By Daniel Agbor
For years, Nigeria has consistently made the top of the list of most corrupt nations on the planet. While strives are being made to stamp out corrupt practices from society, you can still find it in almost every sector of the Nigerian economy. From the bribing of utility workers by customers to consumer-unfriendly practices by distribution companies and the award of shady power contracts by the government, the power sector has had its fair share of corrupt practices.
It is estimated that corruption in the power sector has resulted in a loss of more than N11 trillion since 1999. The power sector reform was implemented in the hope that it would solve the challenges in the power sector. The reform aims to drastically reduce the corruption and inefficiencies of the then government-controlled power sector.
Power Sector Reform – A solution or a problem?
Whether you admire or detest the current electricity industry, one thing many would agree with is that at some point, reform was necessary for the sector. The reform if the power sector has been termed ‘the most ambitious’ market reform attempted in Africa. This process was kick-started in 2003 with the ‘Comprehensive Master Plan’ aimed to migrate from an age of epileptic power supply to one of constant, affordable, and efficient supply. The Electric Power Sector Reform Act of 2005 provided the roadmap for the reform process and defining what the post-reform market would look like.
The reform was deemed essential for the provision of affordable stable electricity needed to drive industrialisation and development and also the growing unconnected population. It was also hoped that the privatisation of the sector would help curb the rampant corruption that has decreased the efficiency of the government-operated utilities.
While the reasoning behind the reforms was noble, the reform process did not reflect these reasons. The privatization process resulted in the utilities being handed to companies which were not capable of operating them, with personal affiliations superseding technical capabilities. Privatisation may have to dome extent reduced corruption especially in utility management but in a supply-constrained sector with high demand, there are still opportunities for off-market and corrupt transactions.
What Can We Do?
One solution is the decentralization of the energy sector in line with the provisions of the Constitution. The power sector currently has centralised governance and operational structure. Electricity generation by local governments and communities would increase ownership of electrical installations and utilities reducing instances of and the need for bribing illegal connections and electricity theft.
These solutions could be effected via mini-grid systems connected to the distribution networks (also called under grids) as well as embedded generation power plants. There is a need for policies that make these options viable for local communities, especially ones with high economic and industrial outputs.
Other solutions such as increasing the transparency of bidding and contract award processes, realigning incentives in a way that makes enforcement of regulations and the rule of law self-sustaining, enactment and promotion of renewable energy law and a dedicated judicial court for the trial of electricity matters and crimes.
Enactment of these solutions would undoubtedly contribute to achieving the objectives set out in the Electricity reform act, as well as reduce the level of corruption in the sector.