Nigerian officials have begun preparing a plan to sell the crippled state electricity system.
Goodluck Jonathan, the president, has privately signalled his support for a reform blueprint, including a potential multi-billion dollar sale of state-owned distribution companies and power plants. But he has encountered stiff resistance, people familiar with the situation say.
Advocates of the reforms said Mr Jonathan’s decision, expected in the coming weeks, would test his willingness to overcome opposition from those who profit from the status quo.
“If the president wills it, it will be done,” said one person close to the discussions, who favours reform.
But a senior foreign official warned: “There are people who don’t see it as in their interests and they could throw a spanner in the works.”
Nigeria is sub-Saharan Africa’s biggest oil and gas exporter, but the state power company provides only enough electricity to run a refrigerator for one in every 30 people among the 150m population.
The proposals under discussion would break up the Power Holding Company of Nigeria (PHCN) – known to Nigerians as “Please Have Candles Nearby” – and invite bids for 11 regional electricity distribution companies and six generating companies.
The Bureau of Public Enterprises had begun work on a bidding process to “hit the ground running” if Mr Jonathan decided to proceed, said an official.
The government might earn $4bn (€3.3bn, £2.8bn) from the sale of existing power plants, along with others under construction, and a further $3bn from the distribution companies, according to estimates.
But restoring the power lines felled by neglect or theft and extending supply would cost many multiples of the sale price.
Investors could still turn the privatised distribution companies into “cash cows”, according to one industry expert, who said: “Supply will never meet demand for 10 years.”
Nigerians spend an estimated $8bn a year running the costly diesel generators that have become the main source of power.
The lack of electricity deprives the country of economic activity worth $130bn annually – equivalent to more than half of gross domestic product – according to a study produced for the power ministry.
While no formal discussions with potential investors have taken place, officials expect interest from European, Chinese and Indian investors.
Tom Burgis on why Nigerians should not rejoice yet www.ft.com/beyondbrics
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