Power
Govt orders sack of 20,000 PHCN workers
ABUJA — THE Federal Government has ordered the retrenchment of no fewer than 20,000 workers of the Power Holding Company of Nigeria, PHCN, ahead of takeover by successful bidders of its assets.
Biztellers gathered that the Bureau for Public Enterprises, BPE, issued the directive to the Chief Executive Officers, CEOs, of the 18 successor companies to PHCN at a meeting in Abuja, to compile names and drastically reduce the 50,000 strong workforce before the new investors take over.
It was gathered that new investors demanded that the workforce must be pruned before government hands off.
Labour warns on danger of action
Though it is not clear how government arrived at this figure, however, General Secretary of the National Union of Electricity Employees, NUEE, Mr Joe Ajaero, who confirmed the directive to massively retrench the workforce, said it was obvious that the Federal Government had decided to truncate the implementation of the collective agreement reached with the unions.
Already, organised labour had kicked against the move and warned the government against such action even as the agreement reached between both parties in December 2012 on the terminal benefits of workers had not been implemented.
The Senior Staff Association of Electricity and Allied Companies, SSAEAC, has petitioned the government through the Federal Ministry of Labour to explain the dangers and futility of government action when agreement on terminal benefits had not been honoured by the government.
On its part, NUEE directed members to shut down the power sector once any worker is issued a retrenchment letter without a financial back up in line with the December 2012 agreement.
NUEE, in a statement by Ajaero, rejected the planned retrenchment of workers without honouring the agreement the government entered into with the workers.
According to NUEE, “our attention has been drawn to the nocturnal meetings being held between Federal Government and all chief executive officers in Power Holding Company of Nigeria, PHCN, where a mandate to retrench workers in the power sector has been handed down to them. It is rather unfortunate and provoking that the Federal Government is hatching such obnoxious idea when agreement reached with the unions on payment of severance benefit is yet to be implemented.
“Information reaching us reveals that arrangement to close down PHCN’s Corporate Headquarters has been put in place. While people are still working, government plans to kill their management.
“It was equally gathered that the Federal Government has concluded plans not to pay pension or transfer money to the Pension Fund Administrators, PFAs, all in the name of driving workers to their early graves. We are worried that the government could be privatizing without cash backing, as information at our disposal suggests that about N43 billion is available out of the over N400 billion agreed with the unions.
“At the moment, agreement on certain indices to be used in calculating entitlements like life expectancy which the Federal Government put at 14 years is yet to be reconciled.
“By this posture, it is obvious that the Federal Government has decided to truncate the implementation of collective agreement reached with the unions. Nigerians should, therefore, hold government responsible for any reaction this action may generate.
“While there is still opportunity for the Federal Government to follow due process, we wish to state unequivocally that PHCN workers will legitimately resist every attempt to shave their hair in their absence. Should the Federal Government make good its threat to retrench workers in the sector when labour issues have not been settled, all members are advised to stop work, while those monies paid into their accounts should be seen as free money. The hour has come for you to defend your rights.”
Govt set to pay off workers —Igali
Meanwhile, the Federal Government has said it is now set to pay off the staff of PHCN. The Permanent Secretary, Federal Ministry of Power, Ambassador Godknows Igali disclosed this, weekend.
Igali told journalists in Abuja that the fund for the payment of the workers’ severance package was ready and that in a matter of weeks, they would be paid as part of the process of the takeover of the sector by private investors.
His words: ”What we have done so far is to try to ensure that the entitlement of these people and their severance package is well calculated from the point of their engagement to the point where the government is bringing the private people to take over.
“We have agreed on virtually everything. Government is preparing towards the formal takeover by the private sector. We expect the process to be seamless. So far, there is no major problem; the fund required to pay the people is available.”
…assures workers
The Permanent Secretary expressed satisfaction at the resolution of the issues surrounding the disengagement with the PHCN staff as well as casual workers and assured that the Federal Government was working to ensure that they were all happily disengaged.
According to him, the new owners would certainly re-engage many of the workers as it would be practically impossible to operate without the old staff. He said the private sector operators would be made to adhere to the nation’s labour laws.
His words: “The people that are working in these power plants are Nigerians, and when the private people take over, they are not going to bring workers from Jupiter, Mercury or China; most of their workers would remain Nigerians.
“The only difference is that they have been government workers up till now and as the government finishes with them, they will transfer their services to private operators who are driving the sector now. But the private sector will still follow the Labour law of this country.
“So, it is not a situation of whether there is going to be mass exodus of people out of the sector. Most of these workers have been very competent; they have been serving the country very well with commitment. And you cannot just replace those who have been on the job for many years.”
Training and retraining of workers
For those who would not be re-employed by the new owners and those who may choose to go into private business, Igali said: “Government also has a very robust programme to train and retrain the workers of most of these companies. Retraining them is at two levels: first is to retrain people in such a way that they can fit into a new nature of the sector. Before it was public service but now, we have private people taking over.
“So we are retraining them so that those who will continue working on contract basis will fit into the system properly. The second training is directed at those who would opt for private life. A lot of people may want to go into consultancy; like I said, the private people coming in cannot go out of the country to import thousands upon thousands of workers to take over our electricity sector. They will still need these same people.
“Government from the highest political authority has assured people of their commitment to ensure that all parties are satisfied with the way the issues are resolved.”
He added that the power reform transaction signing summit presided over by President Goodluck Jonathan, last Monday, was an eloquent demonstration of highest commitment by the government to ensure a successful conclusion of the power transaction.
The Perm Sec said $600 million (about N94 billion) was realised from the 25 per cent initial payments by the investors in the power sector and that they were equally determined to make the transactions successful with some even ready to make 100 per cent payment of their bid prices ahead of the 90-day stipulated payment period.
He said: “Some are ready to pay 100 per cent but 25 per cent was what was required at this stage and the total amount from the information we have from BPE is about $600m.”
Igali said power generation had risen to over 4,500 and that the Federal government’s target of 9-10,000 at the end of the year was still intact.
He claimed that some major cities of the nation now enjoy about 16 hours of electricity daily.
According to reports, Nigeria’s population may face more challenging times ahead as electricity tariffs are projected to increase by over 40 percent in the near future.
This rise in tariffs could ultimately result in the elimination of all energy subsidies in the country.
Currently, the electricity sector relies on a monthly subsidy of approximately N50 billion, stemming from a shortfall in revenue.
The tariff hike, scheduled to take effect from July 1, will pose another significant test for President Bola Ahmed Tinubu’s administration and its ongoing market reforms.
The government has already taken steps to remove subsidies on Premium Motor Spirit (PMS) and implemented a floating exchange rate for the national currency.
These decisions have added complexity to the price-setting process of the Nigerian Electricity Regulatory Commission (NERC) and its 2022 Multi-Year Tariff Order (MYTO).
Despite power sector players failing to meet the target of supplying a minimum of 5,000 megawatts, even after signing contracts with the Nigerian Electricity Regulatory Commission (NERC), the current Service Based Tariff (SBT) is based on an exchange rate of N441/$ and an inflation rate of 16.97 percent.
According to NERC’s directives in 2015, the average tariff for distribution companies (DisCos) and different categories of end-users was N25 per kilowatt, as per Order 198/2020, which came into effect on September 1, 2020.
However, in the MYTO for 2022, the average tariff increased to N60 per kilowatt across all customer categories, and in the most recent update, it stands at N64 per kilowatt.
The determination of the 2015 tariff relied on a foreign exchange rate of N198.97/$, which increased to N383.80/$ in 2020 and further to N441.78/$ in 2022. In terms of inflation, the 2015 MYTO utilized an 8.3 percent rate, which rose to 12 percent in 2020 and reached 16.97 percent in 2022.
Currently, the inflation rate stands at 22.41 percent, and experts predict it could reach 30 percent by the end of June, considering the floating of the naira and the removal of subsidies on Premium Motor Spirit (PMS).
The tariff determination process takes into account various factors, including the significant metering gap of over seven million, gas prices, losses within the system, and the actual generation capacity. These elements play a role in determining the final tariff.
As anticipated, NERC had projected that the tariff for July 2023 would eliminate subsidies and introduce increases to the previously frozen tariff bands D and E.
These adjustments were intended to raise the bands from N54.59/kilowatt to N62.16 for band D and from N48.37/kilowatt to N61.16 on average. Moreover, the average increase across all bands was expected to reach N67/kilowatt.
However, due to the ongoing floating of the naira and the significant inflationary pressures, it is now projected that the new average tariff will need to be approximately N88/kilowatt for the power sector to recover its costs.
According to energy lawyer Madaki Ameh, the continuous and frequent increases in power tariffs are akin to a form of blackmail against electricity consumers.
Amen said “Indexing the cost of electricity on the dollar is a huge mistake because most of the inputs for electricity supply are local. The DisCos are also holding Nigerians to ransom by failing to increase the supply base, thereby spreading the tariffs across a broader spectrum of consumers to reduce the unit cost of electricity.”
He insisted that as long as there remain many unmetered consumers and many others not connected to the grid at all, the few consumers on the grid would continue to be subjected to unjust tariffs, which are not reflective of the quality of service delivered.
Ameh hoped that the signing into law of the new Electricity Act would mark “the beginning of light at the end of the long tunnel of inefficient and epileptic power supply in Nigeria.”
Segun Ajibola, the former President of the Chartered Institute of Bankers of Nigeria (CIBN) and a professor of Economics at Babcock University, highlighted that there remains a gap between the cost of electricity and the value it provides in exchange.
“Nigerians are still struggling to keep pace with the cost of energy for business and household use. If the electricity tariff goes up as envisaged, the question remains if there will be value for the quantum of electricity so paid for.
“The truth remains that if electricity supply is constant, of the right quantity and quality, the envisaged upward review in the tariff will be gladly absorbed by the populace,” he said.
Lanre Elatuyi, an Electricity Market Analyst, expressed that the recently implemented tariff rate would have significant implications. He emphasized that the devaluation of the Nigerian currency poses a major challenge for companies with dollar-denominated loans to repay.
He said “They will need more naira today to buy a dollar. They need to manage their exposure to foreign exchange risk. Even operators of hydro plants pay their concession fees in dollars. So, wholesale electricity price will be adjusted upward and this will get to the end users’ tariffs too.”
Senator Shehu Sani, a prominent Nigerian lawmaker has accused President Muhammadu Buhari’s government and state governors of secretly selling five power generating plants without disclosing the utilization of the funds received.
He disclosed this in his Twitter handle on Monday.
Senator Sani, known for his outspoken nature and activism expresses his concerns over the alleged undisclosed sale of the power plants.
He claimed that the government, in collaboration with state governors, had carried out the transactions without informing the Nigerian public about the purpose of the funds acquired from the sale.
The post reads “Buhari’s Government in collaboration with the State Governors quietly sold the five power generating plants without telling the country what the money was used for.
The Vice President of Nigeria, Prof. Yemi Osinbajo, has inaugurated the Afam 3 Fast Power 240-megawatt turbine project in Rivers State.
The project, which is a subsidiary of the Transcorp Group located in Oyigbo, on the outskirts of Port Harcourt in the state, was unveiled during a ceremony that took place on Tuesday.
The event, which was attended by several dignitaries, including the Chairman of Transcorp Group, Tony Elumelu, and other top officials, saw the Vice President arriving at the venue in a chopper at exactly 11:35 am.
Upon his arrival, he was escorted into the premises where he officially inaugurated the project.
During his speech at the event, he disclosed that the acquisition of the project was approved by the National Council on Privatisation (NCP) and the acquisition cost was ₦105.3 trillion.
Osinbajo further emphasized that the successful completion of the project is a significant breakthrough in Nigeria’s power sector.
In his address, Osinbajo said, “In 2020, electricity subsidies reached N584 billion, but service-based tariffs have led to a doubling of collection in the Nigeria Electricity Supply Industry from N40 billion in 2020 to N80 billion in the first quarter of 2023.
“If this trajectory continues, the Nigeria Electricity Supply Industry will be able to pay for itself. Our administration has also created programs for off-grid for electrification. Rural Electrification Agency now has the capacity to provide electricity supply on a first-class basis.
“We are on track to electrify all Nigerians in the next decade. However, we will not make progress if our gas supply does not improve. The gas supply challenges are hampering improvements.”
He further lauded General Electric, the National Council on Privatization (NCP), and the host communities for their contribution to the completion of the Afam 3 Fast Power 240-megawatt turbine project in Rivers State.
Osinbajo highlighted that the successful completion of the project will significantly increase the country’s power supply capacity, leading to a better quality of life for Nigerians.
In November 2020, the federal government and the Transcorp Power Consortium signed a share sale and purchase agreement in relation to Afam Power Plc and Afam 3 Fast Power Limited.
The National Council on Privatization approved the privatization of the Afam Power Plant back in August 2017, which triggered a competitive bidding process involving 12 prospective investors.
After careful consideration, Transcorp Power Consortium emerged as the preferred bidder with a combined offer of N105 billion.
#OndoDecides2024: Police Chief Tours Polling Units, Collation Centres
#OndoDecides2024: Lawmaker Applauds Peaceful Election
#OndoDecides2024: Police Seize Motorcycles, Vehicles Violating Restriction Order
#OndoDecides2024: BVAS Challenges Mar Ondo State Election
#OndoDecides2024: Interior Minister Commends Peaceful Conduct
Trump Taps 27-Year-Old Karoline Leavitt As New White House Spokesperson
OSSG Raises Alarm Over Murder Plot By APC Chieftain
NCC, SMEDAN, NAICOM, SEC, Others Set for SUPERNEWS SMEs Conf June 13
Sahara’s Tonye Cole resigns from GPHCDA
Oando opens ultra-modern petrol station in Lagos
Niger Delta Avengers: President Buhari Reads riot Act …considers the carrot and stick option
