The Nigerian government handed over management of electricity generation and transmission to new owners on Friday, the latest step in the transformation of the country's power sector from a state-run monopoly to private ownership. The success and recent pace of the privatization process is seen as a solid achievement by President Goodluck Jonathan, whose administration is facing mounting challenges at home in the lead-up to presidential elections in 2015.
Godknows Boladei Igali, permanent secretary in the Federal Ministry of Power and an architect of the reforms, discussed the progress to date in an interview at the recent U.S.-Africa Business Summit in Chicago. Igali, a former top aide to Jonathan, served previously as permanent secretary of water resources and as Nigeria's ambassador to Sweden. Excerpts:
Can privatization really solve Nigeria's massive power problems?
Nigeria is a country of 170 million people - the most populous country in Africa and, potentially, the economic powerhouse of Africa because of the matrices related to the economy and the population. Having said that, we realize that our potential is very limited without sufficient power. Our economy is now number two [in Africa] behind South Africa - because of the fact that we do not yet have the power sector right. To get the power sector right we have to completely go the way of the private sector.
We are one of the most endowed countries in the world in terms of gas.
We are one of the most endowed in terms of oil, and we are one of the most endowed in terms of the possibility to generate solar because about 40 percent of the country is in an arid area in the Sahara belt where we have a little bit too much sunshine, and the potential for other renewable energy sources like bio-mass is huge. So we don't have a reason not to be the power house of electricity in Africa.
But government has never been the best manager of infrastructure, so - in 2005 - we decided to unbundle the existing power company of the country and go completely private - to sell off the assets. We started the divestment with the monopoly called the National Electricity Power Company (NEPA), unbundling NEPA into a number of smaller companies. We included the creation of a bulk trader, which was critical if people were to invest, because they have to know there is somebody to buy the power. And we also created a regulator and an asset and liability company to inherit all the liabilities of the company.
The next stage was selling the assets of the generation and distribution companies. To cut a long story short, on the 22nd of April this year we completed the transactions and the new owners paid 25 percent. On 30th of September this year we handed over certificates of ownership to them.
