While noting that the inefficiencies, corruption and limited information associated with the Power Holding Company of Nigeria was still a challenge, Oduntan said the bigger challenges included the devaluation of the naira, inflation, gas pipeline vandalism, limited gas supply, regulatory uncertainty, lack of respect for contract sanctity and government policy inconsistency.
He said, “Alhaji Aliko Dangote is an astute businessman, a beneficiary of multiple privatisation efforts, (Onigbolu Cement Company, Ukpilla Cement Company, Savannah Sugar, Port Terminal Apapa, Benue Cement Company, etc.) and various other government largesse, we are therefore astonished by his recommendation that the privatisation be reversed.”
Oduntan said any such plan by the government risked subjecting the nation to becoming an investment pariah.
He said, “In these dire economic times, in which we are seeking Foreign Direct Investment, do we really want to send a message to the investment community, both local and international, that the Federal Government of Nigeria does not respect its contract nor is it interested in building an enabling environment for private investment?
“Furthermore, is the government prepared to, in these very difficult economic times, refund over $5bn to the investors as well as deal with the consequences of any resultant litigation and world-wide condemnation?”
ANED said the reversal of the privatisation would not solve the current challenges of the sector.
“As a matter of fact, we believe that the FGN’s application of some of the favourable terms that Alhaji Dangote and his companies have, historically, befitted from – import and tax waivers, favourable terms of access to foreign exchange, FGN credit guarantees, etc., would go a long way towards addressing the challenges that NESI is currently facing.”
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