i

NWALUTU ALOY NNAM

MBA/2000/OA/0394

ASSESSMENT OF POWER REFORM

PROGRAMMES

MANAGEMENT

A THESIS SUBMITTED TO THE DEPARTMENT OF MANAGMENT, FACULTY OF

BUSINESS ADMINISTRATION, UNIVERSITY OF NIGERIA, NSUKKA

Webmaster

Digitally Signed by Webmaster‘s Name

DN : CN = Webmaster‘s name O= University of Nigeria, Nsukka

OU = Innovation Centre

2011

ii

DEDICATION

This project is dedicated to my mother, Madam Chieke Nwalutu.

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CERTIFICATION

NWALUTU ALOY NNAM, a post graduate student of the department of management

whose Registration Number MBA/2000/OA/0394 has satisfactorily completed in

requirement for the course and research work for the award of Masters in

Business Administration (MBA) Degree in Management by the Department

of Management, University of Nigeria Enugu Campus.

______________________________

Nwalutu Aloy

Student

___________________________ ___________________________

Dr. U.J.F. Ewurum Dr. U.J.F.Ewurum

(Project Supervisor) (Head of Department)

___________________________ __________________________

Date: Date:

ACKNOWLEDGMENT

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I wish to sincerely acknowledge the contributions of some individuals that

made this work a reality. In that vien my gratitude goes to my project

supervisor Dr. U.J.F. Ewurum for his untiring efforts and understanding

towards successful completion of this project.

This acknowledgment is not complete without mentioning of my deep

appreciation to my beloved wife, Mrs. Francisca Ada U. Nwalutu for her care

and support all through this work. Finally, I give all the glory, honour and

adoration to the Alpha and Omega, the one that was and is and forever shall

be for His kindness, love and mercy upon my life and for making it possible

for me to realize my quest for further education.

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TABLE OF CONTENT

1. Title Page ………………………………………………………

2. Certification…….. …………………………………………… i

3. Dedication……………………………………………………. ii

4. Acknowledgment ……………………………………………. iii

5. Table of Content……………………………………………. iv-v

6. Absract-------------------------------------------------------------------vi

CHAPTER ONE:

6. Introduction …………………………………………………… 1

7. Statement of the Problem……………………………………… 2-3

8. Objectives of the Study ……………………………………… 3-4

9. Research Question…………………………………………… 5-6

10. Hypothesis…………………………………………………… 6-8

11. Significance of the Study…………………………………… 8

12. Scope of the Study…………………………………………. 9

13. Limitation of the Study ……………………………………. 9

14. Historical background of Electric power sector in Nigeria …. 10-11

CHAPTER TWO:

15. Literature ………………………………………………………

16. Definition of Reform …………………………………………. 13

17. Elements of Reform ………………………………………….. 14

18. International and National Context of Reform ……………… 14-15

(i) Need for Reform

(ii) Objectives of Electric Power Sector Reform

19. Nigeria Electric Power Sector ……………………………… 17-23

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20. Electric Power Sector Reform Programme …………………… 23-24

21. Current Reform Framework …………………………………... 24-27

(i) Nigerian Electricity Regulatory Commission (detailed)…

CHAPTER THREE

22. Research Methodology …………………………………………

23. Research Method………………………………………………. 28-29

24. Sources and Method of Data Collection……………………… 29

25. Sampling Size…………………………………………………. 29

26. Tools for Data…………………………………………………. 29

CHAPTER FOUR ………………………………………………

27. Data Presentation and Analysis ……………………………… 31-45

28. Review of past work done on Reforms ……………………… 45-47

29. Performance Evaluations of Reform Options:………………… 48-64

30. Impact of Electric Power Sector Reforms:………………… 65-69

CHAPTER FIVE

31. Lessons learnt ……………………………………………… 70-

32. Findings …………………………………………………… 70-71

33. Challenges ………………………………………………… 72

34. Recommendation ………………………………………… 73-74

35. Conclusion ………………………………………………… 75

36. Areas for Further Study…………………………………… 76

37. Bibliography ……………………………………………. 77

38. Tables …………………………………………………… 78

39. Figures …………………………………………………… 78

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ABSTRACT

In the preposition to stimulate a genuine dynamic of development and to rise

above the economic, social, political and environmental crises that have

beleaguered the nation more or less permanently since the late 1990’s. The federal

Government of Nigeria introduced several reforms amongst them are the electric

power sector reform. Which were aimed at improving financial and technical

efficiency of utilities, facilitating divestitures and guaranteeing future electricity

supply. The goal of this study is to assess the electricity power sector reforms by

examining the socio-economic and environment impacts of power sector reforms

and use the result of the assessment to determine the extent to which the reforms

have made power sector reform in Nigeria sustainable. The study analyzes the

technical and economic characteristics of the electricity sector, special conditions

prevailing in this sector that determine its developments, the main issues that were

faced prior to the reform movement, the status and prospect for electric reform.

This study is organized in five chapters, chapter one provides the background of

the study, chapter two provides an overview and stature of the power sector,

chapter three deals with methodology, chapter four provides the assessment and

analyses of the reform and chapter five brings the key findings and the

recommendations, possible policy option that could enhance the sustainability of

the power sector.

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CHAPTER ONE

INTRODUTION

1.1 BACKGROUND OF THE STUDY

Electric Power Sector has been a major issue and concern in Africa and most

of the developing countries such as Nigeria.

In effort to extend access to electricity to the communities and the nation at

large, Nigeria like other countries have adopted plans to reform the structure,

operation and financing of the power sector and its utilities.

Nigeria is fortunate to have huge energy resources which potentially give the

country ample opportunity to transform her economy and lives of her

citizens. Nigeria set astride over 35 billion barrel of oil, 187 trillion cubic

feet of gas, 4 billion metric tones of coal and lignite as well as huge reserves

of tra-sands, hydropower and solar radiation.

Problems in the organization and management of electric power sector in

developing countries such as Nigeria from the primary constraint to an

efficient electric power generation.

The law which establishes the National Electric Power Authority (NEPA) in

(1972) stipulated that it should maintain an efficient, co-ordinate economic

system of electricity supply for all parts of Nigeria. Thirty-five years (35)

after, we are still in doldrums as far as power availability is concerned.

At the inception of NEPA in 1973 only 5 of the then 19 states capital were

connected to the national transmission gird system. Today practically all the

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state capitals of the 36 states and FCT now are being served from national

gird although haphazardly.

The focus of this project is on the assessment of electric power sector, the

reforms adopted for better services and the extent to which it has impacted in

the Nigeria Economy.

1.2 STATEMENT OF THE PROBLEM

The problem of electricity in Nigeria started surfacing as early as the mid

70‘s under the moribond electric corporation of Nigeria which lost focus on

paying attention to maintenances of facilities that were generating electricity

in Nigeria.

In the period before the return of democratic rule, the officials responsible

for energy policy believed that the electric power sector has failed to supply

electricity to the society as a whole and the productive sector with adequate

power.

There is no gain saying that energy is a critical and strategic infrastructure

necessary for the development of any nation. It is a catalyst, a life wire and a

driving force for development. Problems experienced during the early 80‘s

including continued power cuts and voltage level fluctuations, corruption,

poor funding, mismanagement of utilities, poor revenue drive, technical and

non-technical losses etc. convinced the federal government and the policy

makers as well as the general public that there was urgent need for radical

change in the electric power sector.

Furthermore, previous attempts to improve on the state and nature of electric

power sector structure had proven unsuccessful. Vested interest including

the government owned technicians and engineers and bureaucrats, trade

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unions, politicians and private suppliers and contractors stymied the efforts

to provide an efficient and effective supply of electricity.

This convinced the federal government that the only solution was a radical

overhaul of the power sector and a redefined role of the sector and state in its

management.

In reality, there was consensus on the nature of problems plaguing the

electric power sector on the past and current head of federation, public

officials, state representatives, business community etc, but there were

different opinions with regard to the origins of the crisis and steps needed to

solve the problem of electric power generation, transmission and

distribution. It was clear that the sector‘s technical decline was not

unconnected to economic decay. The necessary technical capability existed,

but maintenance and repair program weren‘t carried out because of financial

and economical difficulties experienced.

The democratic elected government since 1999 has demonstrated its

commitment to meeting the expectation of the people in the area of

electricity supply. This, they learned to achieve by various reforms hence the

reason for the assessment.

1.3 OBJECTIVES OF THE STUDY

The majority of the societies don‘t have access to electricity supply and

many of those that do have access experience unreliable supply or are forced

to rely on expensive back-ups.

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Power sector in Nigeria failed to provide adequate electricity supply and

services in support of economic growth and improved social welfare.

Since 2001 new ways of organizing the Electric Power Sector have begun to

be explored. Reforms have been adopted to unbundled and privatize the

electric power sector and to introduce competitions.

Yet rhetoric has seldom been matched with implementations of the end

sector model. Nevertheless, while the depth and pace of reforms in Nigeria

electric power sector have not been as extensive as expected, sufficient

experiences have developed over the past years to assessing the impact and

efficacy of the reforms.

The objectives of the study are as follows:

1. Examine institutional framework of parts sector reforms initiatives.

2. The impact of past and current initiatives in the power sector.

3. Suggest innovative ways of ensuring that power sector reforms

improve and met expectations of the society.

4. The study assess whether the reforms taking place are sustainable and

the study incorporated environmental concerns within the context of

power sector reforms.

5. The study seeks to deploy policy and strategies to stakeholders and

the government on how to sustain electricity to nearest lower tariff to

the populace.

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1.4 RESEARCH QUESTIONS

1. How is the electricity supply during the pre-reform era

2. What are the impediments of the reforms towards achieving its

targets?

3. To what extent has the reforms influenced the access and the

quality of electricity to the populace and how effective have these

reforms been?

4. How would the reforms be implored to eliminate the

impediments that are hindering the vision 202020?

5. How the PHCN adapted with the reforms toward increasing

the revenue and the economy, is there any development in

the services delivery and are they better able to provide

reliable and affordable electricity?

1.5 RESEARCH HYPOTHESES

The research will be summarized in two based on the research questions. The Null

to be tested are as follows:

1. HO: Reforms variable (Privatisation) will lead to more capacity and

hence higher output provided that the regulatory regime is supportive.

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2. H1: Reform variables (Privatisation ) will lead to higher price to the

society especially the residential consumer and lower price to the

industrial users as price are aligned with marginal cost.

3. H2: Reform variables (Regulation) will raise prices charged to

domestic consumers.

4. H3: Reform variables (Competition) will lead to a larger capacity, a

higher output and greater labour productivity

5. H4: Reform variables (Competition) will lead to lower industrial user

and to a higher or lower residential user price.

1.6 SIGNIFICANCE OF THE STUDY

The study sought to develop an in-depth understanding of the power sector

reforms. The study adds value to the limited but growing literature on the

power sector reforms in Nigeria. Whilst past studies have mainly assessed

the status and outcomes of power sector reforms, this study adds value by

assessing whether the reforms taking place are sustainable.

The study shall be of great importance:

a. to stakeholders of the independent producers, to ascertain the extent the

reform have influenced them.

b. the executives of the Power Holding Company of Nigeria (PHCN)

adjust to the notable policies from the reforms that are feasible to the

sustenance of electricity.

c. the study will help evaluate and analyze the problems associated with

the reform processes.

d. It will as well give insight to the NERC on the extent the reforms and

how it has incorporated environmental concern within the context of

power sector reforms.

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1.7 SCOPE OF THE STUDY

The study is designed to analyze how and whether the public and the society

interest and benefits were addressed in the reform of Nigeria‘s electric

power sector during the 19990‘s. The study assesses the implementation of

the process of power sector reforms in Nigeria and then proposes options

that could enhance the sustainability of the power sector.

1.8 LIMITATIONS OF THE STUDY

As research and analysis was being conducted, it is apparent to note that the

project has the following limitations.

Data and information required for the analysis spelt out in the project

methodology was not available.

Some reforms impact could be ascribed to other intervention not

directly related to power sector reform.

In the course of the research, the researchers were not able to conduct

sufficient primary research and interviews on the study with the

relevant officers. This applies particularly to indirect and social

impacts.

Furthermore, lack of the desired cooperation from some of the

respondents, as they were reluctant and at some instances refuse to

give out necessary information and answers to some of the question

posed to them, serve as major constraints of the research work.

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1.9 HISTORICAL BACKGROUND OF ELECTRIC POWER SECTOR IN

NIGERIA:

Nigeria is one of the largest generators of electricity in West Africa. Her

major sources of energy are petroleum, natural gas and hydroelectricity.

Electricity generation in Nigeria is traceable to 1896 in Ijora, Lagos. This

was followed by the construction of a hydroelectric power station in Karu

Jos.

A further development was establishment of Electricity Corporation of

Nigeria (ECN) in 1957. The purpose of (ECN) was to control the diesel and

coal plant. In 1962, the Niger Dam Authority (NDA) was established to

catch up with rapid urbanization and increase demand for electricity utility.

During this period, efforts were made to derive electric power from the

natural water resources.

Another major development in the power sector was establishment of

National Electric Power Authority (NEPA) in 1972 which was a product of

(NDA) and (ECN). The act that guided the operation of NEPA was the

electricity Act and the NEPA Act. The law mandated NEPA to carry out the

business of generation, transmission, distribution and marketing of

electricity to the generality of the country.

The operations of NEPA began with four major power stations which

include: Ijora, Delta, Afam Power Station and Kainji hydro power station.

As at 1998, NEPA ceased to have monopoly of electricity generation,

transmission distribution and sales.NEPA as at April 2005 had ten power

stations of which three are Hydro stations, six are thermal and one coal

xvi

power stations. There are Kainyi, Jebba, Shiroro, Afam, Delta, Sapele,

Egbin,Ijora, Oji and Calabar power stations.

The power stations were grossly inadequate to cater for increasing demand

for electricity. This is due to poor funding, mismanagement of the utility,

corruption, poor services amongst others. These problems are grouped into

three key functions of generation transmission and distribution.

Generation:

(i) Insufficient power being generated to meet the estimated national

demand of 10,000 MW.

(ii) Absence of off-grid mini system to cater for rural electrification.

Transmission:

(i) Fragile and inflexible state of the transmission network to wheel

increased power levels.

(ii) Absence of state of the act dispatch facilities.

(iii) High technical losses.‘

Distribution:

(i) Absence of power system planning.

(ii) Failure and overloading distribution network

(iii) High technical and non-technical losses

(iv) Uneconomic traffic structures

(v) Inaccurate billing and poor revenue collection

(vi) Inadequate metering leading to non-payment and theft.

xvii

Figure I: Shows the 3 years power development chart (estimated) from 2008 to

2010)

xviii

CHAPTER TWO

REVIEW OF THE RELATED LITERATUE

Definition of Reform:

Reforms according to encyclopedia Britannica (2005) is to form:

(1) Put or change into an improved form or condition.

(2) Amend or improve by change of forms or removal of faults or abuses.

(3) Induce or cause to abandon evil ways.

According to concise Oxford Dictionary (2001) reform is to make change in

something especially an institution or practice in order to improve it.

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From Wikipedia, Reform means beneficial change, or sometimes, more

specifically, recession to a pure original state.

From Brainy quotes Reform is defined as:

(i) To put into a new and improved form or conditions;

(ii) To restore to a former good state, or bring from bad to good;

(iii) To change from worse to better;

(iv) To amend; or to correct as to reform a profligate man.

From the above, it is clear to state that any reform has to do with change of

positive intention to improving an earlier situation, condition, structure and

status.

However negative result do emanate from reforms showing that not all

reforms can bring improvement. Reforms can be grouped according to their

similarity of objectives, process and ideology. Basically reform is broad as

there is economic, political, social and institutional reform.

Electric power reform is the focus of this project which is a serious step to

undertake by any nation for high productivity and growth.

2.1 POWER HISTORY IN BRIEF

Although the push for private sector participation in the power sector was a

departure from the status quo that predominated in most developing countries1 in

the early 1990s, it was not unprecedented. Throughout the end of the nineteenth

century and early twentieth century, the electricity supply industry (ESI) and other

infrastructure industries such as water, transport and some telephone services,

across North America, Europe and parts of South America, Africa and Asia,

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developed largely within free market conditions (Kessides 2004:27). The Pearl

Street Station, the first central power station, pioneered by Thomas Edison in 1882

in New York City, was the result of privately-financed and privately-managed

efforts (Neil 1942:322).

In the same year in South Africa, public private partnerships would lead

to the first electric street lights in the mining town of Kimberly, and later more

widespread electrification, which helped fuel commercial and industrial

development (Steyn 2006:11; Eberhard 2007:218). While the initial push was

private, it was not long before deeper government involvement was evidenced.

This occurred with varying degrees across countries, especially after World War II.

The rationale was four-fold. First, the network component of the ESI was, after

considerable trial and error, classified, as a natural monopoly.

That is, one firm was thought to produce goods less expensively than if

there were multiple firms in the market, as average costs declined as output

increased (Joskow and Schmalensee 1983:29-20; Newbery 2001a:1-2).

Government ownership of the monopoly (or public regulation) was often justified

on the grounds that the state was the custodian of the public interest and therefore

would be the least likely to act in an opportunistic manner, as monopolists were

prone to do.

Secondly, with regard to public ownership of the generation component, the

general argument was based on the fact that significant amounts of capital were

needed, as increasingly large plants were built to capitalize on economies of scale.

The state was often asked to guarantee these investments and became progressively

directly involved through state-owned enterprises. Thirdly, ownership by one sole

firm (government) also helped to ensure the necessary coordination among the

different segments (generation, transmission and distribution). Finally, an

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overarching argument was made about the strategic nature of the ESI, especially

for industrial development, which justified state ownership and operation (Yergin

and Stanislaw 2002:7).

Electric power activities thus were vertically integrated, which meant one

supplier provided generation, transmission and distribution services to a given area

(Hunt 2002:2, 24). The only real variation evidenced was whether the monopolies

were publicly or privately controlled, with the United States, Germany and Japan,

all exhibiting significant private ownership, albeit heavy government regulation of

the industry—but most countries opted for public ownership (Kahn 1988:3; Bacon

1995b:120,121; Patterson 1999:124). By the 1970s and 1980s, however, a number

of political, financial and technical factors converged and started to chip away at

the logic that electricity provision should be handled via a vertically integrated

generally state-owned monopoly. Although not an exhaustive list, five of the major

factors are summarized here.

First, there was a growing movement away from public sector ownership

especially in the UK and Chile, largely 6 due to ideological reasons (Bacon

1995b:120).2

Secondly, as gas-fired combined cycle gas turbines (CCGT) and other smaller,

more modular technologies came on the market, capital costs of plants declined,

along with the need for government guarantees, making them more easy to finance

(Hunt 2002:26-27; Victor and Heller 2007:3).

Thirdly, development of information and communication technologies

enabled the electricity system to be organized and controlled without vertical

integration.

xxii

Fourth, there was increasing doubt of the efficiency of the highly regulated

but vertically integrated utilities (particularly in the USA) (Bacon 1995b:120).

Finally, publicly-owned utilities in most developing countries were

exhibiting persistent poor performance and governments were either unwilling

and/or unable to provide further capital investment. These factors prompted a

move toward private participation and competition (for the non-natural monopoly

components of the system), which was expected would yield improved and less

costly electricity supply (Bacon 1995b:121; Wolak 1998:81).

2.2 STATUS OF POWER SECTOR REFORM

There is a wide spectrum of power sector reform possibilities. However, the two

most popular options are: structural change and privatisation (ownership change).

Structural change is used to refer to the process of unpackaging vertically

integrated utilities into separate generation, transmission and distribution

companies (vertical unbundling) and conversely unpackaging national utilities into

smaller district or provincial utilities (horizontal unbundling).

Commercialization/Corporation:

This involves reorganization of state owned assets preceded commercialization.

The utilities are now managed on commercial principle and are required to earn

market-related returns on equity. There are two key form of this reform namely;

management contract and reforms.

Management contract involves an agreement through which operational

management of the utility or part of it is delegated to a firm of management

consultant, but the assets and investments decision remain under the government.

Tariffs were approved and, in some cases, determined by Government, this is

normally during the period when provision of electricity was perceived as a social

welfare service rather than a commercial service. Governments, therefore, strived

xxiii

to ensure that electricity was affordable to all by keeping the tariffs low and, to a

large extent, subsidized. Power sector reforms in the region have led to, among

other developments, increases in the tariff levels in line with the following

objectives:

• To recover the cost of electricity generation, transmission and

distribution;

• To fairly and equitably spread the above costs to consumers based on the

true cost of service delivery, consumption levels & patterns, and

affordability to pay, and;

• To promote the efficient use of electricity.

Independent Power Producers:

This constitute an important form of reform in Africa, it involves the participation

of private investors into the generation of electricity to the state.

Power sector reform appears to have involved limited local private participation in

IPP development. Current trends seem to indicate that, in the medium term, the

exit of the state from electricity generation (and eventually from the entire

electricity industry), would effectively hand over the industry to non-national

operators. In political terms, this may be an unsustainable arrangement. Without

significant local involvement, it is possible that reforms may be reversed in the

future mainly because there would be no significant local stakeholder group.

2.3 ELEMENTS OF REFORM

The element of Reforms that will be explored will include;

(i) Commercialization:- Including performance contracts;

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(ii) Corporatization:- Including clarification of shareholders,

taxes and dividends.

(iii) Restructuring for Competition:- Including IPPs and

unbundling .

(iv) Private Sector participation: - Including management contracts

concessions, privatization and new investment.

(v) Establishment of new regulatory institutions.

(vi) New electrification funding mechanisms.

2.4 INTERNATIONAL AND NATIONAL CONTENT OF REFORM

The transformation of the electricity power sector was condition by lager

macroeconomic reforms, intended to correct serious current account deficit,

fiscal in balances and chronic hyper-inflation plaguing the country. Reforms

are drawn from neoliberal economic thinking on the appropriate role of the

state and market in economic development. Towards the end of 1980s

political and economic analyst and thinkers throughout the Western world

were in state of euphoria as they contemplated the triumph of capitalism‖ the

single idea, the end of history‖. The end of ideologies were some of slogans

which at that moment populated the content on which reforms was under

discussion.

Development or proceeds from the reforms on various sectors, would

increase materially: funds would be channeled towards health, education and

reduction of poverty etc. Bringing the Eastern block of nations into the free

market system would accelerate their development and open new markets.

To take full advantages of this change, developing countries such as Nigeria

had to deepen the opening of their markets, deregulate their economics,

xxv

reduce the role of the state sector, eliminate political interference and place

all productive resources at the disposal of the market. They had to become

an opportunity of the world and offer competitive and favourable conditions

in order to attract new investment flows unleashed by market.

A first step in this direction was to promote or facilitate private investment

that would in turn generate economic growth, job creation and improve

incomes, reforming tax and employment laws that limit the private sector‘s

flexibility etc.

A program of state of reforms and the concomitant sale of nations and state

owned enterprises and assets would reduce government deficit and generate

funds that could be used for debt reduction or improvement in education,

health etc. the long-term could be far more better regarding improvements

and developments.

2.5 NEED FOR ELECTRIC POWER REFORM

The need for electric power reform as stated in the National Electrical Power

Policy (NEPP) approved by the Federal Executive council 2001 is stated as

follows:

(i) Improvement in efficiency and affordability of electric power

supply.

(ii) Encourage private sector participation and competition.

(iii) Attract Investment.

(iv) Establishing an independent regulatory agency to ensure level playing

for all market participants.

(v) Providing conducive environment for long-term development of the

sector.

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2.6 OBJECTIVES OF ELECTRIC POWER REFORM

The main objectives of the electric power reforms are:

(i) Fundamental objective which is to ensure that Nigeria has a electricity

supply industry that can meet the needs of its citizen in the 21st

century.

(ii) Other objective is to modernize and expand electricity coverage and to

support national economic and social development.

(iii) To encourage the successors to NEPA to undertake ambitious

investment programme.

(iv) To commercialize state utilities to allow competition, encourage

private involvement, establish regulatory agencies and accelerate

electrification of rural areas

2.7 RATIONAL FOR ELECTRIC POWER REFORM

(a) Restructuring and privatization are not mutually inclusive;

practical logical link.

- Federal Government‘s decision to privatize requires valuation assets,

revenue assts can earn type of system to adopt for industry structure.

(b) Regulation is introduced to control cost and price to make

investment decisions in the absence of competition.

(i) Regulation is surrogate for competition, where latter is

infeasible.

(ii) If competition is feasible, the issues whether it makes

sense to introduce it and how much to introduce arise.

(c) Restructuring arises in conjunction with considerations of

privatization. Key issues in contemplating changes in a

nationalization monopoly industries.

xxvii

(i) Changes in management and ownership.

(ii) Changes in structure (competition and choice).

(d) Privatization is the end-point of changes in the

management/ownership dimension.

(e) Competition is the end-point of changes in the structural dimension.

2.8 THE NIGERIA ELECTRIC POWER SECTOR

Nigeria electric power sector requires substantial reform if the country‘s

program is to be realized. Over the years, government policies have not

yielded positive result in the sector. Rather, what is made manifest in the

sector is decadence of the infrastructure which impacts negatively on the

quality of life of citizens, industries and hence economic growth.

The statistics on the power sector have been appalling. Only about 40 per

cent of Nigerians have access to electricity. In terms of efficiency and

performance, the Nigeria electric power sector has been rated by the

UNDP/world bank report 1993 as having one of the highest rate of losses

(33%), the lowest revenue at 156c/kwh, the lowest rate of return (-8%) and

the longest average account receivable period (15 months), among a group

of 20 low income and upper income countries.

Electricity tariffs are below the cost of service and there is poor revenue

collection. According to Tallapragada and Ade Busuyi, (2008), about 30-40

per cent of power supplied is never billed. The power sector incurs a cash

loss of around US $2 billion per month. Over US$400 million annually is

xxviii

spent by the Federal government of Nigeria as an annual subsidy to cover

losses and investment, an amount that is higher than the Federal budget for

health.

The share of self electricity generated in total electricity generated in Nigeria

was 52 per cent compared to less than 1 per cent of middle income African

countries. A bane of the power sector remains the low funding of the sector

as well as the inability of revenue to cover costs. Cost as a percentage of

tariff declined from 83.3 per cent in 2001 to 42.6 per cent in 2003 before

rising to 66.5 per cent in 2004. In view of other demand on its revenue, the

government has shown itself unable to continue to shoulder past energy

financing responsibilities.

Fig. 2 shows the historical funding levels by government for PHCN

operation since 1974.

Source Makoju (2007) citied in Adegbuludla and Adenikinju (2008).

Nigeria has not vested equal attention to her abundant energy resources. Her

effort have been concentrated on the development, exploitation and

utilization of crude oil and gas fiscal objectives and the electricity to power

the economy.

xxix

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Table 1 shows the profile of Nigeria electricity Industry infrastructure.

(Source Maigida (2008).

Table 1

Generation

- Thermal

- Hydro

Installed capacity

Available

Pre-1999

4,058mw

1,900mw

5,996mw

1,500mw

Post – 1999

5,010mw

1,900mw

6,910mw

4,451mw

Transmission

- 330kv lines

- 132kv lines

Transformer capacity

330/132kv

132/33kv

4,800km

6,100km

5.18MVA

6,230MVA

4,889.2km

6,284.06km

6,098 MVA

7,805 MVA

Distribution

- 33kv lines

- 11kv lines

- 415v lines

Transformer capacity

37,173km

29,055km

70,799km

8,34256MVA

48,409.62KM

32,581.49KM

126,052.79KM

12,219MVA

As at 2004 NEPA had an installed capacity of 5906MW and with the

supplement capital from independent Power Producers (IPP) has only been

able to generate 3,400MW. As at April 2005, NEPA had ten power stations

of which three are hydro stations, six are thermal and one coal power station.

xxxi

These are Kanji, Jebba, Shiroro, Afam, Delta, Sapele, Egbin, Ijora, Oji and

Calabar.

By the end of 2008 there are up to 12 Numbers power stations being

operated by PHCN.

These consist of 8NO gas fired, 1No coal and 3NO hydro stations. The

power plants and the installed capacity of each are as listed in the following:

TABLE 2 – Existing Power Stations

S/N POWER STATION INSTALLED

CAPACITY

YEAR

COMMISSIONED

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

Oji River Coal

Ijora Gas

Kainji Hydro

Afam Gas

Jebba Hydro

Sapele Gas/steam

Egbin Thermal

Shiroro Hydro

Delta Gas

Geregu Gas

Omotosho Gas

Olorunshogun Gas

TOTAL:

30MW

30MW

760MW

792.6MW

570MW

1,020MW

1,320MW

600MW

900 MW

414 MW

335MW

335MW

7106.6 MW

1956

1956

1967

1979

1980

1981

1985

1990

2001

2007

2007

2007

Source: PHCN Annual Technical Report

PLANTS SITUATION AS AT APRIL 2008

TABLE 3:

S/N POWER STATION SITUATION

1. Egbin Thermal The station is only capable of producing

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600MW because 2 out of 6 Units namely (ST3

and ST6) have major breakdown with their

Boilers.

2. Delta Gas Built in 4 Phases from 1966, terminal constraints

have limited the station to only 580MW

3. Sapele Gas/System Overhauls not carried out due to lack of funding.

Only 2 steam unit are available for service.

Produces 1020MW.

4. Afam Gas The Station is only capable of producing

410MW due to some technical constraints.

5. Shiroro Hydro All the four Units at Shiroro will be due for

major overhaul commencing in 2008 produces

600MW.

6. Jebba Hydro Lot of limitation currently inhibiting station

capacity, even though all the Units are all

available produces 578.400.

7. Kainji Hydro Some machines need complete refitting

produces 450 MW.

8. Oji Rive Coal The station is presently not available and is

awaiting final decision of government on its

reactivation.

9. Ijora Gas The plant is not currently generating as a major

reactivation is awaiting government approval.

10. Gergu Gas The contract for the construction of the second

phase of Geregu has already been awarded.

11. Omotosho Gas The contract for the constructions of the second

phase of it has been awarded.

12. Olorunshogu The contract for the construction of the second

phase of it has also been awarded.

xxxiii

Benin

Ajaokuta

Alaoji

New Heaven

Ayede

Sapele

Ikeja West

Source: PHCN Annual Technical Report

Fig. 3: Shows TCN 330KV Transmission Grid as at today:

Onisha

Osogbo

Birinn Kebbi

Kainji

Shiroro

Kano

Jos Gombe

Jebba

Abuja

Kaduna Jebba

GS

xxxiv

Delta GS

Aladja Afam

Egbin

Aja Akangba

2.9 ELECTRIC POWER REFORM PROGRAMME

INTRODUCTION

Electric Power Sector reform has become an issue in the past few years. The

motivation is to achieve better services, reliable operation and competitive

rates. The reform to electric power sector started in 2000 with formulation of

a new power policy.

This policy was adopted by National Council on Privatization (NCP) and

approved by the Federal Executive Council in 2001.

The Electric Power Sector Reform (EPSR) Act was signed into law in 2005.

2.10 CURRENT REFORM FRAMEWORK

The BPE played a crucial role in modifying a permanent solution to the

liberalization as a strategy towards economic reform working through

Electric Power Sector implementation committee (EPIC), it developed the

National Electric Power Policy approved by National Council On

Privatization which led to the enactment of the electric power Sector Reform

Act 2005. The Act created Nigeria Electricity Regulatory Commission

(NERC), an independent regulator from the Ministry and the services

providers. It provided for the incorporation of an Initial Holding company

(IHC) the shares of which shall be held by the Ministry of finance

xxxv

Incorporated and the Bureau of Public Enterprise in the name of and or

behalf of the Federal Government of Nigeria. The name of the Initial

Holding Council, incorporated on the 31st of May 2005, is Power Holding

Company of Nigeria Plc (PHCN).

The Act has the following key provisions which will have great bearing on

the future of regulation of the power Sector in Nigeria.

1. A legislative basis for the splitting up of NEPA into separate legal entities

for generation, transmission and distribution, and a method of transfer of

assets, liability and personnel. The Act makes provisions for the unbundling

of NEPA into an initial holding Company and subsequently into successor

companies that will comprise six generation companies, one transmission

company and eleven distribution companies.

2. The establishment of Nigeria Electricity Regulatory Commission (NERC) as

an independent regulator of the sector and a definition of its functions.

3. The establishment of a regulatory regime including the granting of licences

to private electricity generators and distributors, the determination of tariffs

and regulated activities and the prevention of abuses by the market power.

The tariffs regulation will however, ensure a reasonable return on

investment.

4. The establishment of a bilateral contracts markets in the medium term

following the unbundling of NEPA.

5. The establishment of Rural Electrification Agency to provide rural

communities with access to electricity.

6. The establishment of Rural Electrification fund to promote support and

provide rural electrification programme through public and private sector

participation.

xxxvi

7. The establishment of power consumer assistance fund to subsidize

underprivileged power consumers.

8. The repeal of Electricity Act and NEPA Act as amended. The regulations

made pursuant to the Act were however saved.

2.11 NIGERIAN ELECTRICITY REGULATORY COMMISSION (NERC)

OBJECTIVES OF NERC (EPSRs 32A)

i. Create, promote and preserve an efficient electricity industry.

ii. Maximize access to electricity, both urban and rural.

iii. Ensure that the supply of electricity is adequate.

iv. Ensure that prices are fair to both consumer and regulated companies.

v. Ensure safety, sanity, reliability and quality of services.

FUNCTION OF THE NERC (EPSRs 32(2))

i. Promote competition and private sector participation, when and where

feasible.

ii. Establish/approve operating codes and consumer protection standards.

iii. License and regulate generators, transmission owners and system

operators, distributors and traders including tariff price and regulation.

iv. Monitor the operation of the market

v. Administer the power consumer assistance fund.

RELATIONSHIPS BETWEEN THE NERC AND THE

GOVERNMENT

i. The NERC is designed to be an independent body

ii. The government has the power to issue general directives but not to

exercise direct control.

xxxvii

iii. The NERC‘s independence further protected by the fact that it is self

funding.

iv. The key challenge interims of relations between the NERC and the

government will be to avoid conflicts over privatization and new

investment.

RELATIONS BETWEEN THE NERC, REGULATED COMPANIES

AND CONSUMERS

i. The basic role of the NERC is to protect the long-term interests of

both consumer and investors.

ii. The key challenge is to foster confidence, amongst all stakeholders in

the NERC‘s decision making.

iii. The courts should be reluctant to over turn decision of NERC that

meet these tests.

The NERC will have to prove itself as a reliable regulator during the

difficult transition from public to private ownership and from vertical

integrations to competition. The Act gives the NERC significant legal

and financial independence. The ESPR Act gives the NERC extensive

powers to regulate the electricity sector.

According to the power sector report (2008), two sets of public sector

action – steps emerged in response to the power crisis; there is the

period of infrastructure rehabilitation (1999-2004) and infrastructure

expansion (2004) to date) – major part of which is being implemented

under the National Integrated Power Project (NIPP) (Transition

Phase). The other focus on implementing a comprehensive sector

reform (Restructuring; Deregulation and Privatization) within the

framework of the Electric Power Sector Reform Act 2005.

xxxviii

2.12 STATUS OF NIGERIA ELECTRIC POWER REFORM

Power sector reform is often equated with deregulation and

reduction of government participation in electricity industry. The

major reforms that have been taking place in Nigeria are structural

changes and privatization of electric power utilities.

Structural changes refer to the process of unpacking vertically

integrated utilities into separate generation transmission and

distribution companies. (Vertical bundling) and Horizontal

bundling which is concisely unpacking national utilities into

smaller district or provincial utilities.

Nigeria adopted; a reform configuration of 6-1-11 industry structure which

entails:

(i) Establishment of six competing generation companies from existing

NEPA generation facilities, which will be privatized.

(ii) Opening of generation sector to independent producers.

(v) Establishment of one transmission company (Transysco)

(vi) Establishment of electric distribution companies, which will be

privatized. (Discos).

(b) Competition in bulk sales and purchase of electricity to be developed.

(c) Special purpose entity to assure NEPA‘s energy purchasing

obligations legacy debts and liabilities etc.

The privatization process is essentially an issue of changing ownership of

assets. It commences with bringing the state-owned utilities under a

xxxix

parastatal. The parastatal is therefore commercialized and it ultimately goes

through several other steps to become a fully privately owned entity.

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 INTRODUCTION

The project ―Assessing the Electric Power Sector Reform‖, Issues,

challenges and prospect‖ aim to develop a more and better understanding of

the Nigerian Electric Power Sector Reforms.

The project also intends to identify best practice in reform strategies and to

disseminate research findings to policy makers. The research approach

adopted in this project is based on Nigeria.

xl

3.2 RESEARCH METHOD

The basic approach adopted in this project is eclectric which takes on a

qualitative review and evaluation of electric reform for economic

development on the power sector.

The researcher chooses to conduct the study in more qualitative way,

making use of data collections where possible. Basically, there are two

methods depending on the characteristics of the research theme. This

includes;

Historical Research methods

Descriptive Research methods

For the purpose of this study, which gives the project a status of descriptive

and historical, the historical and the descriptive would be employed. These

involved the uses of survey to observe and evaluate the phenomenon. In it,

variables are subjected to proper evaluation, observation, inferences and

conclusions. Means that form the characteristics manifestation of this

method are the administration of questionnaires and oral interview.

Formal interview and survey were conducted but more reliance on existing

studies and survey data coupled with rapid techniques including discussions

and other PRA type approaches. The outcomes were treated as illustrative

i.e. providing anecdotal evidence to illustrate what is found elsewhere.

3.3 POPULATION OF THE STUDY

For the purpose of the objectivity based on the technicality of the project

topic, the targeted population consists of the stakeholders which include the

public, (people running business) Executive of relevant business, regulatory

authority.

xli

3.4 SOURCES AND METHOD OF DATA COLLECTION

The data used in the project are collected through primary and secondary

sources of data. While literary works such as books, journals, magazines etc

constituting the secondary sources of materials used for the documentary

studies in observation and information. The primary source entails carry out

a survey through the administration of questionnaires to the stakeholders,

public, Executives of relevant business, regulatory authority and corporate

organizations. The administration of the questionnaires enables the

respondents to answer the questions in the own time, interviews were

conducted.

Thus the 140 questionnaires to be administered, one hundred (100) would

be administered to the public, twenty (20) each to the executive of the

relevant business organizations, and the Regulatory authority.

3.5 SAMPLING SIZE AND DETERMINATION

In selecting the sampling of the research for all the categories in population of the

study, random sampling method for selecting would be employed. Three hundred

questionnaires will be given to the public, twenty for the executive, and twenty for

the regulatory bodies. To ensure effective coverage of the large population, the use

of statistical formula for a finite population is employed, Taro Yamani (1967). This

is chosen on the basis that it may be too difficult to establish casualty between the

electric power sector reforms and the impact on the society.

n = N

1+N(e)

e = marginal error

xlii

n = sample size

I = A constant

N = population size

Here ―N‖ will be equal to the staff size which is 1400, ―e‖ = 5%, the sample size

for the research can be determined as;

n = N = 1400

_____________ _______________

1 + 1400 1 + 1400

n= 1400 1400

_____________ = ____________ = 311.11 apprx = 300

1 + 3.500 4.5

3.6 TOOLS FOR DATA ANALYSIS

The data to be presented, interpreted and analyzed would be the response

table statistically tabulated. The interpretation shall be done with the aid

of simple percentage ration.

The analysis of data to be presented would be done by simple analytical

expression. This would involve a close look at the power sector reforms

and the influence on the society and corporate organization. Attempt to

establish the interrelationship therein would be done by subjecting the

hypothesis of the study to empirical test.

xliii

3.7 RELIABILTY OF THE INSTRUMENT

In order to establish reliability, re-test technique were used, the

researcher selected a group of staff in batches, distributed the

questionnaire in different occasions and days so as to ensure the

reliability of the answer. It was found out that the answer given on the

first batch on different days by the groups are the same. The researcher

concluded that the answers are reliable.

3.9 VALIDITY OF THE INSTRUMENT

The instrument used for this study was adapted from Workers Behaviour

Performance rating developed by Archer. This response format used

includes five point scales: Good, Fair and Poor.

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

INTRODUCTION

The major challenge facing Nigeria is to reach a sustainable rate of positive

economic growth that will enable Nigeria to cope with soaring demographic

and urban growth. In a bid to stimulate genuine dynamic of development and

to rise above the economic, social, political and environmental crisis that

xliv

have beset the region more or less permanently since 1910‘s. Nigeria

introduced sectoral reforms; among these reforms are those related to

electric power, which was as analyzed by energy experts, aimed at

improving financial and technical efficiency of utilities, facilitating

divestiture and guaranteeing future electricity supply.

Electricity is needed both to industrialize and provide basic energy for the

majority of the people living off the grid in rural areas and this situation

needs major changes not only for demand but also for the regions and sub

regions.

A total of twenty-five questions were administered in two sets, the first

comprises of fourteen (14) questions given to Regulatory body officials and

the Executives of Corporate organizations. The second consisting of eight

(20) questions was given to the public.

The entirety of the questionnaire administered to each of the section was

returned duly completed, thereby recording a 50% response in this direction.

This implies that the response recorded are true reflection of opinions of the

population of this study and therefore, valid for and adoption and utilization.

4.1 QUESTIONS ADMINISTERED TO REGULATORY BODIES

Description of Questionnaires Received

Number of Questionnaires Sent 300 Copies

Number of Questionnaires Replied 150 Copies

Number of Invalid Questionnaires 150 Copies

xlv

1. How is your opinion about electric power supply being during the pre-

reform era?

RESPONSE

FREQUENCY

PERCENTAGE

Excellent _ _

Good _ _

Fair 4 20

Poor 16 80

TOTAL 20 100

Field Survey:

The question is meant to determine the state of electric power supply during

the pre-reform, which serve as basis for the dilapidation of the electric power

supply. From the above 75% of respondents confirms the poor state, thus the

response received are reliable and valid for adoption.

2. To what extent has reforms played in improving access to electricity to the

society?

Response Rate 50%

xlvi

RESPONSE

FREQUENCY

PERCENTAGE

Excellent 10 50

Good 6 30

Fair 4 20

Poor - -

TOTAL 20 100

Field Survey:

The above shows that 80% of the respondents accept the impacts of the

reforms on the society.

3. To what extent are the targeted and transparent subsides put in place to help

the investors?

RESPONSE FREQUENCY PERCENTAGE

Excellent _ _

Good 14 70

Fair 3 15

Poor 3 15

TOTAL 20 100

Field Survey:

The respondent acknowledged that targeted and transparent subsidies are

deployed to assist the investor in realizing profit.

xlvii

4. To what extent has the incentives by the Regulators reduced the prices of

electricity?

RESPONSE FREQUENCY PERCENTAGE

Excellent _ _

Good 14 70

Fair 3 15

Poor 3 15

TOTAL 20 100

Field Survey:

The table above shows that 70% of our respondents do state that the

incentives given to the IPP has gone a long way in reducing the pay price of

electricity by the consumers. This further confirms the reliability of the

response received from the perspective of the proximity of the respondent.

5. How has the incumbent invested in the power sector during and after

reforms?

RESPONSE FREQUENCY PERCENTAGE

Excellent _ _

Good 14 70

Fair 3 15

Poor 3 15

TOTAL 20 100

Field Survey:

The table above shows that 70%of our respondent do state that the incumbent

participate in investing on the reform activities. This further confirms the

xlviii

reliability of the response received from the perspective of the proximity of

the respondent.

QUESTIONS ADMINISTEREDTO THE PUBLIC AND

STAKEHOLDERS.

1. How has the electricity supply being during the pre-reform era?

RESPONSE FREQUENCY %

Excellent _ _

Good 5 5

Fair 15 15

Poor 80 80

Total 100 100

Field Survey:

From the response of our respondents the electricity supply pre to the

reform is in a very bad state, this is attested by the respondents. Thus 80% of

the response can be seen from the table above.

2. How would you grade the tariff before reform?

RESPONSE FREQUENCY %

Excellent - -

Good 25 25

Fair 40 40

Poor 35 35

xlix

Total 100 100

Field Survey:

From the table above it shows that the tariff was fair as 40% of the

respondent agrees to this.

3. How would you grade tariff after reform?

RESPONSE FREQUENCY %

Excellent - -

Good 30 30

Fair 45 45

Poor 25 25

Total 100 100

Field Survey:

The response from the table above shows that the tariff is also fair

as compared to the tariff before reform.

4. How has the energy cost of doing business changed?

RESPONSE FREQUENCY %

Excellent 10 10

Good 40 40

Fair 35 35

Poor 15 15

Total 100 100

Field Survey:

l

From the table it can be seen that the cost in the provision of energy

incurred by the society and the industry in productions is not high.

5. What is your opinion about privatization in the provision of electricity?

RESPONSE FREQUENCY %

Excellent 25 25

Good 45 45

Fair 25 25

Poor 5 5

Total 100 100

Field Survey:

Table above shows that 70% of our respondents confirm that

privatization has lead to high output of electricity.

6. Public sector finance privatization receipts, how has these receipts been

used to release fund for increase expenditure on electrification

programme?

RESPONSE FREQUENCY %

Excellent 30 30

Good 50 50

Fair 10 10

Poor 10 10

Total 100 100

li

Field Survey:

The table above shows that 80% of the respondent confirms the use

of the receipts on privatization on electrification programme, as the

regulatory bodies is in the picture of the receipts collected.

7. To what extent does the investors engage in the generation of electricity?

RESPONSE FREQUENCY %

Excellent 35 35

Good 50 50

Fair 10 10

Poor 5 5

Total 100 100

Field Survey:

The table shows that 85% of our respondents confirm that the investors

have increased the generation of electricity to the populace.

8. How would you rate and rank the effect of the investors?

RESPONSE FREQUENCY %

High 55 55

Medium 35 35

Low 10 10

Total 100 100

lii

Field Survey:

Table shows that 90% of our respondent confirms to high

rank and rating of the investors towards power generation. Thus

confirms the reliability of the response received.

9. Considering the on-going reform process, has PHCN increased in

its revenue due to competition?

RESPONSE FREQUENCY %

High 55 55

Medium 35 35

Low 10 10

Total 100 100

Field Survey:

Table above shows that 90% of our respondents confirms to the high

level in the revenue while 10% on the low level. Thus confirms the

reliability of the response received from the perspective of the

proximity of the respondents to increase in revenue.

10. To what extent has competition led to the increase in the efficiency

and effectiveness in power generation?

RESPONSE FREQUENCY %

Excellent 35 35

Good 50 50

liii

Fair 10 10

Poor 5 5

Total 100 100

Field Survey:

Table above shows that 85% of our respondents confirms to the high

level in the efficiency and effectiveness while 15% on the low level.

Thus confirms the reliability of the response received from the

perspective of the proximity of the respondents to efficiency and

effectiveness.

11. What is the state of the tariff structure and moves to cost reflectivity?

RESPONSE FREQUENCY %

High 25 25

Medium 45 45

Low 30 30

Total 100 100

Field Survey:

The above table shows that the tariff is medium as 70% of the respondents

reflected on this and the bodies ensure that the tariff rates are not heavy on

the consumers. This they do by beefing up the private sector‘s capital thus

the response is reliable and valid for adoption. However on a contrary, on

reforms that introduces the private sector capital can lead to cost increase.

liv

12. How has the new agents emerge that invest in access to electric power

supply?

RESPONSE FREQUENCY %

Excellent 40 40

Good 45 45

Fair 5 5

Poor - -

TOTAL 100 100

Field Survey:

The question is meant to establish the involvement of electric power agents

(IPP‘s) in facilitating the generation of electricity in Nigeria. The table

shows a unanimous (95%) view of our respondents indicating that new

agents emerge on electric power investments.

13. Do reforms include the establishment of any special ‗access

mechanisms‘‘ by the regulators?

RESPONSE FREQUENCY %

Yes 100 100

No _ -

Total 100 100

Field Survey:

The table shows that the special ‗access mechanisms‘ have been induced to

enhance the growth of the independent private producer in the participation

of electricity generations in the society. This is reflected by the unanimous

(100) response.

lv

14. How efficient is the services of the PHCN officials as regard to customers

complains after the reforms?

Field Survey:

The table shows that the services of the relevant official as regards to

meeting customers complain are still poor irrespective of the reforms

15. How is the reform on social services?

Field Survey:

From the table the response indicate that the introduction of reforms has

little effect on social services as compared to the pre-reform era. This can be

seen from the 40% on our respondents.

RESPONSE FREQUENCY %

Excellent - -

Good 15 15

Fair 50 50

Poor 35 35

Total 100 100

RESPONSE FREQUENCY %

Excellent - -

Good 25 25

Fair 40 40

Poor 35 35

Total 100 100

lvi

QUESTIONS ADMINISTERED TO THE EXCUTIVES OF

CORPRATE ORGANISATIONS

1. How has the electricity supply being during the pre-reform era?

RESPONSE FREQUENCY %

Excellent _ _

Good _ _

Fair 2 10

Poor 18 90

Total 20 100

Field Survey:

From the response of our respondents the electricity supply pre to the

reform is in a very bad state, this is attested by the respondents. Thus 90% of

the response can be seen from the table above.

2. Does your organization depend on electric power supply for their

operations?

Field Survey:

The question is meant to establish the extent of dependence of the electric

power supply by enterprises and organizations. Thus the 70% response from

our respondents is reliable and valid for adoption.

RESPONSE FREQUENCY %

Yes 6 30

No 14 70

Total 20 100

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3. Have reforms improved access to electricity to the society?

RESPONSE

FREQUENCY

PERCENTAGE

Yes 13 65

No 7 35

Total 20 100

Field Survey:

The table above shows a little effect or margin on electricity supply to the

organizations and other business enterprise. As 60% against 40% indicates

that despite the reform there is still some low level of power supply.

4. Have reforms improved the quality of electricity supply?

RESPONSE FREQENCY %

Yes 14 70

No 6 30

Total 20 100

Field Survey:

The above table confirms that the quality of electricity supply was improved

by the reforms. This was shown by the 70%of the respondent reflected on

the table.

lviii

5. To what extent has the price changes have resulted from the power sector

reform?

RESPONSE FREQUENCY %

High 4 20

Medium 10 50

Low 6 30

Total 20 100

Field Survey:

The table shows that our respondents‘ response the prices as result of the

power sector reforms are medium to the tune of 50%.

6. Do you think that chances are given to the agents (IPP‘s) in the provision

of electricity supply for business?

RESPONSE FREQUECY %

Yes 15 75

No 5 25

Total 20 100

Field Survey:

lix

The above table shows that chances are given to the Independent Private

Producers in the generation of electric power generation. There is 75%

acceptability on this and the response is reliable and valid for adoption.

7. How has the (IPP‘s) impact on the power supply generation been felt and

rated?

Field Survey:

The table shows that the IPP‘s involvement in the provision of power supply

is 65% which is a relative mark as regards to power generation.

8. Has the privatization lead to higher price to the resident consumers and

lower price to the industry?

RESPONSE FREQUENCY %

Excellent - _

Good 10 50

Fair 6 30

Poor 4 20

Total 20 100

RESPONSE FREQUECY %

Yes 14 70

No 6 30

Total 20 100

lx

Field Survey:

The table shows the conformity to the question in agreement because prices

are aligned with long-run supply cost and because profit, not votes are main

concern of private investors.

9. Have electrification programmes by the PHCN expanded access of small

business?

Field Survey:

The above question was meant to establish that expanded access to

electricity allows new enterprise to emerge and enable the interaction of

different business enterprise to benefit from one another. The response is

valid and reliable.

4.2 ANALYZING THE HYPOTHESIS

RESPONSE FREQUECY %

Yes 12 60

No 8 40

Total 20 100

lxi

The empirical results presented in this study based on the result from the

questionnaires, seems consistent with the findings of a number of the

literature reviewed earlier, that point to the importance of competition and/or

effective independent regulation if economic performance is to improve

following privatisation. The review findings in relation to the hypotheses are

as follows;

HYPOTHESIS:

1. (H1)-Reform variable (privatization) will lead to a more capacity and

hence output provided that the regulatory regime is supportive.

Like regulation, privatisation on its own did not seem to generate many

benefits. However, the interaction term between privatisation and regulation

did show a positive impact on electricity penetration, capacity expansion and

labour efficiency. The results underline the importance of regulatory reform

along with privatisation. The results are therefore consistent with the

hypothesis.

2. (H2) - Reform variable (privatization) will lead to a high price to the

society especially residential as prices are aligned with supply cost.

The results suggested that privatisation, even when linked with competition

or regulation does not have a statistically significant effect on residential

prices. The results are the same for industrial user prices. The hypothesis

was rejected.

3. (H3)-Reform variable (regulation) will raise price charge to domestic

user as cross-subsidies are removed.

lxii

The researcher found that regulation, even when associated with

privatisation or competition, does not appear to have a statistically

significant effect on residential user prices. This finding is contrary to

expectation. Independent regulation also seems to have no reliable impact on

industrial user prices, though when independent regulation and competition

co-exist, surprisingly, industrial prices are found to be higher. These results

may reflect the particular crudity of the regulation measure used, in the

absence of a superior alternative. Nevertheless, on the basis of our regression

results the hypothesis has to be rejected.

4. (H4)-Reform variables (competition) will lead to a larger capacity,

higher output and greater labour productivity.

The findings from the researcher are consistent with the notion that

competition does lead to a higher generating capacity per capita and a higher

output per capita. It also leads to higher labour productivity. The hypothesis

was accepted.

5. (H5)-Reform variable (competition) will lead to lower industrial user

and to a higher or lower residential user prices.

The effect on prices was ambiguous. Competition does seem to lower

industrial prices, but the result is reversed when competition co-exists with

regulation. The hypothesis is therefore supported and accepted. Also,

competition does not necessarily lead to more efficiency in capacity

utilization – this is possibly because the entry of competitors expands

generating capacity leading to a fall in average utilization, at least for a time.

lxiii

4.3 ANALYZING ELECTRIC POWER SECTOR REFORM IN

PHCN

GENERATION EXPANSION PLAN (2007-2010)

Dec 2007 Dec 2008 Dec 2009 Dec 2010

Existing power Station 3,357 4,027 3,880 3,780

Existing IPPs 750 750 750 750

On-going Fli Projects

Geregu (Ph 1&2) 414 414 828 828

Papalanto (Ph 1&2) 167 335 1,228 1,228

Omotosho (Ph 1&2) 167 335 1,228 1,228

Alaoji (Ph 1&2) 504 504 504 1,074

Proposed Niger Delta Ps - 1,127 2,256 2,256

Proposed JV – IPPs - 1,100 2,210 2,810

Other IPPs 330 1,035 1,035 1,035

TOTAL (MW) 5,689 9,627 13,919 14,989

Source: PHCN Annual Technical Report

COMMERCIALIZATION/CORPORATION

Following the time line provided under the EPSR Act 2005, the BPE sought

and obtained approval from the National Council on privatization (NCP) for

incorporation of (18) Successors companies to PHCN to conform to the 6-1-

11 industry structure approved by power sector in 2002.

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These are:

(1) Abuja Electricity Distribution Plc

(2) Enugu ― ― ―

(3) Port Harcourt ― ―

(4) Kaduna ― ― ―

(5) Kano ― ― ―

(6) Jos ― ― ―

(7) Ibadan ― ― ―

(8) Ikeja ― ― ―

(9) Eko ― ― ―

(10) Benin ― ― ―

(11) Egbin Power Plc ― ―

(12) Ughelli ― ― ―

(13) Afam ― ― ―

(14) Sapele ― ― ―

(15) Kainji Hydro Electric Plc

(16) Shiroro ― ― ―

(17) Transmission Company of Nigeria (TCN)

This is the first reform option executed in Nigeria which key objectives is to

ensure the utility runs to operation based on the business principle of profit

maximization. The two key forms of commercialization in Nigeria electric

power sector are management contract and tariff reforms.

From the table 4 it can be seen that every Disco recorded a significant

improvement in the performance between January and December 2006

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However, only seven out of 11 companies (Discos) performed above their

average target while the performance of the rest 4 were below targets.

INDEPENDENT POWER PRODUCER

Independent Power Producers (IPPs) in Nigeria electric power Sector

constitute an important form of private sector participation. With the demand

of electricity outstripping supply in the country, independent power projects

are becoming major source of new power generation capacity in the country.

Generation capacity availability:

The capacity availability of all the generators during 2006 is shown from the

table; the average total monthly available capacity for all generators was

4,011 MW. The Federal Government generators contributed about 80% of

the available capacity while the IPPs were responsible for 20%. The hydro:

thermal mix (capacity wise) during the year was 40:60.

GENERATION EXPANSION PLAN

TABLE 7:

Dec 2007 Dec 2008 Dec 2009 Dec 2010

Existing Power Station 3,357 4,027 3,880 3,780

Existing IPPs 750 750 750 750

On-going Fli Projects

Geregu (Ph 1&2) 414 414 828 828

Papalanto (Ph 1&2) 167 335 1,228 1,228

Omotosho (Ph 1&2) 167 335 1,228 1,228

Alaoji (Ph 1&2) 504 504 504 1,074

Proposed Niger Delta Ps - 1,127 2,256 2,256

Proposed JV - IPPs - 1,100 2,210 2,810

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Other IPPs 330 1,035 1,035 1,035

TOTAL (MW) 5,689 9,627 13,919 14,989

ESTABLISHMENT OF ELECTRICITY REGULATORY AGENCIES

The establishment of regulatory bodies for the power sector alongside the

amendment/enactment of new Act is the third most popular reform option

implemented. The problem of inadequate autonomy for the regulatory

agencies can be traced back to the process of appointment of their board

members.

The BPE facilitated the setting up of NERC after being screened by the

Senate. The BPE provides technical and financial support to the commission

through the privatizations as detailed in chapter 2 as regard to electric power

reform framework in Nigeria.

NEW/AMENDED ACT

Electricity Act often provides the legal and regulatory framework; the legal

and regulatory framework was originally designed for state owned

Government – regulated power utilities, with little or no provision for

private sector participation.

PRIVATIZATION

The ultimate objective of the FGN in electric power sector reform is to

improve infrastructure and access. The Government‘s policy thrust is

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anchored on the private sector which will drive investment and grow the

sector in the short medium and long term.

The privatization reform option is one that emphasizes infrastructural

improvement and not proceeds‖. In order for the FGN to actualize the

electric reform, the following strategies were preferred.

A. MANAGEMENT CONTRACT:

The Transmission company of Nigeria (TCN) Plc is one of the (18)

eighteen successor companies of PHCN, incorporated in Nov, 11

2005. The management contract is for 3 years and deliberately

designed to provide for skills and transfer of expertise to Nigerian

counterparts who will serve in deputy positions to the key

management staff of the management contractor. The essence of this

is to promote sustainability continuity and success for the company

when the duration of the management contract expires.

The management contract for (TCN) is currently engaged through the World

Bank by PHCN for transmission Development Project, funded under the

Nigeria Energy Development Programme. Upon evaluation of the

expression of interested bidders for TCN management, four bidders were

pre-qualified and request for proposal on Feb. 28 2007.

(1) ESB International Ireland

(2) Terna Rete Eletrik Nazionale, Italy

(3) Power Grid Corporation Ltd, India,

(4) Manitoba Hydro International, Canada.

B. CONCESSION

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This is the most preferred strategy for the electricity distribution companies

and some of the power station. This is because it allows investors to

undertake investment and to recoup them over a given period. It also gives

government the opportunity of continuously strengthening the networks

through additional investments and gives the required platform to address

attended political issues that may arise from privatization.

C. ASSETS SALE

This is mostly being adopted for the privatization of PHCN non-operational

assets located in Oji River, Ijora and Calabar. Owing to their moribund state,

the assets sale allows the investor the benefit of deciding how it intends to

turn around the moribund infrastructure.

D. CORE INVESTOR SALE:

This strategy may be applied in the privatization of certain power stations. It

is not however a widely acceptable method of privatizing utilities because of

the consequences of conferring right of outright acquisition on the investor.

4.4. IMPACT OF ELECTRIC POWER SECTOR REFORMS: ON

PRICE, TARIFF

Tariffs reform has been a key component of reform programs, typically

involving significant increases in tariffs brings them to cost-reflective levels

and often involving tariff rebalancing to reduce degree of cross-subsidization

in the industry.

The Labour Unions and the society, as the 70% of Nigerian are dominated

by low income earners, found it politically difficult to sustain tariff increases

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and have either rescinded. Tarrif reforms have tested the independence of

newly established regulators with several bowing to political pressures to

reduce tariffs.

Price reforms are intended to restore the financially viability of the industry,

and creates the basis for renewed investment infrastructure, including

distribution networks. The effect of this is naturally dependent on the utility

ability to collect revenue and maintain downward pressure on costs. As such

price reforms may be conditional on other reform measures that target

technical and managerial performance if they are effective. Tariff increase

will clearly have a negative impact on household and there is evidence of

most of the public switching to any alternative in the face of tariff increases.

Tariff reforms have reduced the level of subsidised consumption in order to

target the subsidy more effectively. In addition, prepayment metered

supplies have often proved popular with low- income as they allow more

careful control over energy expenditure. Furthermore, it must be noted that

with access rates of 10 to 20 percent, maintaining low tariffs benefits only

minority of the Nigerian population and inevitably subsides the wealthier

portion of the population as it is thus community that is more likely to have

electricity supply.

TARIFF REVIEW

Electricity tariffs do not cover PHCN‘s average cost of production in N10.00

– N12.00 /KWH

GENERATION = N5.00 - N7.00

TRANSMISSION = N2.00

DISTRIBUTION = N3.00

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Residential Consumers

- Residential tariffs vary from N1.20 to N4.00 for life line. Price

increases are preparatory to planned privatization

- Industrial consumer pays N6.50 - N8.50/kwh

(likely to increase by about 100%).

Impact on tariff increase appears to take place more rapidly and obviously,

tariff increase can quite possibly bring about straight forward move away

from electricity to other fuel alternatives.

Tariff can even act as a barrier to investment. This is because lifeline tariff

rate means that revenue from electrification project remaining below the

marginal cost of supply. Furthermore the National tariff structure implies

that distributors in the region with high electrification burden will fail to

recover the cost of supplying low income and rural customers. Consequently

the reform programme has failed to stimulate additional investment in

extending access.

The privatization of PHCN has also involved a commitment to investment in

electricity services in the (first 3 years) although the company has managed

to mobilize a large part of its investment obligations, investment targeted at

electrification have not materialized fully. In the situation where the

company has been unable to mobilize all the investment resources required.

It has clearly prioritized other needs over electrification. In this case, the

relationship between reform prices and investment in access has not

materialized as anticipated. Award of management contract has restored the

financial performance of the utility to a point where at least some investment

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can be financed from loans or retained earnings. However, this is yet to lead

to a significant increase in the rate of new connections.

4.5 IMPACT OF ELECTRIC POWER SECTOR REFORM ON

QUALITY AND RELIATBILITY OF SUPPLY

This is another aspect the Nigeria electric power sector reform aim to

address. The distribution industry remains fragmented and is yet to be

restructured, quality and reliability of supply varies regionally and in a low

performance as can be seen in this chapter. Moreso, the public continue to

experience frequent outages and voltage drops.

The key focus and success measure of electric power sector reform is the

ability to attract IPPs into the industry. The climate for independent power

(IPP) deteriorated dramatically, several project of the industry on power

sector have suffered as a result, and have forced a reassessment in the

electric power sector. Where IPPs have been established, the cost of

production have proved higher than existing supplies, partly due to the effect

that inflation had on existing asset values and partly due to the cost of

capital facing the private investors.

4.6 IMPACT OF ELECTRIC POWER SECTOR REFORM ON

ECONOMIC ACTIVITY

Most reform programmes have included measures to increase tariff to cost

reflection level. In these cases, the reflection or economic activity should be

expected to be negative. However, there is little evidence to suggest that

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price as a result of the reform has had a significant impact on economic

growth. Outside of every electricity intensive industries, industrial

willingness to pay is generally fairly high, given the level of other input

prices and high cost of unserved energy.

Most industries are more concerned about power reliability and quality than

price. Reform programmes that combine tariffs with improvement in supply

quality will thus mitigate the negative economic impact of increase in tariff.

4.7 IMPACT OF ELECTRIC POWER SECTOR REFORM ON

SOCIAL SERVICES

Concern with the availability and quality or electricity supply to social

services has rarely been a prominent issue in the design and implementation

of sector reforms. The target of electrification has not been met as findings

have not been made available to support the electrification activity and the

social benefit has not been made significant.

4.8 IMPACT OF ELECTRIC POWER SECTOR REFORM ON

PUBLIC FINANCES

Reducing the sector‘s dependence on public finances has been a key driver

of reforms. There has been a focus on shifting the investment burden away

from the public sector. Also where utilities have been dependent on

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government subsides; there has been an intention to remove this drain on

public resources.

It is clear that electrification itself cannot be fully financed by the utility

business itself, particularly rural electrification. Government of Nigeria is

expected to provide subsides for this purpose, and must have established

system to ensure that the subsidy is targeted at capital cost rather than

operating subsides.

Finally, the outcome of the electric power sector reform has been a change

in the financial relationship between government and utilities, rather than a

separation. Public finances are more targeted at specific interventions and

there is need for greater transparency in the allocation of resources.

CHAPTER FIVE

5.1 LESSONS LEARNT FOR THE FUTURE ON ELECTRIC POWER

SECTOR REFORM

A growing economy requires a massive energy to power it. From the

analysis, reforms were primarily designed to bridge short term generation

short falls and enhance the financial health of state owned power utilities.

The first lesson learnt is that reforms do not appear to have solved the

electric power sector problems with the exception of increased profitability

of utilities, the key issues that provided the impetus for reforms continue to

prevail long after reform have been implemented. This could be seen that the

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generation capacity shortfalls still persist and several requisite reform

measures put in place have not guaranteed the desired results.

The second lesson is that private sector involvement in the power sector is

not the ultimate solution. Development in the management contract indicates

a significant degree of satisfaction.

5.2 CHALLENGES OF THE ELECTRIC POWER SECTOR REFORM

The following have been identified as critical challenges that will impact on

the implementation of the reforms:

(a) Lack of access to power stations and PHCN facilities due to labour

opposition to the reform.

(b) Vandalization of network systems and other PHCN assets.

(c) Subsidies and incentives to attract private investor are important for sector

sustenance and growth.

(d) Uncertainty in continuity of energy policies, politicking of the energy and

power sector.

(e) Uneven geographical location of power generation plants.

(f) Poverty and customers‘ inability to pay an economic and appropriate

electricity tariff.

(g) Technical issues, high technical and commercial losses across the three

segment of electricity value chain.

(h) Environments.

5.3 FINDINGS

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(1) Electrification of the rural areas is an important indicator of the electric

power sector sustainability. Rather it has either stagnated or declined

altogether. In urban areas, electric reforms appear to hold benefits than the

rural areas, the advent of independent power distributors appear to provide

an opportunity for electrification in urban.

(2) Reforms have led to the establishment of rural electrification funds and

boards, these developments have not helped to increase electrification level.

This is because the rural electrification funds and boards have not provided

effective and innovative mechanisms that would ensure they achieve their

objectives.

(3) It is also important to note that the involvement of IPPs have led to

aforementioned increase in tariffs, this is because the licenses and Power

Purchase Agreement (PPAs) issued to the IPPs appear to have a short time,

span leaving IPPs with no choice but to ensure that they recover their

investment cost and make attractive returns within limited time.

(4) The power system in the region have over the past years been overstretched

due to a shortfall in generation capacity to match giving demand. The

response in the unfolding crises has been to increase generation capacity by

allowing IPPs to the sector. In extreme cases where generation by IPPs has

still not been sufficient to meet demand, local shedding ensued.

(5) The electricity Regulatory Agencies has done little to ensure the

sustainability of the power sector. This is attributed to the weakness of the

regulatory agencies to enforce the electricity Act because the ability to

perform its duties has been compromised by its lack of the requisite

lxxvi

independence as a result of politically motivated appointment of the

members of the respective agencies boards.

(6) Power sector reform appears to have marginalized local private investment

in the power sector. Current trends seem to indicate that in the medium term,

the government will be effectively handing over a significant share of the

electricity industry to non-material operators. In the long-term, this may be

an unsustainable arrangement. In part the IPPs have mainly been hampered

by the emphasis on large scale investment.

RECOMMENDATIONS

To achieve the vision 2020 goal of making Nigeria one of the twenty largest

economies in the world, electricity generation will have to increase from the

present level of 3650MW to about 45000MW. To achieve this, the following

should be done:

(1) Incorporate off – grid policies and legislation in power sector reform: The

focus of electric Power Sector Reform is understandably on the main grid

utilities. Rural electrification grid versus off-grid planning. Concession areas

etc. Power Sector Reform in general opens space for private sector

participation. Legislation should create clear rules for off-grid or mini-grid

concessions which should preferably be awarded on a competitive basis.

There is also need for equitable arrangement around capital subsidies and

lifeline tariff grid and off-grid or mini-grid systems.

(2) The most effective measures of the reform is ensuring the independence of

regulatory agencies. This could be achieved by enhancing the re-

lxxvii

presentation among the board members. For example, having representative

of various segments of consumers including rural on the board of regulatory

agency could ensure that the plight of the disadvantaged is heard especially

with respect to electrification and review of electric tariffs.

(3) Issuing licenses and Power Purchase Agreements (PPAs) covering a longer

period, this can ensure that setting price of electricity is moderated. This is

essentially because long-time agreement allow for sufficient time for the

investor to pay off project financing debts as well as adequate amortization

period for the equipment.

(4) Design plausible and realistic programs: power Sector reform arbitrations

need to be realistic, both in scope and content. It is not always possible to

transfer ideologies or practice elsewhere to the environment in another

country. Competition and privatization varies from country to country as

well as views regarding this.

(5) Electrification challenges: High cost of grid extension is identified as a

barrier of rural electrification. An immediate option to lower the cost of rural

electrification is the use of proven low cost electrification option such as

wind, solar DV etc. another option is the promotion of decentralized

electricity generation in rural areas using bio-gas based cogeneration and

where applicable geothermal. This would greatly reduce the need the

transmission has to transverse long distance and sometimes difficult terrain.

Special funding mechanism need to be put in place (system limes fiscal

allocation, donor funds), consolidated in a natural electrification fund lucked

to electrification playing and fund allocation process. Transparency and

lxxviii

accountability in the allocation of these funds is crucial, as there are far too

many instances where funds have either been directed or allocation

politically done to favour constituencies.

(6) Leveling ―the playing field‖; the regulatory agencies could promote proven

environmental friend by electricity generation options through setting of

spiral targets as well as providing for preferential tariffs for their electricity

sales. In addition regulatory agencies could provide attractive incentives to

investors willing to install electricity generation plan based on these energy

sources.

CONCLUSION

The challenges of reforming the electric power sector to make it deliver

available power supply, to the economy is enumerable but there is need to be

hopeful as the Multi Year Tariff Order (MYTO) has been approved by the

government, a wake-up call has been made on the institutional structure like

(NERC) to take the bull by the horn on the provision and sustenance of the

realistic policies to achieve the vision 202020.

As a country that is at the echelon of subdivision competition with other

countries in the world. The government should also faithfully implement the

recommendations of Electric Power Sector Reform Committee. There is

need for a huge rehabilitation work to be done in some of the power plants

with a view to sustaining and improving availability of electricity supply.

These empirical results have policy implications for electricity reformers in

developing countries. Like Pollitt (1997) the study finds that competition is

lxxix

the most reliable driver of economic benefits. In the light of the benefits

associated with competition, NERC should introduce measures conducive to

promoting liberalized electricity markets. When privatising industries where

significant monopoly powers remain, emphasis should also focus on

designing and implementing an effective

regulatory framework. The competition variable is significant with the

expected sign throughout, except on the most politically sensitive issue of

residential prices and for capacity utilisation, where liberalisation may lead

to a decline in average capacity usage. Because competition is confirmed as

the most reliable means of improving performance, this suggests that the use

in a number of developing countries of exclusivity periods granted to new

generators and long-term purchase contracts for IPPs, arranged so as to

stimulate investment, may be unwise. Such measures may dim efficiency

incentives and reduce economic performance by removing the incentive of

competition.

This Questionnaire is on assessing the Electric Power reform. Participation in the

research will not have any implication on you. We would be glad if you could

supply us with the needed information. Thank you.

SECTION A: SOCIO-DEMOGRAPHIC VARIABLE

A1. Sex Male Female

lxxx

A2. Age

A3. Department__________________ A4.

Rank___________________

A5.Division/Unit____________________

SECTION B: COMPLIANCE WITH REFORM

Scale: Excellent, Good, Fair, Poor. (Tick only one option)

NO QUESTION Excellent Good Fair Poor

1. How is your opinion about electric supply

been, during the pre- reform era?

2. To what extent has reform played in

improving the access to electricity to the

society?

3. To what extent are the targeted and

transparent subsidies put in place to help

the investor

4. To what extent has the incentive issued by

the regulators reduced the price of

electricity?

5. How has the incumbent invested in the

power during and after reform?

SECTION B: EXTENT OF AVAILABILTIY

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For the Stakeholder, to what extent will the reform affect your productivity,

business and otherwise? Indicate by grading it to show the extent of your support

for the following factors.

Scale: Excellent, Good, Fair, Poor (Tick only one option)

NO QUESTION Excellent Good Fair Poor

1. How has electricity supply been during the pre-

reform era?

2. How would you grade the reform before reform?

3. How would you grade reform after reform?

4.

How has the energy cost of doing business

changed?

5.

What is your opinion about privatization in the

provision of electricity?

6.

Public sector finance privatization receipt, how has

this receipt been used to realize fund for the

increase expenditure on electrical programme?

7. To what extent does the investor engage in the

generation of electricity?

8. How would you rate and rank the investors?

9.

Consider the on-going reform process, has PHCN

increased in its revenue due to competition?

10.

To what extent has competition led to the increase

in the efficiency and effectiveness in the power

generation?

11.

What is the extent of tariff structure and moves to

cost reflectivity?

12.

Do the new agents emerge that invest in access to

electricity power supply?

13.

Do reforms include the establishment of any

special access mechanism by the regulators?

14.

How efficient is the services of PHCN officials as

regards to customers complain after the reform?

15. How is reform on social services?

lxxxii

This Questionnaire is on assessing the Electric Power reform. Participation in the

research will not have any implication on you. We would be glad if you could

supply us with the needed information. Thank you.

SECTION A: SOCIO-DEMOGRAPHIC VARIABLE

A1. Sex Male Female

A2. Age

A3. Department__________________ A4. Rank___________________

A5.Division/Unit____________________

SECTION B: COMPLIANCE WITH REFORM

Scale: Excellent, Good, Fair, and Poor. (Tick only one option)

NO QUESTION Excellent Good Fair Poor

1. How is your opinion about electric supply

been, during the pre- reform era?

2. To what extent has reform played in

improving the access to electricity to the

society?

3. To what extent are the targeted and

transparent subsidies put in place to help the

investor?

4. To what extent has the incentive issued by

the regulators reduced the price of

electricity?

5. How has the incumbent invested in the power

during and after reform?

lxxxiii

SECTION B: COMPLIANCE WITH THE ABAILABILITY

Scale: Excellent, Good, Fair, Poor (Tick only one option)

NO QUESTION Excellent Good Fair Poor

1. How has the electricity supply been during

the pre-reform era?

2. Does your organization depend on electric

power supply for their operations?

3. Have reform improve access to electricity

to the society?

4. Have reform improve the quality of

electricity supply?

5. To what extent has the price changes have

resulted from the sector reform?

6.

Do you think that chances are given to the

(IPP) in the provision of power supply for

business?

7.

How has the (IPP) impact on the power

supply generation felt and rated?

8.

Has privatization led to higher price to the

residential consumer and lower price to the

industry?

9. Have electrification programme expanded

the access to small business?

lxxxiv

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lxxxv

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18. Kareke, S. et al (2005) Engendering Power Sector Policy in Eastern and

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lxxxvii

FIGURES:

Fig 1: = Power development chart

2. = Historical funding levels by governments for PHCN

operation

3. = TCN 330KV Transmissions grid as at today.

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lxxxix

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