Nigerian President Goodluck Jonathan announced plans to reform the power sector 20 months ago but privatisation has been slow due to political wrangling, union disputes and government concernsover raising electricity prices.
Africa’s most populous nation of more than 160 million is the continent’s biggest oil producer, but is blighted by persistent electricity outages which force businesses and individuals who can afford them to rely on diesel generators.
It also perpetuates social inequality in a country where the majority survive on $2 a day or less, depriving many of light at night or the ability to power water pumps, let alone recharge mobile phones or access the Internet.
MHC has won the contract to manage the Transmission Company of Nigeria (TCN), responsible for transmitting electricity from power plants to substations. It is negotiating the contract price – it wants $24 million – before signing.
The Bureau of Public Enterprises said in a statement on Wednesday MHC would be responsible for reducing electricity losses during transmission, ensuring adequate generation output and regulating fair payments between traders.
Nigeria plans to privatise the bulk of six power generation plants and 11 distribution firms, which supply end users, but it has yet to clarify a new tariff structure due to fears of a public backlash against higher prices.
Companies won’t buy state assets until a tariff system guarantees competitive electricity prices. Given that most people currently only receive sporadic power it will be a universally unpopular step, although necessary for the long term future of power output.
The power ministry is also in negotiations with unions representing employees of the Power Holding Company of Nigeria, the inefficient giant which currently manages power distribution. Privatisation will lead to job losses.
Tens of thousands of Nigerians took to the streets in January after the government removed gasoline import subsidies, more than doubling the cost of motor fuel.
More than a week of protests and strikes forced the government to partially reinstate the subsidies.