NIGERIA/FILE: Government agencies owe state power firm 140 million U.S. dollars in unpaid electricity bills, hampering privatisation plans seen as vital for overhauling the country's dilapidated power sector

Record ID: 235636

  • Title: NIGERIA/FILE: Government agencies owe state power firm 140 million U.S. dollars in unpaid electricity bills, hampering privatisation plans seen as vital for overhauling the country's dilapidated power sector
  • Date: 30th April 2012
  • Summary: LAGOS, NIGERIA (FILE) (REUTERS) VARIOUS OF FAMILY SITTING IN THE DARK WITH LANTERN / GIRL DOING HOMEWORK WITH LANTERN
  • Embargoed: 15th May 2012 13:00
  • Keywords:
  • Location: Nigeria
  • Country: Nigeria
  • Topics: Business,Economy,Politics,Energy
  • Reuters ID: LVA38C10AC6F917DQT8KBB8T6U7R
  • Story Text: Electricity black outs and poor power supply in Nigeria are rampant. Those who can afford it rely on expensive diesel generators. Those who can't light candles and lanterns at night.
    Nigeria holds the world's seventh-largest natural gas reserves but decades of corruption and mismanagement mean it only provides a population of over 160 million with enough electricity to power a medium-size European city.
    Nigeria's power minister, Bart Nnaji says unpaid bills are a big part of the problem. Nigerian government agencies owe the state power firm 140 million US dollars in unpaid electricity bills hampering privatisation plans seen as vital for overhauling the country's dilapidated power sector.
    "The government ministries must pay their bills and if they don't pay the bills will be deducted from source. The ministry of finance will simply deduct the money from source whether its federal government or... this is, we just cannot continue to operate a system where government become... government agencies become dead beats, they have to pay," said Power Minister Bart Nnaji.
    Nigeria's President Goodluck Jonathan laid out plans in 2010 to break up inefficient Power Holding Co of Nigeria (PHCN) and sell off generation and distribution units. But powerful vested interests, such as diesel generators and fuel importers, unions and power contractors, have delayed the sale.
    PHCN has never been able to efficiently collect money for the electricity it provides and it is owed 110 billion naira, of which 20 percent is government debts.
    "About a $110 billion is owed to PHCN. Of that amount, 20 percent of that is owed by government, government agencies, states and so on, so its actually percentage-wise not a lot but really its a lot, they should not be owing because every government budgets for this, they simply don't pay," said Nnaji.
    However Nnaji said by October the ministry would have completed the sale of 11 state-owned distribution firms and six generation companies, handing them over to private buyers who can invest to boost supply.
    Through privatisation, the ministry is aiming to increase electricity supply from below 4,000 megawatts currently to 6,000 megawatts by year end.
    He hopes this will rise to 10,000 megawatts by end-2013 and 40,000 by 2020. Privatisation was supposed to be completed last year and industry experts say the delays mean government power supply projections are too optimistic.
    Nigerian businessmen rely heavily on generators to run, making it hard to save any profits as most of the money made goes to the purchase of diesel.
    "Power works in many many countries so they have to find out what is going right in those countries and make it work. I don't understand, no one has been able to come and tell me why power has not worked in Nigeria... I am not an engineer but honestly light should work, I sincerely don't care how it should be done but light must work, every young man every striving business needs light to work," said Seun Okegbrmiro, a businessman.
    "What we are now advocating is that we want everybody to be metered... what I mean by metered is the instrument to be used in measuring our consumption... now if you bring electricity we pay you if you don't bring you lose," said Makounjoula Ganiyu, National Co-ordinator Electricity Consumer Enlightenment Initiative.
    Even though millions Nigerians go for months on end without power they are still wrongfully billed monthly for usage of undelivered services by PHCN.
    The scale of the arrears among government agencies is yet another example of the mismanagement plaguing Nigeria's government.
    Parliament sent Jonathan a report this week recommending top officials be prosecuted for their part in fuel subsidy graft costing 6.8 billion US dollars.
    PHCN owes around 500 million US dollars to gas suppliers, including Shell and Eni, and because it can't pay its bills, power output is dropping and debts are rising.
    Economists say solving power problems could launch Nigeria's GDP growth into double-digits and help Africa's second-largest economy diversify from its reliance on oil exports. It would also help alleviate poverty, inequality and unrest.
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