Goodluck Jonathan administration has just gained significant confidence of the power sector investment community with the signing of a range of industry and transaction agreements that pave way for successful generation and distribution companies to take control of the new corporate entities unbundled from the PHCN.
With this development, in the next 15 days, the 15 bidders that have emerged are expected to make a 25 per cent down payment of the share purchase price and in 90 days to pay the outstanding 75 per cent to complete the transaction in keeping with the terms of the sale and purchase agreements or shareholders’ agreements they signed in Abuja recently.
The process that formally commenced in 1999 with the inauguration of the Electric Power Implementation Committee and development of the National Electric Power Policy two years later had been literally crawling along until President Jonathan gave it a much welcome jolt of commitment and action that brought it to virtual fruition in barely two years.
No wonder the atmosphere at the agreement signing event was alive with investor glee amid strong optimism about the timely completion of all the pending processes simultaneous with other aspects of the administration’s acclaimed power reform agenda, especially attainment of stability and sufficiency in power supply, which are also progressing according to plan.
Highlights of significant achievements recorded in implementing the reforms are hinged on the enactment of the Electricity Power Sector Reform Act of 2005, establishment of the PHCN and identification of 18 successor companies in generation, transmission and distribution categories as well as three agencies relevant to the provisions of the Power Policy and the Power Act, viz–the Nigerian Electricity Regulatory Commission, NERC, the Nigerian Electricity Liability Management Company, NELMCO and the Nigerian Bulk Electricity Trader Plc.
It is noteworthy that the transaction and industry documents were developed during interaction with relevant investors and other stakeholders organised to carry them along in defining the transaction structure and process against the background of absence of relevant industry agreements in the nation’s power sector which had been identified as contributory factors to the nagging problems of under-performance and other lapses linked to the hitherto unimpressive record of PHCN successor companies.
The drafting and signing of agreements are regarded as necessary safeguards, especially when the private sector is being involved in handling the country’s power sector which is of critical strategic impact on the development and progress prospects and aspirations, requiring well-defined relationships, agreed performance targets and other terms and conditions relevant to the smooth execution of the agreements. The process involved several weeks of consultations and interactions being a first-ever feature in the nation’s power sector.
The industry agreements now cover gas sale and aggregation, gas transportation, bulk power purchase for thermal and hydro, vesting, transmission use of system, grid connection and ancillary services, while transaction agreements include share sale, shareholder agreement, performance and concession.
The attainment of these world-standard documentation, structure and process as a precursor of the much-anticipated power sector reform and privatization will go down in history as among most significant outcomes of the Jonathan administration’s bold interventions that broke the jinx seen to be impeding progress in the power sector for several years despite disheartening consequences on investor confidence and delivery of democracy’s dividends to the Nigerian people. It is also a good omen pertaining to the prospects for smooth and successful implementation of other important components of the power sector reform agenda.
Observers recall the repeated assurances by President Jonathan that by the time he is through with implementing his acclaimed Transformation Agenda, there will be more commendations than condemnations of his administration across the land and point out that the record of performance in the power sector is indicative of the justification and accuracy of this presidential prophecy.
It also draws necessary attention to the often forgotten fact that the enormity of decay of infrastructure that the Jonathan administration has decided to address does not lend itself to a hurried approach which impatient critics demand either out of ignorance of the reality on ground or political mischief or both.
If only the administration would be free of these and numerous other unwarranted distractions, we could have helped ourselves and our nation tremendously, but even with these nuisances, the administration’s achievements are remarkable.