“Privatization And Unionism: Nigerian Power Sector Experience”
BY Amb Godknows B. Igali, PHD, OON,
PROTOCOL
I will like to begin by expressing my very sincere gratitude to the President General of the Senior Staff Association of Electricity and Allied Companies, Engr. Dr. Chris Okonkwo, FNSE, President of the Trade Union Congress of Nigeria, Comrade Boboye Kaigama, Comrade Joe Ajaero and other key stakeholders of the Labour Movement in the Power Sector, for this very high honour done to me in being called upon to make this Keynote Address at this Fourth Triennial Conference. For an event that takes place every three years, the opportunity to share thoughts with the critical mass of the work force in one of the most important sectors of our national economy, is indeed a rare privilege which I do not take light of at all.
More importantly, I will like to pay special tribute to our host, the very dynamic and performing Governor of Enugu State, the Rt. Hon. Ifeanyi Ugwuanyi (Gburugburu), a man who has performed in a most spectacular and outstanding manner and laid a foundation from which Enugu, which by the way remains the all time capital for us from the former Eastern Region, can thrive. This is also the first public forum in which I am privileged, to share thoughts with the Honourable Minister of Power, Works and Housing, Babatunde Raji Fashola, SAN. This therefore affords me the opportunity to appreciate your performance in the past four years in handling the most daunting responsibilities. The fact that Nigerians and expectedly so, are in a hurry to see results produced with microwave speed, and the triple nature of your tasks must have created additional burden. I also would like to convey my respects to the Hon. Minister of Labour, Sen. Chris Ngige, who is in very familiar terrain, as we toiled day and day to address the post privatisation labour issues during the 2014-2015 era.
Excellencies, Distinguished Comrades and Delegates, I have been asked to speak on the theme “Privatization and Unionism: Nigeria Power Sector Experience”. This is apt and at the very nexus of the power sector matrix. This is due to the fact that the power sector is not just made up of megawatts, kilowatts, sub stations, crossed bars, turbines, etc. In reality, the Sector is, first and foremost, manned and operated by human beings, mostly fellow Nigerians. I dare say, most of these workers of the power sector are amongst the most professional, proficient, efficient, capable, dependable and patriotic Nigerians. We will return to this later.
Before I delve into the theme, let me say that Dr. Okonkwo and his team, like other previous efforts by other persons managing the power sector of our country at present, made efforts to get me out to speak on this occasion. Not that I do not have things to say, in the daily national discourse on how to take the power sector forward. I had, on personal decision, maintained a taciturn attitude in being part of the debate. This finds explanation in the fact that I came into the sector in 2013 and till 29th May 2015 was Permanent Secretary. Between May and November 2015, I was in charge of the entire sector in the absence of a Minister. It is therefore only fair and proper that I keep to the old golden rule of not publicly meddling with what our successors are doing. I want to assure all, however, that I have quietly been very generous with my thoughts and counsel and availability to help with issues in the sector whenever my attention was required.
But taking account of the fact that the role of individuals in this sector remains largely misunderstood, politicised and unfairly regarded, I took the decision to break my rule and participate in this conversation and shed light on so many things. Unknown to many Nigerians, majority of the workers in the sector, daily, put their lives on the line in order that others may be happy. By that, I mean members of the National Union of Electricity Employees (NUEE) and our host today, members of the Senior Staff Association for Electricity and Allied Companies (SSAEA).
Without dwelling on much details, this is exemplified by the fact that in the past four years alone, several staff in the power sector lost their lives while performing their duties. And let it be explained clearly, this is not common to Nigeria alone: All over the world, power sector workers often have to pay the supreme price. In deep jungles they have to go, sometimes in the most inclement weather and often at very odd hours. At times, some are victims not of natural causes but by deliberate human actions. For example, in some of our Distribution companies, consumers bent on breaking laws, have directly attacked power sector workers and at times subjected them to very grievous injuries or even deaths. Yet, our dear Comrades in the sector are unrelenting, continuing to ensure that they keep faith with their oath: that there is power available to Nigerians within the best of possibilities, which they have to work with.
ELECTRICITY PRODUCTION AND NATIONAL ECONOMIC DEVELOPMENT
I have already alluded to the fact that those who man the power sector are among the Nigerians performing critical roles in the day to day survival of the country. This is due to the fact that the electricity sector has for nearly 200 years become the most important determinant of the economic progress, social progress and the material wealth of any nation or people. A cursory overview of the state of the countries of the world shows that the countries with the highest electric energy per capita (consumption of electricity) are the most developed while the darkest countries, so to say, are the least developed. It is therefore very easy to know where a country belongs if we are to look at the pie chart of power availability and power consumption.
It is in this respect that countries such as Iceland, Norway, Finland, Canada, United States, China, Germany, France, Sweden, Japan and so on enjoy relatively high levels of social and economic development as they have more access to power. On the flipside, such countries as Niger, Liberia, Nepal, Equatorial Guinea, Guinea Bissau, Haiti, Burundi, Mauritania, Chad, Sierra Leone and several Caribbean and Pacific islands have rather modest levels of domestic economic activity. Therefore, the foundation for the forward movement of any country in all sectors is a product of the effort, the toil and the labour of the workers in the power sector.
Indeed, even in the most developed countries where there is a lot of automation, very critical role is played by workers and not robots. It is therefore of paramount importance not just for workers but for the overall good that we adumbrate on the status of workers in the sector, on their welfare and wellbeing and on all matters pertaining to the work environment in which they operate. Unfortunately, the common discussions on the public space in a place like Nigeria seem not to have taken regard of this reality.
WHY BOTHER ABOUT THE RIGHTS OF WORKERS?
In answering that question, we need to understand why Trade Unions exist. The need for workers to organise themselves in cooperatives, guilds, in fraternities and in recent history, in unions, is well established and has an antiquity that goes back to about 1,000 years in continental Europe. It is recalled that as far back as 1381, the Peasant Revolt also known as the Great Uprising took place in England during which workers rose up to demand against such obnoxious social practices as high taxation, free labour and the whole idea of slave-like working conditions resulted in the casualty of about 1,500 at the time. In primordial cases when industrial production was carried out at localised levels, the instinct for workers to have some form of aggrupation was regarded as important but not thoroughly organised. They merely focused on matters such as negotiating wages and working conditions with employers of labour.
This however took a dramatic turn in the 18th and 19th centuries with the coming of industrial revolution which now brought about large scale employment of big numbers of workers and the movement from agrarian to extensive industrial production based on manufacturing, unleashing a number of social consequences. These include migration of people particularly from rural to urban areas, changes in family structures, higher levels of exploitation of workers, etc. This naturally led to greater consciousness on the part of workers themselves in increasing the demarche for improvement in the conditions in which they work. This led to the beginning of the formation of Trade Unions or Labour Unions as they are also called interchangeably, with the sole objective to delineate in clear terms, the working conditions.
This was further bolstered by the revolutionary thoughts of German philosopher, Karl Marx (1818 – 1883) who upped the discussions on the right of workers to unionise and as a matter of fact, dictate the terms under which they are made to work. By way of deviation, I should mention that the thoughts of Karl Marx were eventually translated to reality in 1917 when the Bolshevik^ Revolution led by Vladimir Lenin led to the establishment of the Soviet Union which was actually a collectivisation of workers in the new Communist or rather Socialist Republic which was established. Whether this was a reality in word and deed or turned out to be an animal farm as depicted by George Orwell should be left for another discussion.
With the progressive internationalisation of global systems, the International Labour Organisation (ILO) was formed in the aftermath of the First War World (1914 – 1919) as part of the League of Nations. This was on account of the fact that the right of workers was considered as a critical social and economic issue which transcends national boundaries. So, by the time the United Nations was formed in 1948, the ILO became one of its main organs. Even more than that, was the enactment of the Universal Declaration of Human Rights in that same year. Amongst other things, it clearly stated in its Article 23 (1), ”Everyone has a right to work, to free choice of employment, to just and favourable conditions of work, to protection against unemployment ….”
Article 23 (II) Everyone, without any discrimination, has a right of equal work for equal pay
Article 23 (III) Everyone who works has a right to just and favourable remuneration for himself and his family; an existence worthy of human dignity and supplemented, if necessary, by other means of social protection.
While these are general
provisions that are codified within the corpus of international law on the rights of workers, one of the greatest position and very relevant and at the core to this discussion is Article 23 (IV) which reads inter alia Everyone has the right to form and to join Trade Unions for the protection of his/her interest.
It is important to note that these positions have been codified into the laws of the countries of the world as the ILO is the single body with one of the highest participation of countries around the world. At present, this 99 year old organisation has a membership of 187 countries and has in the past received Noble Price for its works.
Is There A Right To Form A Union
While there are wide national variations, it is important to state clearly the question of unionisation is now established as a right under international law. This is at two levels: first is the fact that Universal Declaration of Human Right states clearly in Article 23 (IV) that Everyone has a right to form or join Trade Unions for the protection of his or her interest. This is very unambiguous. However, in the same declaration, there is the provision of freedom of association, which is considered by many as a superior right, both at individual and collective level. Historically, this has been established starting from the Magna Carta of 1215, coming down to the United States Bill of Right, and the Universal Declaration of Human Rights. Since then, there have been several international and regional Covenants including the Human Rights Bill of 1966 and the African Charter on the Human and People’s Right of 1979, also known as the Banjul Charter. In the African Charter, Article 10 (1) clearly states that “Every individual shall have the right to free association provided he abides by the law.”
Interesting enough, the Banjul Charter goes beyond to protect workers by insisting that subject to negotiation or solidarity provided by Article 10, no one shall be compelled to join an association. This is important as we shall see later.
There is a right to unionise but there is no power to be compelled to do that. To give teeth and content to the provision of the Banjul Charter, the Organisation of African Unity, as replaced by the African Union, established an African Commission on Human and People’s Rights in 1987 and later in 1988, established the African Court for Human and People’s Rights. These have now been incorporated into the African Court of Justice and Human Rights founded in 2014, based in Arusha, Tanzania.
A peep at Nigeria’s Labour Laws
As it is known, Nigeria is not only a member of the United Nations but also a signatory to most Conventions and Protocols that deal with the rights of workers not only to unionise but on so many other issues. From time of colonial rule, various forms of legislations have been made to protect the rights of Nigerian workers.
As far back as 1912, government employees in the Public Service formed the Trade Union called the Nigerian Civil Service Union. This was followed in 1931 by another body known as the Railway Workers Union, along with the Nigerian Union of Teachers, which also came on board. It was against this backdrop that in 1938, the colonial government proclaimed the Trade Union Ordinance legalised trade union in the country, including the right to unionise. Since then, much development have occurred, including the merger of the 4 erstwhile existing organizations, that is, Trade Union Congress, Labour Unity Front, United Labour Congress and Nigerian Workers Council to form the Nigeria Labour Congress.
Critical to all these is the clear provision of the voluntary nature of associations, the right to join union and participate in its activities and the right to undertake collective bargaining, the right to embark on strike if all necessary conditions are met. The right of being able to join a union or association or not to be forced to do so are further strengthened by the provisions of the 1999 constitution which clearly states in the Fundamental Objective of State Policy and specifically in Sections 1 and 2 of the Labour Act of 2004 (as Amended).
Power Sector and Labour Unionism
Traditionally, workers in the Nigerian Electricity Sector were all employees of the Federal Government to the extent that they were staff of the Government monopoly, although the workers of the first power plant installed in Lagos in 1896 with only 60 KVA, were of the private sector. Interesting enough, Lagos started to generate regular electricity only 15 years after power was generated in England itself. However, the first company formed to generate electricity at the national level was Nigeria Government Electricity Undertaking (NGEU) which was formed in 1946 as a department of the Public Works Department (PWD). At that time, it generated only 165 Megawatts of electricity. By 1950, the Electricity Corporation of Nigeria (ECN Ordinance) was promulgated while ECN effectively took off in April 1951. This body functioned until it was replaced by Decree 24 of April 1972, establishing the Nigerian Electricity Power Authority (NEPA).
NEPA became a giant monopoly which also inherited the hydro stations and power plants that were operating almost independently by the Nigeria Dam Authority which had been established in an Act of Parliament in 1962. NEPA had existed until it was later divested to form Power Holding Company of Nigeria (PHCN). The important point to note here is that at this time, all workers that worked for government even while it was quasi commercialized to produce power under previous governments, the dealing between workers and management was therefore totally public sector engagement. Even when NEPA operated as public limited company in 2000s, it was a government monopoly. Even the omnibus National Integrated Power Projects which took off in 2003/2004 to leapfrog power generation was supervised by the Niger Delta Power Holding Company (NDPHC) – a government entity owned by the Federal Government, States and Local Governments and funded from Excess Crude Account (ECA).
The enactment of the Electric Power Sector Reform of 2005 started the process of privatisation with the unbundling of NEPA into 18 successor companies: 6 Generation companies and 12 Distribution companies. The PHCN which was formed was therefore a Holding Company and in cooperation with the Bureau of Public Enterprise (BPE) and under the strict monitoring of the Canadian CPCS Consultancy, finally privatised the sector. The formal act was carried out on 30th September 2013.
LABOUR AND UNIONISM UNDER PRIVATE SECTOR
The handover of the national power assets to the private operators has created totally different scenarios. Of principal reckoning the nearly workers who were hitherto government employees have now become staff of the private sector. They were henceforth to function like workers in any other private sector.
However, whether under private sector or government, the fundamentals of labour conditions do not matter because the rights of workers are entrenched and codified, both domestically and internationally.
Let me share a bit of initial misunderstanding when the privatisation exercise took place. A few of the new owners approached me, very triumphant and jubilant, insisting that “I have banned my workers from joining unions”. It took a lot of initial information management to make them understand that it was unconstitutional and against the labour laws of the country to ban unionisation. We insisted that what was important was to allow unionisation take its course under existing labour laws and regulations. That is, ensuring unionisation was optional but is a right. Understand the fundamentals of unionisation which seeks not only to take emphasize the interest of workers but to form a healthy buffer between the right of workers and the good of the companies whether it is the GENCOs, DISCOs, TCN, etc.
In my then capacity as Chairman of the Technical Implementation Committee on the privatisation, we had to break the gridlock on whether unions can exist or be affiliated with national and international movements. As simplistic as it appeared, it took several months to settle this. By the time we winded up, the two national unions in power came put stronger, financially and structurely.
The other important point which we painstakingly affirmed is the fact that in a new private sector setting, both labour and employers had come under Nigeria Employers Consultative Assembly (NECA). NECA seeks to ensure stability of economic activities and deepening of engagement in the private sector, ensuring that there is appropriate quality for the thriving of the private sector. In the initial stage of private sector, we worked closely with NECA in all the meetings, especially on areas dealing with good corporate governance and training of new investors to understand the fundamentals of bargaining negotiating and perpetuating of a healthy environment for economic growth.
THE BENEFITS OF UNIONISATION UNDER PRIVATE SECTOR
In a private sector setting, even more than under government, it is it in the interest of the workers to join voluntarily than being on their own. It is in the interest of workers to allow the union to deal with negotiation on their behalf than dealing with a powerful employer alone. If an employee in one of the big power plants has an issue with the company, it will even take more resources including paying lawyers and other professional services to negotiate on his or her behalf.
On the part of employers, it is better to encourage unions to exist so that they are not encumbered with the daily attending to the individual needs of the workers. In all the big power plants which have unions, there exists a symbiotic benefit to both sides. The workers and employers will benefit more from a leadership that enables them to negotiate with many people through one window. In the spirit of give and take, see areas of commonality between the workers interest and allow workers to have a buy-in than if things are to be done individually.
WHAT DO WE EXPECT FROM THE POWER SECTOR
Nigerians expected a more result oriented and productive sector. This places great burden, both on management and labour.
So far, we seem to be on the right track. Although privatization has not overnight brought all the dividends which Nigerians want to see, it is important to underpin the fact that privatisation has created a capacity to add new lines, new human capacity capacities and energy into the sector. Workers welfare is also increasingly being accorded deserved attention.
For one, privatisation has brought about increase in power generation which had stunted in the past as a result of budgetary constraints and other legacy handicaps which had bedevil the sector. For example, such major plant as Egbin Plant has been able to increase, under private sector managers, its generation capacity from 550 megawatts to its full capacity of 1,300 megawatts. Ughelli Power Plant which has an installed capacity of about 900 megawatts has always operated at below 160 megawatts. Under the private sector, this has increased to 575 megawatts and is right now heading towards 1,000 megawatts. The hydro plant in Shiroro had installed 600 megawatts but only operated at 450 megawatts, but now on full capacity. Generally, generation companies are already producing at a pace at which the distribution companies cannot cope with.
The distribution companies are investing heavily in improving their networks and interfaces and not the least, is the heavy investment in technology, in metering and the ICT application on distribution. According to Association of Nigeria Electricity Distributors (ANED), by way of intervention, at least 1.75 million metres have been installed since 2014. ANED also reveals, that most of these companies now also have GIS enumeration system now. At another level, Aggregate Technical, Commercial and Collection losses (ATC & C) have also gone down. Collections between 2017 and 2018, for example, rose by N78 billion or 21%.
It was in the news recently that the Abuja Disco installed equipment to improve its automation service delivery worth N982 million. As a matter of fact, AEDC stated recently that it has invested N19 billion to improve its services since it took over. In terms of employment, the power sector which had seen almost zero levels of employment for many years, are all involved in massive employment of young and dynamic Nigerians.
The general outlook, therefore, is that the power sector will do well over time.
WHAT ABOUT FUNDING THE SECTOR ?
Nigerians need steady and quality electricity supply and there must be no compromise about that. But to do that, we need a lot of money.
The sector had been starved of resources for many years. The sector, which is heavily capital intensive, had also suffered when we compare our case with say those of India and Brazil. Our per capita investment in the power sector is totally at variance with the statistics in other countries like us. India moved from producing 26,000 megawatts in 1979 to 42,000 megawatts in 1985, reached 226,000 megawatts in 2017 and moved to 240 megawatts in 2018. These were a result of their realization that this sector is what controls other sectors of the economy and is critical to national economic transformation.
In the case of Brazil, its power output reached 156,000 megawatts in 2018, which was just 11,000 megawatts in 1970. Egypt’s power supply increased from 9,900 megawatts in 1997 to 18,130 megawatts at present. This massive overall increase in Brazil and Egypt is owing to the private sector and the massive budget both from government and the private sector into building the value chain of the sector.
As a matter of fact, total global investment in power sector in 2017 alone was US$750 billion. Of his figure, Africa’s overall share is less than 5%.
What many Nigerians need to know is that for each additional megawatt, there is need for US$2 million for hydropower generation and about $1.3 million for conventional gas (thermal) based power and solar. This is outside the investment in transmission and distribution.
Relative to the needs of the sector and global patterns, budgetary allocation to Nigerian power sector, when it was wholly under government summed at about an average of N2.74 trillion Naira or UD $10.538 billion (at current rate of exchange) from 1999-2015. This is not regarding the fact that actual cash releases are just a fraction of that; even though there are also occasional intervention funds for some specific projects. In the immediate, figures for 2017 Appropriation- N64.80billion Release- – N22.84billion 2018Appropriation- N88.36billion Release – N18.18billion
We, therefore, have to realise that for a sector that has been stifled of funds for so many years in which new capacities were not added, there must be continued infusion of capital.
Some have argued that government should not intervene in the sector. Agreed that government should not be spending on the day-to-day running of power plants. However, let us not forget that government owns 20% of the generation plants and 40% of the distribution plants. Government also owns 100% the national grid. Therefore, beyond the social and economic imperatives of providing steady electricity, power sector support by way of intervention funds by government in meeting CAPEX needs or stabilisation of power market liquidity are in the overall interest of all and a viable power industry. This will mean still more revenue accruing to government by way of dividends gained from its investment as a shareholder and in increased corporate tax returns. Besides this, we must not forget governments all over the world; and as a matter of, in some places concerts of countries come together to bail out specific aspects of some national economies. We, lately, saw this with the United States with respect to the Real Estate, Automotive and Capital Market sectors or in the case of Greece, which was more omnibus. With specific reference to the Power sector, other countries such as Indian, Brazil and Turkey which went similar privatisation route like Nigeria, all provided some form of initial capita support. We need not also bother about this as all funds brought into the power sector is fully recoverable over time.
GOING FORWARD
the Nigerian power sector must reinvent itself and improve. Ultimately, workers will carry this out. The workers must therefore re-dedicate themselves to world-class service delivery to ensure that Nigerians have greater value for the collective trust placed on them. There must be greater performance levels and show of core competences by all staff. There needs to be greater innovation and application of creative and modern management skills. There must be a more robust interest on matters pertaining to Renewable Energy, Energy Efficiency, Safety & Health, and Environmental Protection. We have to raise a corps of experts on innovative financing and modern corporate governance.
There must be more responsible approach to unionism: the attitude of embarking unguardedly into labour action and continuous threat of strikes are not tenable in a private working environment. This must be negotiated and resolved. The new companies are profit oriented and may not be susceptible to the public service approach to negotiation. Labour leaders must train and retrain themselves. Study what is obtainable in other climes and only resort to such exercise as strikes when it is absolutely necessary. It must be an era of responsible unionism, an era of productive unionism and an era of focused unionism.
I thank you very much for your attention.
(AMB IGALI WAS KEYNOTE SPEAKER AT THE FOURTH TRIENNIAL DELEGATES CONFERENCE OF THE SENIOR STAFF ASSOCIATION OF ELECTRICITY AND ALLIED COMPANIES, ENUGU, 6TH APRIL, 2019)
