THE Federal Government of Nigeria through the Power Minister, Bartholomew Nnaji recently signed a $10 billion agreement with General Electric (GE) Company of the USA for the construction of power plants in the country to produce 10,000 MW of electricity. Details of the project are pithy. The Memorandum of Understanding, which was developed by the GE, makes provision for the company to invest 10-15 per cent in equity for every single power plant through provision of requisite components. The Federal Government is expected to match the company's stake in any plant.However, reports do not indicate the number of power plants, their proposed location, the time frame for their execution and whether the generating plants would be gas and coal-fired or even hydro-driven or wind-propelled. It is unclear if the price tag is for GE-produced turbines to generate 10,000 MW or for the GE to build fully and equip power generating plants with capacity to deliver 10,000 MW to the transmission grid. Nigerians are not told if there are any default clauses and penalties to be borne by the GE as a precaution as well as by the Federal Government, which has offered to provide guarantees. Nnaji should address the above concerns and disclose all other relevant information on the project for the benefit of the public. The Nigerian people deserve the right to know even ahead of the signing of such agreement.As regards the source of funds for the project, Nnaji reportedly said in one breath that government would use a small part of the national pension fund to finance some power plants and denied in the next breath any planned government financial involvement in any of the plants apart from providing guarantees for private sector participants. Apparently government did not have in waiting any private sector participants on whose behalf it had proposed guarantees. Nevertheless, while a large proportion of pension funds, when privately and freely invested in the plants, could prevent default by government on the GE agreement, a note of warning should be sounded here against any government plans to poach the national pension funds. It must be emphasised that the pension funds are privately owned and are also managed by licensed special purpose Pension Fund Administrators (PFAs), which are private companies, on the basis of guidelines set by the National Pension Commission (Pencom). Indeed, owing to both the Federal Government's unsatisfactory handling of the PHCN utilities and failure to execute the upfront-funded National Integrated Power Project that is already seven years behind schedule, the Pencom should not even allow pension funds to be invested in power utilities that have the Federal Government as a partner.Apart from the foregoing reservations, the Pencom and the PFAs should find the FG/GE agreement a boon. Pencom Director-General, M. Ahmad indicated in July 2011 that pension funds in excess of N2 trillion were under-utilised and therefore available to be ploughed into long-term projects with guaranteed returns. That amount, which has swollen further since then, outstrips the estimated cost of the GE project. When they are well constructed and efficiently run, power utilities offer good and steady returns. In light of the FG/GE agreement and the recent favourable recommendations by the National Council on Privatisation on the power sector, therefore, the Pencom should designate greenfield power utilities as falling within the class of assets to which up to 100 per cent stake could be subscribed with pension funds. Consequently, specific power plants (why not all') involving the GE could be financed with pension funds to the tune of 85 per cent holding while the GE picks up the balance, thereby requiring no matching investment by the Federal Government. In such a wholly private sector partnership with majority Nigerian content, the power plants would be built on schedule. Moreover, the GE could be relied upon, if need be, to help identify and recruit required experts internationally to efficiently manage the utilities for specific periods during which time Nigerian personnel understudy them preparatory to succeeding them.The GE project, which looks feasible on paper, will not meet the national requirement for electricity. The Federal Government should therefore intensify the implementation of the power reform programme, expedite work on the National Integrated Power Project and lay down plans for further expansion of electricity generation, transmission and distribution. With regard to their financing, as in the case of the GE project, it has been shown time and again that there exist more than adequate internal resources for filling the country's infrastructural gap and to rapidly develop the economy. But their actualisation has been frustrated by the Federal Government, which is willfully hard of hearing while resolutely disregarding the national economic objectives mandated by the Constitution under the Fundamental Objectives and Directive Principles of State Policy.
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