Business - Business & Economy - News - February 19, 2021

Labour demands review of power sector privatization; rejects import-driven deregulation

Directs workers in states yet to pay new national minimum wage and pension to proceed on indefinite industrial action.

The Federal Government must immediately review the power sector privatization programme and jettison, any deregulation policy in the country driven by fuel imports, the organized labour has said.
Also, all plans to concession the country’s airports and other considerations for privatization of public assets must be reversed forthwith.
These were among key resolutions by the National Executive Council (NEC) of the Nigeria Labour Congress (NLC) at the end of its meeting in Abuja on Wednesday.
Members of NEC of the NLC consist of all Presidents, General Secretaries and Treasurers of NLC’s affiliate unions; Chairpersons and Secretaries of State and FCT Councils, and members of the National Administrative Council.
In a communique signed by the NLC President, Ayuba Wabba, and General Secretary, Emmanuel Ugboaja, the NLC Council expressed concern that Nigeria’s total power generation capacity has not exceeded 4000 megawatts (MW) more than eight years since the privatization of the power sector, despite all the monies sunk by the government and investors.
In the communique, the NEC noted that this development poses a huge question mark on the success and usefulness of the power sector privatization and should be reviewed.
Power sector privatization
In line with the privatization agenda by the Bureau of Public Enterprises (BPE), the power sector privatization programme was to be reviewed every two years.
But more than eight years after the sector was privatized, and the defunct Power Holding Company of Nigeria (PHCN) broken into 11 distribution, six generation and one transmission successor companies and handed over to private investors, nothing seems to be happening in that direction.
Rather, the government has continued to pump in more public funds into the sector to support operators and enhance their capacity to achieve steady supply of electricity.
Although BPE said in June 2018 it discovered fundamental flaws hindering effective operations in the sector after its privatization, it is yet to proceed to conduct a review of the sector privatization to correct the flaws.
The Director-General of the Bureau, Alex Okoh, said the review would cover customers enumeration, to eliminate estimated billing challenges, improve metering infrastructure, cost-reflective pricing and tariff structure.
NEC decisions
The NEC demands were part of the organized Labour reactions to the report of the committee on petrol price and electricity tariff constituted by the government following the decision last September to increase both the retail petrol price and electricity tariffs in the country.
When the report was presented earlier by the Committee, the NLC had asked for time to out consultations with its constituents before responding.
Consequently, during the meeting, the Council resolved that government should immediately address the conditions within its control that are behind the incessant increment of fuel prices and driving up electricity tariffs in the country.
Conditions driving petrol price hike
On petrol price, the Council identified some of the issues driving the incessant increases in the pump price of the Premium Motor Spirit (PMS), also known as petrol, and other refined petroleum products in the country.
These include the continued dependence on imported refined petroleum products due to the decay of all Nigeria’s public refineries; sea freight charges, and use of import parity prices to calculate the landing cost of petrol.
Other factors include the unbearable pressure as a result of the persistent volatility in foreign exchange rates, additional costs owing to the absence of critical infrastructures in the ports to handle imported refined petroleum products, the cost of demurrage, and taxes by different regulatory agencies.
Labour rejects import-driven deregulation
In rejecting the deregulation policy that is import-driven, the Council condemned the failure of successive governments to keep their promises to fix the country’s refineries, saying with the right political will, the government could make it work within a short time.
It reiterated its traditional position that the government should rehabilitate and revamp Nigeria’s local refineries as a sustainable solution to the incessant increases in the pump price of petrol.
It also called for the establishment of modular refineries in order to bring down the price of diesel in the country.
On the template for determining the pump price of PMS, which includes inbuilt charges and inflationary trend, the Council demanded that a review should be carried out to shield Nigerians from the volatilities in the international crude oil market.
Conditions driving electricity tariffs increases
On condition that drive electricity tariffs increases, the NEC identified high cost of natural gas used in power generation in the country, because it is priced in dollars, and the frontloading of the cost of infrastructure investment by electricity distribution companies (DISCOs) transferred to the end-consumers.
Reduction in gas price
On electricity tariffs, the Council criticized the findings in the report that gas is being sold to GENCOs at 2.5 cents per 1000 cubic feet against the international best price of 1.5cents, noting that the 1.0cent difference was always passed on to the end-consumers of electricity.
While calling for the immediate reduction of the cost of gas to 1.5 cents, the Council also demanded the scrapping of the use of U.S. and Nigeria inflation rates to determine the cost of gas sold to GENCOs.
The Council expressed dismay over the poor implementation of the Accelerated National Mass Metering Programme (NMMP) by the government, a development it said allows DISCOs to migrate consumers to higher tariff bands without their consent, while imposing fresh tariff hikes on electricity consumers in the country.
It called on the government to step up on the mass distribution of meters to electricity consumers all over Nigeria, saying to ensure strict follow up and compliance, an oversight taskforce must be set up outside the purview of NERC and DISCOs.
Second wave of COVID-19 pandemic
On the second wave of COVID-19 pandemic, the Council expressed concern over the inability of African countries, including Nigeria, to develop anti-COVID-19 vaccines, blaming it on the lack of commitment by government to fund research and innovation.
The Council called on governments at all levels to demonstrate genuine commitment to research by ensuring central coordination of all research funding and efforts in the country.
Also, the Council called on the government to put in place an enabling legislation to promote research, particularly by encouraging research into the use of local herbs and other resources in managing COVID-19.
Escalating insecurity
The Council lamented the persisting insecurity in the country as a result of increased terrorism, kidnap-for-ransom, banditry and inter-communal clashes which has displaced millions, rendering many places inaccessible, while ruining livelihoods.
Urging the government to live up to its constitutional responsibility of protecting the lives and property of Nigerians, the Council warned that Nigerian workers would no longer tolerate the escalation of insecurity in the country as it presents huge dangers to citizens, economic growth and national stability.
While expressing worries over the fate of Nigerian workers and citizens in the face of the growing insecurity, the Council said the toll on productivity, economic growth, food security, and the mental and physical health of workers, their families and citizens was huge.
The Council reiterated its resolve to convene a national security summit as soon as possible to contribute to the search for solutions to the crisis.
Against concession of public assets
The Council described the move by government to concession Nigeria’s major airports to private businesses as the usual appetite by successive Nigerian governments to privatize every public asset.
It warned against any plan to either concession or privatize public enterprises and assets as previous exercises have not been to the advantage of the Nigerian people and workers.
New national minimum wage, minimum pension
On the implementation of the new national minimum wage and minimum pension, the Council decried the failure of some state governments to pay the national minimum wage and minimum pension as a result of their failure to conclude negotiations on consequential salary adjustment owing to the new national minimum wage.
While threatening drastic action against state governments that have refused to pay the new national minimum wage and minimum pension, the Council directed all affected states to immediately proceed on indefinite industrial action.

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