Introduction
Funding is a critical component of party politics, as funds are central in meeting the objectives of political parties. Indeed, the pattern of funding in a given party to a significant extent shapes its ideology and government policies (Sklar 2004). Therefore, funding has great implications for democratic governance, particularly regarding the accountability of political office holders to the citizenry. The colonial and post-independence political parties in Nigeria were regionally based with relatively clear ideologies (Sklar 2004). Consequently, political parties drew their electoral strength from the blend of party ideology, as well as regional and ethnic supports. However, with the military’s entry into the country’s politics in 1966, and the military government insistence on mega-political parties with national appeal, parties passed through several radical reforms which resulted in large organisations assuming the character of political machines (Adekeye 2017). These relegated ideology and emphasised the detribalisation of party politics in order to gain national appeal. Funding became a critical factor in mobilising, enticing and wooing supporters and voters, and securing an electoral victory that would reflect the geographical size and population of Nigeria.
Also, to secure electoral victory that would meet the constitutional vote requirement of 25% of the vote in two-thirds of the federating states, tremendous resources are critically required. At the inception of the republic in 1999, it was only former military leaders and their successful cronies in the business community that could afford such resources to float or support political parties. This accounts for these groups of political entrepreneurs perceiving party funding as joint ventures to the exclusion of the majority poor in the party (Danjibo and Ashindorbe 2018; Sklar 2004). The implications of the reforms and the imperative of adequate funding provided the platform for the political entrepreneurs to posture as owners and financiers of post-military political parties and choose candidates during elections; a trend that strengthened after the country’s return to democratic rule in 1999. The party financiers usually expect their beneficiaries who are successful at the polls to reward them with lucrative appointments and contracts even when they may not possess the technical competence to handle such responsibilities (Fagbadebo 2016).
The power sector in Nigeria has witnessed several efforts by successive regimes aimed at ensuring affordable, regular and enhanced power supply. In this regard, government increased budgetary provisions and provided several intervention funds running into trillions between 1999 and now for the award of contracts for the purchase, upgrade and rehabilitation of new and existing power facilities and infrastructures. In line with the above, the National Electric Power Policy (NEPP) of 2001 paved the way for the Electric Power Sector Reform Act of 2005 (EPSRA), which set up the Nigerian Electricity Regulatory Commission (NERC). The EPSRA provided the legal framework for the privatisation of the power sector. A critical step in this plan was the establishment of the Power Holding Company of Nigeria (PHCN) and the subsequent unbundling into 18 successor firms. The implementation of the ‘Roadmap for Power Sector Reform in Nigeria 2010’ led to the privatisation of the power sector in 2013, with the formal handover of the successor companies to private investors as six power generation companies, 11 distribution companies and the establishment of the Transmission Company of Nigeria (TCN) (Adeniji and Osisiogu 2014). EPSRA provides that the federal government owns 100% of the transmission company and 20% of the generating companies, with 80% of equity sold to private investors. The government also owns 40% of the distribution companies, with 60% sold to the private sector (Awosope 2013). According to the then PDP-led government, the privatisation was aimed at encouraging private sector participation, since the defunct National Electricity Power Authority (NEPA) could not meet the energy demands of the public. Despite these efforts and resources deployed, the sector has not recorded any significant improvement in terms of output, as between March 2005 and December 2020, the country's average quarterly electricity production was assessed at 6.912 Gigawatt hours (GWh) (CEIC 2020).
The justification for the choice of PDP among other political parties in Nigeria as focus of analysis here was for the reason that the party had controlled national government and two-thirds of the states between 1999 and 2015. Besides, it was within this period that the PDP-led government initiated and superintended the entire reform process in the power sector. The choice of the power sector for analysis was largely on account of the paradox presented by the reform (significant reform and public investment, yet dismal performance), exemplifying key features of crony capitalism in the country. Electricity plays a critical role in industrial development in Nigeria, hence reforming the sector has remained a top priority for successive governments. However, instead of utilising the resources channelled into the reform for the overall development of the sector, the PDP-led government turned the exercise into an avenue for looting funds and the mass exploitation of consumers.
Existing analyses of the crisis in the power sector have implicated lack of regulatory clarity, inadequate infrastructures and gas supply as the major challenges undermining the performance of the sector (Adenikinju 2003; Ayodele 1998; Makoju 2007). Others cited policy inconsistency, unrealistic pricing regimes and restrictive laws around generation and transmission lines as some of the constraints hindering regular and efficient power supply in Nigeria (Iwayemi 2007; Okafor and Joe-Uzuegbu 2010; Okolobah and Ismail 2013). Issues raised by the above scholars might have played a part in the poor energy supply, however corruption and sharp practices – which are the major challenges undermining the performance of other sectors – contributed largely to the energy crisis and in particular the failure of reforms to remodel the power sector in Nigeria.
In view of the foregoing, this article uses existing empirical data to account for the failure of the reform in the power sector to address the energy crisis in Nigeria. It specifically examines the impact of crony financing of PDP electioneering campaigns on the contracts and privatisation processes in the sector. It thus argues that this crony financing reinforces economic domination and exploitation, given that the comprador bourgeoisie class in the party found the reform an opportunity to recoup their investment in the party through the mass exploitation of consumers and the looting of government intervention funds in the sector. Besides appropriating the sector, this crop of capitalists succeeded in establishing an oligopoly in the sector (SERAP 2017). This has furthered primitive accumulation by the owners at the expense of energy consumers, namely, the country’s population of over 200 million (of which over 100 million are living on less than one US dollar a day [NBS 2020]). It has also led to the further impoverishment of the poor masses that had to pay exorbitant bills for electricity that is not even stable and regular.
Since the emergence of mega-political parties in the country, it has become common practice for political entrepreneurs not only to fund electoral campaigns of some of their cronies, but also influence the appointment of others into sensitive positions in government and sectors of their interest. In return, their beneficiaries help facilitate the realisation of their business interests in what Fagbadebo (2016, 127) described as an ‘unholy mutual alliance’. For instance, in the case of the privatisation programme, one of the initial steps taken by former president Olusegun Obasanjo on assumption of office in 1999 was to dissolve the military-constituted Technical Committee on Privatisation and Commercialisation (TCPC). This was followed by placing his cronies in the National Council on Privatisation (NCP) and Bureau of Public Enterprises (BPE) created by his administration and empowering them to oversee the rest of the privatisation programme (SERAP 2017). With this move, the power sector privatisation was superintended by these bodies constituted by the PDP-led government. Moreover, it was PDP-sponsored elective and political office holders that were in charge of the Bureau of Public Procurement (BPP), Ministry of Power and other agencies under it, the National Assembly Committees on Power and the Federal Executive Council that initiated and awarded those inflated, fictitious and poorly executed or unexecuted contracts in the power sector (SERAP 2017). Therefore, since the holders of these public offices and positions had largely obtained their status through donor funding, that reciprocal relationship or pact engendered expectations that they reciprocate by accommodating the interests of their benefactors in those contracts as is reflected by the data provided here.
Methodology
Documentary and observation methods were deployed in gathering data for the study. These methods help the researchers to glean information and data from already documented sources and ongoing activities in the power sector in Nigeria. The justification for these methods is that they are well suited for contextual analysis and useful when the task is to glean, illuminate, interpret and extract valuable information in order to draw inference from the available evidence. Above all, these methods were considered most appropriate given that secondary data constitute the bulk of the data used in the analysis. Besides, opinions of experts and critical stakeholders in the sector as expressed in the leading print and electronic media were equally elicited to validate and support data generated from documentary and observation methods. Therefore, we essentially relied on articles in journals and Nigerian newspapers, official publications of the federal government the PDP, non-governmental organisations and opposition political parties among others on the subject matter. One of the merits of secondary sources of data is the fact that gathering of information does not require the cooperation of the respective subjects of research (in this case stakeholders in PDP and in the power sector) about whom information being sought.
Content analysis based on logical deduction was applied in the analysis of data generated in the study. This is the technique for making inference by objectively and systematically identifying specified characteristics of message (Stone et al. 1966). The application of this technique involves examination of documents in order to generate information or inference based on the canons of scientific research. The justification of this method is that it enables the political inquirer to scrutinise the content of a document in order to understand its underlying structure, ideas and concepts and to quantify the message it relates (White 1983). Besides, content analysis can be used to delineate the characteristics of the communication itself, the causes or circumstances of the communication, and the effects of the communication on the audience. Moreover, content analysis is descriptive, dialectical, interactive and multi-dimensional, and falls within the intersection of the quantitative and qualitative continuum; hence, it is most appropriate for the analysis of documentary evidence.
Crony capitalism, funding of the Peoples Democratic Party and the power sector reform in Nigeria: theoretical expositions
The link between the PDP electioneering campaign financing and the power sector reform is explained using crony capitalism as the framework of analysis. The concept tries to explain the ‘unholy’ alliance between the business class and the political class. Crony capitalism is an economic system in which major, influential businesses thrive not so much as a result of risk taking and investment, but rather as a return on money amassed through a nexus encompassing business and a political class.
Standing (2016) argued that the institutional architecture of modern capitalism is geared to promote cronyism that benefits rentiers. An economic system can be described as a crony capitalist system also when government power and decisions or policies are used to favour cronies of governmental officials. To achieve this, state power rather than competition becomes the determinant factor in managing permits or licences, government grants or bailouts, tax breaks, or other forms of state intervention in some sectors of the economy or over resources where the state exercises monopolist control over public goods (Hughes 1999). It also often manifests as party financiers who use their enormous wealth to sponsor candidates and political parties during elections. These candidates become their cronies in government when elected, and they use state resources and power while in office to make policies that are mostly aimed at benefiting the business interests of their financiers who financed their elections. In such an economic system, money is largely made not as a result of profit making in a competitive market, but through profiteering by rent seeking in ‘markets’ using this monopoly or oligopoly. Entrepreneurship and innovative practices which seek rewards for risks etc. are stifled, since the value added by crony businesses is rather small, as hardly anything of significant value is created by them. Transactions take the form of trading rather than free-market competition. Crony capitalism is multifaceted, as it spills over into the government, the politics and the media. The nexus between the business and political classes in this system distorts the economy and affects the society to the extent that it corrupts public-serving economic, political and social ideals (Hughes 1999; McCormick 1981). In its worst form, it can degenerate into simple corruption, in which case any guise of a ‘free market’ is dispensed with, and bribes to government officials are considered normal practice. Corrupt governments may favour one set of business owners who have close ties to the government over others (Hughes 1999; McCormick 1981).
In Nigeria, crony capitalism manifests itself in many sectors of the economy, most notably the oil sector, where oil processing contracts, fuel importation licences and numerous oil-related contracts are mostly awarded to cronies of the political class. These cronies are businessmen who are mostly instrumental in the electoral successes of the people who occupy political positions (Adibe, Nwagwu, and Albert 2018). Crony capitalism is a problem in both the global South and the North as businesses spend hundreds of millions of dollars in lobbying to influence policy and legislation (Laubscher 2017).
Crony capitalism can explain why there was a lack of transparency in the contract awarding processes during the privatisation exercise, since the election of most of the political office holders who superintended the reforms were financed by funds from party donors. In the final analysis, it can explain how the privatisation process in Nigeria’s power sector reinforces the relationship between the business political classes in its economic system. While other factors like the deplorable state of infrastructure, the pricing regime and restrictive laws around generation and transmission have also undermined the performance of the power sector since privatisation, the nexus between the donors who benefited hugely from the process and the political class who executed the privatisation process remains the root cause of the problems of the power sector. The manipulation of the pricing regime, infrastructural deficiencies and existence of restrictive laws on generation and transmission have all persisted as a result of the seeming incapacity of government regulatory agencies to enforce best practices that may hurt their cronies’ profit base. It is in this light that we explain below how the funding of electioneering campaigns was used by some elements within the business class in Nigeria to secure favourable deals during the power sector reform.
The prioritisation of the interests of the business class as a reward for their contribution to campaign funding led to a net loss for society at large, as the rules that governed the bidding process were designed to favour the element of the business class that helps to fund the PDP. Furthermore, this business class often derives its economic survival and profits from access to political power, and not necessarily from innovative–productive decision-making processes in business. This article notes that the nature of funding in contemporary political parties, particularly in the then-ruling PDP, short-changed democratic governance. For instance, Bello (2020) reported that the Nigerian Senate has called for the cancellation of the contracts awarded during the power sector privatisation exercise as a result of lack of transparency and due process in the exercise. Udo (2020) further noted that the existence of a capital shortfall and a liquidity crisis in the industry, which has seriously undermined power accessibility in the country, showed that most beneficiaries of government contracts during the privatisation exercise did not actually meet government requirements for a contract award. He also reported that almost 70% of power production plants operate below capacity due to weak regulation of the activities in the sector after the reform, and that the power generating companies lack the required funding capacity to increase production to a level that can adequately address the power crisis (Ibid.).
The above scenario explains the inability of public budgeting (the budget grew from N9 billion to N7 trillion between 1999 and 2019) to address the crisis in the power sector, as most of the contracts were awarded to party financiers as settlements. The firms created out of the PHCN were merely parcelled out to PDP benefactors under the guise of privatisation. This best explains the failure of the power sector reform.
Crony funding of PDP electioneering campaigns as a violation of statutory provisions on party funding in Nigeria
Statutory provisions on party funding in Nigeria are found in the 1999 Constitution (as amended), the Electoral Act 2010 (as amended), Companies and Allied Matters Act 1990 (CAMA), Political Party Finance Manual 2004, Political Party Finance Handbook 2005, Guidelines and Regulations for Political Parties 2013, and the constitutions of various political parties. Section 221 of the 1999 Constitution prohibits any association other than political parties from making electioneering campaign donations to candidates. Sections 88–93 of the 2010 Electoral Act limit individual, group and corporate contribution to candidates and political parties to N1 million; while Section 90 provides penalties for offences relating to financing political parties.
Furthermore, Section 38(2) of CAMA echoes Section 221 of the Constitution, which forbids any association other than a political party from funding political parties and candidates. This provision of the Act precludes companies from making a donation or gift of any of its property or funds to a candidate, political party or association for political purposes. The law provides that officers in default shall be liable to refund to the company the sum or gift so donated. The company/officers shall also be guilty of an offence and liable to a fine. Besides the above provisions, constitutions of political parties usually provide a funding template. This template among other things spells out the financial obligations of members, other sources of income and expenditure of the party.
The above provisions became necessary following the experiences of the 1992/1993 transition programme which was annulled by General Ibrahim Babangida’s military government over the alleged monetisation of the electoral process by the candidates (Adetula 2008). As a result of this alleged incident of monetisation, the Independent National Electoral Commission (INEC) initiated the above legislation – CAMA and the Nigerian Constitution – with the aim of guiding political parties in their financial activities for electioneering campaigns and expenditures, as well as providing a framework for monitoring political parties. However, given the political economy of a state that thrives on cronyism and rentierism and the attendant desperateness of the political class to acquire power at all costs, those laws were honoured more in the breach, since excessive development of funds by political parties, candidates and their financiers were recurring problems in the fourth republic (Nwangwu and Ononogbu 2016). For instance, contrary to the one billion Naira expenditure limit for a candidate in presidential elections, PDP raised and expended over N4.7 billion in 2003; and the figure rose to over N8.7 billion in 2015 (Olorunmola 2011; CSJ 2015). These violated the provisions of the 2010 Electoral Act as amended. It is worth noting that the above figures were declared expenditure and do not include undeclared funds deployed in influencing the electoral processes in bids to secure victories for the party. The business class is a major contributor to those funds as shown in Appendices 1, 2, 3 and 4, whose returns in investment include periodic remittances, contracts and nomination of their cronies for major political appointments through whom the vicious circles of accumulation are sustained (HRW 2007).
Impact of crony funding of PDP electioneering campaign on the reform processes in the power sector in Nigeria
Party financiers bear over 80% of the running cost and electoral expenses of their political parties and preferred candidates in most of the states in Nigeria. In addition, over 60% of offices/secretariats, vehicles, and stationeries of the political parties are personal property of some of the party financiers (Fagbadebo 2016). The financiers provide political means for the electoral victory of their preferred candidates in a transaction that commercialises the political process, including manipulation of the political party rules and electoral laws for the selection of candidates for elections. This is to ensure that the candidate that emerges is the preferred candidate of the crony financiers. Electoral violence and other forms of irregularities are common mechanisms often adopted by the party financiers to ensure the victory of their preferred candidates (Fagbadebo 2016). Where the candidates fail to meet the demands of the financiers after electoral victory, the latter will activate state machineries, including security operatives, to effect compliance with their preferences or ensure the removal of the candidate from office. A classic illustration was the orchestrated removal from office of Chris Ngige, a former governor of Anambra State, by his crony financier (Fagbadebo 2016; Sklar 2004; HRW 2007).
In the Anambra State case, Chris Uba, as the crony financier, allegedly bankrolled the electoral campaign bills and ensured the victory of his candidate at the polls with the expectation of returns which include a percentage of state allocations and control of major contracts and appointments. Ngige as governor kept to this agreement until a point where he could no longer access sufficient resources to meet the monthly remittances. In a bid to remove the governor from office, Uba initiated drastic measures, which included masterminding a failed attempt, in connivance with the Nigerian police, to abduct the governor and force him to announce his resignation. The last step was alleged by Ngige, in an interview with Human Rights Watch, but dismissed by Uba as being ‘completely without basis in fact' (Ibid.), although ‘several well-placed sources' corroborated that Uba had been behind the attack (HRW 2007, 70). Uba ‘after that [2003] election publicly declared himself “the greatest godfather in Nigeria”, noting that “this is the first time an individual single-handedly put in position every politician in the state”' (HRW 2007, 67). Uba provided HRW with a copy of his agreement with Ngige, and Ngige also, in the interview, ‘did not deny that Chris Uba rigged his election into office' (HRW 2007, 68). The alliance and later confrontation between the two over the distribution of the state resources depicts the depth of cronyism in Nigerian electoral and party politics. Table 1 shows major cases of business–political class relationships in the fourth republic in Nigeria. There are many other cases of impunity and undue exercise of influence by financiers of the ruling parties under the tactical support of the president or chief executives of their respective states across Nigeria that are not captured in the table.
Major patron–client relationships in PDP, 1999–2015.
| No. | Period | State | Donor | Client | Nature of relationship |
|---|---|---|---|---|---|
| 1 | 1999–2003 | Anambra | Chief Emeka Offor | Chinwoke Mbadinuju | Rancorous relationship strained by frequent financial demands by the patron, who collected N10 million monthly from his client (Alechenu 2013; Fagbadebo 2016). This resulted in violence, involving multiple murders. The situation further degenerated into instability and eventually led to the governor losing the party ticket for re-election in 2003 (HRW 2007). |
| 2 | 2003–2005 | Anambra | Chief Chris Uba | Chris Ngige | Tumultuous relationship as the patron, Uba, unleashed terror when the client, Ngige, reneged on the pre-election agreement to remit N10 million monthly from the state treasury to him (HRW 2007). The governor was abducted and forced to resign from his position. Uba confessed to the rigging of the election in favour of his client (HRW 2007). Ngige was eventually removed by a judgment of the Court of Appeal (HRW 2007). |
| 3 | 2003–2005 | Anambra | Chief Chris Uba | Members elected from the State to the National and State Assembly | Cordial relationship, with no record of conflict between the ‘godfather’, Uba, and the elected legislators. |
| 4 | 1999–2003 | Enugu | Chief Jim Nwobodo | Chimaroke Nnamani | Conflictual relationship over control of internal affairs, including allocations, appointments, party structures and contracts in the state, as the client reneged on the pre-election agreement two years into office (Ossai 2006; Eze 2006; Edigin 2010). |
| 5 | 2007–2011 | Enugu | Dr Chimaroke Nnamani | Sullivan Chime | Conflictual relationship, as it was alleged that the client, Sullivan Chime, in a desperate move to dismantle political and economic empires of his sponsor, Chimaroke Nnamani, instigated Economic and Financial Crimes Commission prosecution and confiscation of the property of the latter, over diversion of state funds while in office (1999–2007) (Ogbu 2013; Ibeh 2015). |
| 6 | 2007–2011 | Abia | Chief Orji Uzor Kalu | Theodore Orji | Conflictual relationship over control of local government administration and funds, as well as disagreements over sharing of state allocation. |
| 7 | 2003–2007 | Oyo | Chief Lamidi Adedibu | Rashidi Ladoja | Conflictual relationship, as it was alleged that the candidate, Rashidi Ladoja, reneged on the agreement with the financier over sharing of contracts and appointments. The relationship became strained and resulted in deployment of force to destroy government property and that of the client (Fagbadebo 2016). The governor was removed by a faction of the legislators loyal to the donor (Ibid.). Judicial review of the legislative decision reinstated the governor, as the Court of Appeal and the Supreme Court declared the impeachment unconstitutional (Ibid.). |
| 8 | 2003–2007 | Kwara | Alhaji Olusola Saraki | Bukola Saraki | Conflictual relationship over control of party structure and contracts in the state. |
| 9 | 1999–2003 | Rivers | Chief Harry Marshall | Peter Odili | Conflictual relationship over control of party structure and funds in the state. |
| 10 | 1999–2003 | Edo | Chief Tony Aninih | Lucky Igbinedion | Conflictual relationship, as the candidate, Lucky Igbinedion, reneged from periodic payment to the financier (Azeez and Ibukunoluwa n.d.). |
| 11 | 2007–2011 | Kebbi | Senator Adamu Aliero | Saidu Usman Dakingari | Conflictual relationship over control of state allocations and contracts. |
| 12 | 2003–2011 | Ogun | Chief Olusegun Obasanjo | Otumba Daniel | Conflictual relationship over control of PDP structures and political succession in the state (Faces International Magazine 2016; Adedeji 2013). |
| 13 | 2007–2011 | Benue | Senator George Akume | Gabriel Suswan | Conflict over control of resources including contracts in the state. |
| 14 | 1999–2007 | National Assembly | Chief Olusegun Obasanjo | Former presidents of the Senate and speakers of Federal House of Representatives | Conflictual relationship over control of the National Assembly; this resulted in frequent changes especially in the leadership of the Senate. |
| 15 | 2007–2015 | National Assembly | Chief Olusegun Obasanjo and Dr Goodluck Jonathan | Former presidents of the Senate and speakers of Federal House of Representatives | Conflictual relationship over control of the National Assembly and series of anti-party activities especially in the House of Representatives. |
| 16 | 2007–2015 | Nigeria | Chief Olusegun Obasanjo | Former presidents Alhaji Musa Yar’Adua/Dr Goodluck Jonathan | Cordial relationship till 2013 when Jonathan co-opted other donors, disagreement among the donors led to Obasanjo exit from PDP and the defeat of Jonathan in the 2015 general election. |
Source: Authors’ compilation from the sources cited in the table.
At the national level, it is usually a conspiracy among certain groups in the business class to capture the central government through bankrolling the campaign expenses of the presidential candidates and their running mates, in return to control contracts and appointments in the critical sectors of the economy (Fagbadebo 2016). For instance, during Olusegun Obasanjo’s presidency (1999–2007), the successful businessmen and retired top military officers that formed and funded PDP in the 1999 and 2003 elections allegedly received lucrative shares in the major contracts and in the privatisation of some state-owned enterprises (SOEs), such as Nigerian Telecommunication Limited (NITEL) and PHCN, and in the alienation of federal government property in Lagos State (Sahara Reporters 2011). To achieve the above, as soon as his government was inaugurated in 1999, Obasanjo scrapped the TCPC and in its place constituted the NCP and its secretariat, the BPE, to handle the privatisation and commercialisation of the remaining 22 SOEs and, above all, to ensure that the interests of his cronies in PDP were accommodated. The favouritism, sharp practices and controversies that followed in the wake of the exercise under Obasanjo, and the desperate need by his successor to accommodate a new set of sponsors, led to the temporary halt of the privatisation exercise under the late president Umaru Musa Yar’Adua, only to be continued later by Goodluck Jonathan’s administration. The crony businessmen, besides clandestine funding of campaigns, usually organise fundraising dinners in support of their anointed candidates, most often conscripting private firms and state parastatals to make donations as shown in Appendices 1, 2, 3 and 4. The appendices show strong financial ties between the business class and their preferred candidates.
The scenario highlighted by these lists of contributors accounts for the failure of federal, state and local government budgets to address critical infrastructure issues, such as power, roads, healthcare and education, despite the rise in the combined budgets from 4 trillion in 1999 to 41 trillion in 2018.1 This is because a greater percentage of the funds was diverted as repayment of campaign obligations to donors. The power sector became a classic case, as contracts awarded by successive regimes under the pretext of rehabilitating energy infrastructure provided the avenue for compensating or rewarding party financiers. The total estimated financial loss to Nigeria from corruption in the electricity sector, starting from the return to democracy in 1999 up to 2017, was over N11 trillion. This represents public funds, private equity and social investment (or divestments) in the power sector. It is estimated that the figure may reach over N20 trillion in the next decade, given the rate of government investment and funding in the power sector amid dwindling fortunes and recurrent revenue shortfalls (SERAP 2017). This accounts for the failure of funds allocated to the sector between 1999 and the present to address the energy crisis in Nigeria.
A report published in 2017 by the non-governmental organisation Socio-Economic Rights Accountability Project (SERAP), From darkness to darkness, gave details of several cases of diversion of public funds under the guise of contract awards for the upgrade and rehabilitation of power plants. According to the report, Olusegun Agagu’s short tenure (2000–2002) as minister of power was wrecked by several allegations of financial misappropriations. This trend of looting was sustained in Liyel Imoke’s tenure as a minister (2003–2007), as it was confirmed that the federal government squandered over US$16 billion for contracts and other reform measures in the sector. It was even alleged that Imoke personally collected US$7.8 billion out of the fund for the purported execution of the contract for the construction of the Jos–Yola transmission line which was never executed. Investigations revealed that a substantial part of the US$7.8 billion was expended in the 2007 PDP electioneering campaigns, as exemplified in the diversion of the US$2 billion intended for arms purchases to the fund the party’s 2015 election campaign (Legit 2015; SERAP 2017). After investigation of these allegations of corrupt practices, including that of Imoke, the looters were neither prosecuted nor punished under the law. (SERAP 2017). In sum, given financial leakages within the period, the sector was not able to meet the expectations from the reform. Table 2 shows some of the beneficiaries of the US$16 billion released to the power sector under Liyel Imoke as a minister. This shows gross diversion of funds budgeted for the power sector reform.
Breakdown of companies/individuals that benefited from the US$16 billion power sector reform contracts under Liyel Imoke.
| No. | Company name | Owners | Nature of contract | Amount involved |
|---|---|---|---|---|
| 1 | Pivot Engineering Ltd | Mr Oba Otudeko | Construction of Owerri-Ahoada–Yenagoa 132 KVA DC lines and substations | US$78,625,736.54 |
| 2 | ABB (Nigeria) Ltd (SAE) | Alex O. Orjika, Victoria N. Orjika and others | Construction of second Benini–Onitcha 330 KVA SC line | US$21,489,644.79 and N1,489,271,079.60 |
| 3 | Siemens Ltd | - | To provide Onitsha 150 MVA, 330/132 /33 KVA, T/F and 330 KV Base at Onitsha and Benin | €15,032,410.65 and N200,000,000 |
| 4 | Energovod Srcv | - | Construction of Alaogi–Calabar 330 KVA DC lines | US$42,382,351.30 and N900,000,000 |
| 5 | Areva T&D Spr International Ltd and MBH Power | - | Constructions of bays | €8,987,322 and N600,000,000 |
| 6 | Chrome Construction | Sir Emeka Offor | Provision of Gombe–Yola–Jakngo 330 KVA SC lines | US$74,872,154.04 |
| 7 | News Engineering Nigeria Ltd | Sir Cyprian Ojimadu Nwaeze and others | Construction of Jalingo 2 × 30/40 MVA and 132/33 KV substation | US$3,485,113.50 and N250,000,000 |
| 8 | Pivot Engineering Co. Ltd | - | Construction of Alaogi–Umuahia 132 KVA DC line | US$4,067,940 |
| 9 | Valenz Holdings Nigeria Ltd | - | Construction of Umuahia 2 × 30/40 MVA and 132/33 KV substations | US$7,083,399.48 and N489,704,091 |
| 10 | Khozam Consulting Engineers/News Engineering Nigeria Ltd | - | Construction of Gombe–Damatru–Maduguri 330 KV lines | N30,172,772 and N2,500,000,000 |
| 11 | JKN Ltd | - | Construction of Ado–Ekiti 132/33 KVA substation and Akuure 132 KVA Liangbe extention | N822,000,000 |
| 12 | LCEP | - | Construction of Kano–Duste B2 KVA DC and Duste–Azare 132 KV SC line | US$50,294,388 |
| 13 | ABB | - | Construction of Dutse-Azare 2 × 30/40 NVA and 132/33 KV substation | US$12,500,000 and €1,771,582.83 |
| 14 | Energo Nigeria Ltd | - | Construction of Egbin-Ikeja, West/ Benin Main 330 KV DC line and substations | US$8,437,687 and N141,967,775.92 |
| 15 | SAE Power Lines and Areva (SIS) | - | NEPA-ACEB Power Interconnection project | N1,194,500,000 |
| 16 | News Engineering Nigeria Ltd | - | Construction of 1 × 30MVA, 132/33w sub-station at Kelti | N44,534,004.50 |
| 17 | Continental Engineering Nigeria Ltd | - | Construction of Talaba Matatol 2 × 30/40MVA and 132/33 KV substations | N453,532,829.20 |
| 18 | News Engineering | - | Construction of Amukpe (Sapele) 1 × 30/40MVA and 132/33 KV substation | N1,194,482.34 and N219,920,252.71 |
| 19 | ABB Power Katempe | - | Construction of national stadium 132 KVD line | N347,000,000 |
| 20 | ABB Nigeria Ltd | - | Rehabilitation of Delta TV Switchyard | €2,879,811.11 andN109,899,233 |
| 21 | Valenz Holdings Nigeria Ltd | - | Construction of Nnewi 2 × 60MVA 132 KV substation | €4,421,811.72 andN251,833,400 |
| 22 | CMC | - | Construction of Omotosho new 33 KV substation | US$30,325,386 |
| 23 | Steers International Ltd | - | Construction of new 330 KV line at Ornotosho, Benin/Ikeja West | US$1,395,353.83 andN52,092,929.50 |
| 24 | SEPCO Electric Power Construction Corporation | - | Construction of new 330 KV substation at Papalanto | US$30,325,366 |
| 25 | NCEP Engineering Nigeria | - | Construction of Kukwaba 2 × 60 MYA and 132/33 KV substation | US$5,252,932.61 andN272,237,433.25 |
| 26 | CCC International Engineering Nigeria Ltd | - | Construction of Onitsha-Nnewi-Ihiala 132 KV DC Line | US$2,631,003.58 and N198,049,270 |
| 27 | 26 other companies | - | Execution of FV 2000 substation reinforcement project | N2,679,487,010 |
| 28 | Tasolk and Associates Nigeria Ltd | Ibogun Temidire Olaogu | Construction of power plant in Ogun State | US$27,096,148 |
| 29 | Mak and Mak (Nigeria) Ltd | Livinus Makwe (PDP), Anyim Pius Anyim (PDP) and others | Construction of Okpitim, Amachi power project in Ebonyi State | US$45,558,237 |
| 30 | Wimbo (Nigeria) Ltd | Senator Dunjaiye (PDP) | Not specified | US$45,940,120 |
| 31 | Horb Ventures Ltd | Dr Olajumoke | Not specified | US$49,253,253 |
| 32 | Tomleya Vent | Senator Ladoja (PDP) | Not specified | US$49,982,377 |
| 33 | Symak Ltd | Hon. C. Macebuh (PDP) | Not specified | US$34,648,122 |
| 34 | OSCO Construction Company Ltd | Hon. Mao Ohuabunwa (PDP) | Not specified | US$14,904,806 |
| 35 | Adolfee Nigeria Ltd | Senator Adolphus Wabara (PDP) | Not specified | US$33,890,765 |
| 36 | Nabeelah Nigeria Ltd | Senator Ibrahim Mantu (PDP) | Not specified | US$40,714,415 |
| 37 | Ashat Nigeria Ltd | Hon. Bashir Adamu (PDP) | Not specified | US$18,589,356 |
| 38 | Saffi Nigeria Ltd | Hon. Aminu Bello Masari (PDP) | Not specified | US$32,180,825 |
| 39 | Not disclosed | Hon. Lawal Funtua (PDP) | Not specified | US$23,646,576 |
A careful perusal of Appendices 1–4 and Table 2 shows that the major contributors to PDP presidential campaigns were the beneficiaries of the fund. That incident represented the peak of cronyism in the electricity sector. Despite PHCN having been privatised in 2013, Chinedu Nebo as minister of power (2013–2015), nonetheless sank about N200 billion into the sector under the pretext of supporting the newly created companies, officially to address other technical issues (SERAP 2017). This was unexpected, as the companies were not meant to be publicly funded, and it is even publicly known that PHCN had been merely balkanised and parcelled out to the party cronies at highly undervalued prices.
According to a labour leader:
This year alone, they were said to have given the so-called private sector over N200 billion. So why fund them if you say the electricity is in the hands of the private sector? Why would you sell your house to somebody and you will still give him money to maintain it? So it is fraud. (SERAP 2017, 24)
Monumental fraud was thus recorded in the reform processes, which include inflation and award of contracts to fictitious firms, diversion of funds, poor execution or outright project abandonment and circumvention of due processes and transparency in the biddings for the privatisation of the 18 companies created out of PHCN (Sahara Reporters 2011). Table 3 articulates alleged corrupt practices recorded in the sector within the short period (2013–2015) when Chinedu Nebo was minister of power. It can be deduced that the proceeds from the frauds perpetrated in the sector were channelled towards prosecution of the 2015 general elections, as evidenced in the unsolicited donation of 47 SUVs by the then minister of power to the Jonathan/Sambo Campaign Organisation. Tony Elumelu chaired the House of Representatives Committee on the Power Sector Probe, a committee set up to investigate allegations of sharp practice and corruption in the award of contracts and the privatisation exercise in the power sector between 1999 and 2007. The Committee was accused of collecting bribes to the tune of N100 million (SERAP, 2017). Elumelu was involved in the PDP campaign fundraising: the indications in Tables 4 and 5 lend credence to our assertion. Moreover, the fact that the period when these frauds were committed coincided with the period when five governors defected from PDP to APC, and PDP desperately needed money to prosecute the 2015 presidential election, further validated the SERAP report and the Committee on the Power Sector Probe’s findings on diversion of funds intended for the restructuring of the power sector.
Corrupt cases involving PDP government officials and financiers in the power sector, 1999–2015.
| No. | Cases |
|---|---|
| 1 | Allegations of fraud and corruption perpetrated by the Nigerian Electricity Regulatory Commission (NERC) under the leadership of Dr Ransome Owan (p. 26) |
| 2 | 47 SUVs allegedly bought by the former Permanent Secretary of the Ministry of Power, Dr Godknows Igali, for the Goodluck/Sambo campaign organisation (p. 27) |
| 3 | Alleged misappropriation of funds intended for Rural Electrification Agency (REA) by former chair of Senate Committee on Power, Senator Nicholas Yahjah Ugbane, and his House of Representatives counterpart, Hon. Ndudi Elumelu, and others (p. 29) |
| 4 | Exorbitant salaries received by some members of the Abuja Electricity Distribution Company (p. 31) |
| 5 | Arbitrary and frequent increases in electricity tariff by NERC (p. 35) |
| 6 | Questionable US$23.6 million Manitoba deal with the Transmission Company of Nigeria (TCN) (p. 38) |
| 7 | Melaye vs Manitoba: renewed allegation of N13.8 billion fraud (p. 40) |
| 8 | Several cases of corruption and manipulation in the privatisation of the Power Holding Company of Nigeria (PHCN). The processes of bidding and award were said not to be sufficiently transparent (p. 41) |
| 9 | Lack of transparency in the award and execution of the Nigerian Integrated Power Project (NIPP), as the project swallowed US$10 billion without tangible results in terms of increase in power generation (p. 43) |
| 10 | Refusal by government to implement the Report of the House of Representatives Committee that probed government spending in the sector between 2000 and 2007: the Report indicted 21 persons and 36 companies (p. 43) |
| 11 | Other forms of corruption in the sector, including billing and metering fraud against consumers and poor remittance of government share (40% stakeholding) in the Abuja Electricity Distribution Company (p. 44) |
Source: Authors’ compilation from SERAP 2017.
Budgetary provision for reform of the power sector, 1999–2015.
| Year | Amount approved (N billions) | Amount released (N billions) |
|---|---|---|
| 1999 | 11.206 | 6.698 |
| 2000 | 59.064 | 49.785 |
| 2001 | 103.397 | 70.927 |
| 2002 | 54.647 | 41.196 |
| 2003 | 55.583 | 5.207 |
| 2004 | 54.647 | 54.647 |
| 2005 | 90.283 | 71.889 |
| 2006 | 74.308 | 74.3 |
| 2007 | 100 | 99.8 |
| 2008 | 156 | 112 |
| 2009 | 89.5 | 87 |
| 2010 | 172 | 70 |
| 2011 | 125 | 61 |
| 2012 | 197.9 | 53.5 |
| 2013 | 146 | 49 |
| 2014 | 69.8 | 48 |
| 2015 | 5.240 | None at the time of compiling this table |
Source: Authors’ compilation from Umoru 2015.
Intervention funds (grants) released to Ministry of Power for the multi-year tariff order.
| Year | Amount released (N billions) |
|---|---|
| 2009 | 30.8 |
| 2010 | 43.2 |
| 2011 | 37.0 |
| 2012 | 11.5 |
| 2013 | 32.6 |
Source: Authors’ compilation from Umoru 2015.
Besides affirming the expositions made by the SERAP report, Umoru (2015) further alleged that despite the gravity of economic and financial implications of the crime to the economy, anti-graft agencies made little effort to prosecute public officials, private individuals and firms involved. This allegation tends to suggest complicity between the PDP government that oversaw the reform and the anti-graft agencies headed by their stooges. Therefore, given the indifference of these agencies, the public outcry and condemnation, gross fraud and impunity involved, the opposition faction in the National Assembly demanded an investigation into the reform in the power sector. Following this pressure, the Federal House of Representatives in 2008 passed a resolution mandating its Committee on Power and Steel to probe the sector with regard to the alleged investment of over US$16 billion between 1999 and 2007. Since the PDP controlled the Federal House of Representatives, a party member, Tony Elumelu, was chosen to head the committee. The Committee was allegedly bribed to the tune of N100 million to exonerate some of the looters (SERAP 2017). Nonetheless, perhaps because of the magnitude of the fraud and overwhelming evidence in the public domain, the Committee was unable to find excuses as to exonerate all the looters. The report which indicted some government officials was, however, not made public until the PDP was overtaken as the dominant party at national level in 2015 (Parrot Nigeria 2018). The recommended prosecution of persons indicted in the report has not been implemented as at the time of writing.
Besides budgetary provisions, as shown in Table 4, other grants channelled into the sector ended up in private vaults. For instance, Ambassador Godknows Igali, during his visit to the Senate Ad Hoc Committee probing the power sector from 1999 to 2015, revealed that about N155 billion-worth of grants released by the federal government to the companies created out of PHCN for the multi-year tariff order (MYTO) was not properly accounted for (Umoru 2015). These grants were made in order to cushion the effects of the shortfalls in expenditure for the sector between 2009 and 2013, as shown in Table 5.
Besides diversion of budgeted funds, the privatisation in the sector was not transparent, as companies created out of the Power Holding Company of Nigeria (PHCN) were merely parcelled out to major financiers of the party under the guise of privatisation. According to the House of Representatives Ad Hoc Committee report on the power sector probe, headed by Hon. Tony Elumelu, top government officials – including former president Obasanjo, ministers of power and heads of agencies under the Ministry of Power between 1999 and 2015 – were all indicted for their roles in the subversion of government policy on due process which led to over-scoping, project cost inflation, preferential treatments in the bidding process for the privatisation of the 18 companies, awarding contracts for the same project multiple times, and general lack of performance in the power sector in spite of the huge investments made (Sahara Reporters n.d.; National Assembly 2008; Parrot Nigeria 2018). The deliberate subversion of due process and lack of competitiveness was orchestrated to ensure that major benefactors to the party like Chief Emeka Offor (owner of EEDC, one of the electricity distribution companies in Nigeria), Chief Aliko Dangote (CEO of the Dangote Group), Tony Elumelu (one of the longest-serving members of the House of Representatives and owner of Ughelli Electricity Generating Company), Chief Femi Otedola (owner of Geregu I Electricity Generation Company) and others took over ownership and control of the privatised companies (Sahara Reporters 2007). Nasir Ahmad el-Rufai alleged that under his tenure as the director of BPE, he was suffocated by pressures from the presidency to manipulate the bidding processes of the privatised companies in favour of their cronies (Sahara Reporters 2007). The implication of the above is that the eventual owners of the privatised companies might not have been the best bidders or possessed the required technical competences but emerged largely on account of cronyism.
As in the case of the privatisation of other SOEs in Nigeria, the reality is that most of the top drivers of the privatised companies are financiers and cronies of PDP government officials (Sahara Reporters 2011; Punch 2016). Furthermore, the fact that owners of the privatised companies shown in Table 6 were at the same time major contributors to PDP electioneering campaign funds between 1999 and 2015, as shown in Tables 2–5, lends credence to our assertion. Moreover, one of the avenues of recoupment of the invested resources is by occupying commanding heights in their preferred sectors of the economy, leveraged by the policies of their cronies in government (Fagbadebo 2016).
Names of major PDP financiers linked to the privatised generating companies and distribution companies created out of former Power Holding Company of Nigeria (PHCN)
| Privatised companies | Owners | Cost | Capacity | Remark | |
|---|---|---|---|---|---|
| Generating companies | |||||
| 1 | Ughelli (UEGC) | Mr Tony Elumelu, Mr Obinna Ufudo and Mr Adeoye Fadeyibi – acquired by Transcorp/Woodrock Consortium | US$300 million | 972 MW | The current generation output assessed at 340 MW, compared to the projected 972 MW (Nigerian Bulletin 2017) |
| 2 | Egbin (EEGC) | Tope Shonubi and Tonye Cole – acquired by KEPCO Energy Resources Ltd | US$549m for 51% plant share in 2007 and US$670m for 19% plant share in 2013 | 1,320 MW | The plant was redesigned to generate over 1000 MW, but it has been producing only 171 MW (Nairaland 2017; Nigerian Bulletin 2017) |
| 3 | Kainji/Jebba (KEGC) | Col. Sani Bello, Alhaji Ismaila Isa and Brig. Gen Tunde Ogbeha – acquired by Mainstream Energy Solutions Ltd | US$170 million | 826 MW | The firm recently claimed to have overhauled two turbines, but it produces a combined energy of about 735 MW and has a 826 MW capacity (Nigerian Bulletin 2017) |
| 4 | Shiroro (SEGC) | Gen. Ibrahim Babangida and Engr. Olubunmi Peters –acquired by North-South Power Company Ltd | US$111.7 million | 600 MW | Currently producing 179 MW against the projected 600 MW (Nairaland 2017; Nigerian Bulletin 2017). |
| 5 | Geregu I (GEGC) | Chief Femi Otedola and Mr Akin Akinfemiwa –acquired by Amperion Power Distribution Ltd | US$132 million | 414 MW | It planned to make a 50% increase in the short to medium term to generate 600 MW. Three years later, it scarcely generates 400 MW, due to poor gas supply and other issues (Nigerian Bulletin 2017 |
| 6 | Afam (AEGC) | Not verified | US$260 million | 966 MW | - |
| 7 | Sapele (SEGC) | Acquired by CMEC/Eurafric Ltd | US$201 million | - | - |
| Distribution companies | |||||
| 1 | Abuja (AEDC) | Ambassador Shehu Malami and Mr Neil Croucher – acquired by KANN Utility Consortium Company Ltd | US$164 million | The firm claimed to have spent over N40 billion on improving the network, metering and the billing system since it took over in 2013 (Nigeria Bulletin 2017) and is adjudged to be relatively stable | |
| 2 | Kano (KEDC) | Alhaji Yusuf Hamisu Abubakar and Alhaji Umaru Mutallab – acquired by Sahelian Power (SPV) Ltd | US$102 million | - | It installed 73,000 meters in 2016 and said it had improved its networks, but customers complain about high estimated billing and poor electricity supply (Nigerian Bulletin 2017) |
| 3 | Benin (BEDC) | Mr Victor Gbolade Osibodu and Mrs Funke Osibodu –acquired by Vigeo Power Ltd | US$129 million | - | Of all the distribution companies, Benin has the highest number of customer meters installed, but a record of poor energy supply to customers (Nigerian Bulletin 2017) |
| 4 | Eko (EEDC) | Mr Charles Momoh, Dr Tunji Olowolafe and Mr Ernest Orji – acquired by West Power and Gas Ltd | US$135 million | - | Unable to ensure consistent epileptic power supply and poor installation of meters (Nigerian Bulletin 2017) |
| 5 | Ikeja (IEDC) | Mr Kola Adesina, Mr Tonye Cole and Tope Shonubi – acquired by NEDC/KEPCO Consortium | US$134.75 million | - | The consortium ownership of both Egbin generating company and Ikeja distribution company raised issues of them potentially acting as a monopoly; this was ignored by the Technical Committee of the National Council on Privatization led by Mr Atedo Peterside (Nairaland 2017). Currently, the firm is faced with poor power supply and slow installation of meters (Nigerian Bulletin 2017) |
| 6 | Ibadan (IEDC) | Gen. Abdulsalami Abubakar, Mr Olatunde Ayeni and Dr Sola Ayandele – acquired by Integrated Energy Distribution and Marketing Ltd | US$126.75 million | - | Ibadan distribution company has the highest number of customers, but still grapples with consistent epileptic power supply and poor installation of meters (Nigerian Bulletin 2017) |
| 7 | Yola (YEDC) | Gen. Abdulsalami Abubakar, Mr Olatunde Ayeni and Dr Sola Ayandele – acquired by Integrated Energy Distribution and Marketing Ltd | US$44.25 million | - | Yola distribution company also grapples with consistent epileptic power supply and poor installation of meters (Nigerian Bulletin 2017) |
| 8 | Kaduna (KEDC) | Alhaji Yusuf Hamisu Abubakar | US$102 million | - | The firm provides poor power supply and is slow in the installation of customer meters (Nigerian Bulletin 2017) |
| 9 | Enugu (EEDC) | Sir Emeka Offor – acquired by Inter State Electrics Ltd | US$107.4 million | - | The company supplies electricity to five eastern states, and there are abundant complaints of high billing, and poor electricity supply and metering services (Nigerian Bulletin 2017) |
| 10 | Jos (JEDC) | Alhaji Mohammed Ahmed – acquired by Aura Energy Ltd | US$82 million | - | It grapples to ensure a consistent epileptic power supply and has a poor record of meter installation (Nigerian Bulletin 2017) |
| 11 | Port Harcourt (PEDC) | Mr Augustine Nwokocha and Governments of Bayelsa, Rivers, Cross River and Akwa Ibom States – acquired by 4 Power Consortium Ltd | US$124 million | - | Its power supplies are poor and it has a slow record of meter installation (Nigerian Bulletin 2017) |
| Transmission company | |||||
| 1 | Transmission Co. of Nigeria (TCN) | Federal government of Nigeria | - | - | - |
The power sector is not alone in the spate of cronyism in the privatisation exercise. For instance, the privatisation of Aluminium Smelter Company of Nigeria (ALSCON), NITEL, Nigerdock, NICON Insurance Ltd and NICON-Hilton Hotel (currently known as Transcorp Hotel plc), among others, suffered a similar fate (Sahara Reporters 2011). A careful examination of Appendices 1 to 4 and Table 6 reveals the height of patronage control of the privatisation process in the power sector as 18 companies created out of PHCN were parcelled out to financiers of the PDP presidential election campaigns. This is expected given that those officials who superintended over the privatisation were beneficiaries of patrons’ magnanimity during the elections that brought them to power. Table 6 shows the owners of companies created out of PHCN, dominated by PDP patrons.
The majority of the beneficiaries of the privatisation exercise lacked technical knowledge and expertise about the sector and, as a result, they largely rely on state patronage to make profits, hence the crises in the electricity supply remain unabated many years after the exercise (Parrot Nigeria 2018; SERAP 2017). As at the time of writing this article, average electricity generated is still far from the expected overall potentials, given the available infrastructure (CEIC 2020). This situation is abysmal, considering the reform projections and the more than N11 trillion already sunk into the sector in the present democratic dispensation (SERAP 2017).
Above all, comparative data on electricity power generation and share of the population with access to electricity across the globe, as displayed in Appendix 5, lend credence to the fact that the reform did not yield any significant results in the development of the power sector, and hence was perceived by many Nigerians as a ‘fraud in disguise’ (Punch 2016; see also Agbakwuru 2015; Iroanusi 2020; Umoru 2019). The data in Appendix 5 indicate that the Nigerian power sector is performing abysmally, compared with the selected countries that have relatively similar sizes of population. In 2001 when the power sector reforms began, 43.77% of Nigeria’s population had access to electricity, while the total amount generated was 14.84 terawatt-hours (TWh). The reforms ended in 2013; six years later, in 2019, access had only risen to 55.4% of the population, leaving over 44% still lacking access to electricity. Over the period of the reforms, 2001–2013, the amount generated rose by 85% while only 27% more of the population gained access to electricity over the period, with Nigeria’s population having grown by 37% in the same period. Total electricity generated reached 35.67 TWh in 2019, however access to electricity actually fell slightly, to 55.4% of the population, reflecting the 60% rise in population since 2001. Taking into account the population growth, Nigeria generated 8.45 TWh per million inhabitants in 2001, 6.26 TWh per million in 2013, and 5.63 TWh per million in 2019. In 2019, Nigeria’s figure of 55.4% of the population with access to electricity is stark, when set against 100% for China, Russia and the US, and 99.8% for Brazil.
The present administration of President Mohammadu Buhari has already spent over N2 trillion between 2015 and 2018 to clear the liabilities of the defunct PHCN and to support the operations of private firms in the sector.2 Currently, the price of electricity is US$0.081 per kwh for households and an enormous US$0.120 per kwh for businesses that have accessed electricity meters. These prices include all components of electricity bills, such as the cost of power, distribution and taxes (Global Petrol Prices 2020). However, for over 60% of electricity consumers, who are yet to access meters, they are billed as high as double what metered consumers pay, in a crude exploitation described by electricity companies as an estimated billing system. This is primitive accumulation when compared with average current prices of electricity in the world, which stand at US$0.14 per kilowatt-hour for households and US$0.13 for business (Global Petrol Prices 2020). Despite the fact that those companies, after privatisation, have been receiving some financial grants from government to date, prospective electricity consumers are compelled to provide electricity equipment such as cables and poles, and transformers in the case of large residential buildings and factories, before electricity is installed for them. While old consumers are expected most of the time to fund the replacement of damaged, overused and obsolete equipment in their areas, the companies assume ownership of the installed equipment and are ready to take legal action against anyone who tampers with those facilities. This practice is common in rural and semi-urban areas predominantly habited by illiterate electricity consumers.
Conclusion
Cronyism is a global phenomenon, although recent South African experiences, where government policies were skewed to favour financiers of the ruling party, demonstrated that it is more pervasive in sub-Saharan Africa, where most businesses rely on rents rather than profits made out of innovation and risks taken to thrive. It is a common practice for the political class to rely on donations from the private sector to fund electioneering campaigns and in return to offer them favourable deals in government contracts and concessions. The business class is a major contributor to those funds as shown in Tables 2 to 5 in the article, whose returns on this investment include periodic remittances, contracts and nomination of their cronies for major political appointments through whom the vicious circles of accumulation are sustained. Their connections to government rather than open competition becomes the determining factor in managing permits or licences, government grants or bailouts, tax breaks, or other forms of state intervention in some sectors of the economy and over resources where the state exercises monopolist control over public goods.
The business class in turn leverages and exploits the state patronage and preferential treatments granted them to establish monopolies and oligopolies in those critical sectors like oil, energy, aviation and telecommunications, through which they make super-profits by increasing prices for the goods and services they provide for the public. Because they are monopolist/oligopolist operators in those sectors, consumers are left with little option but to patronise them despite the exorbitant prices. Classical case illustrations are the ongoing exploitation in the energy and petroleum downstream sectors of the Nigerian economy, where operators charge high prices for energy and petroleum products. This is largely on account of licences to import petroleum products and establish oil refineries: energy distribution companies are granted on a patronage basis, hence cronies of government officials in the business community dominate, and as a result they decide prices in conjunction with the government.
Furthermore, government periodic financial interventions, tax holidays and other concessions under the guise of subsidies or support funds for the infrastructural upgrade are allegedly shared between government officials and the political entrepreneurs who claimed to be businessmen through kickbacks, fictitious or inflated and poorly executed contracts. Other means through which public funds are shared include abandonment of contracts after mobilisation, over-invoicing and payment for goods and services not supplied, as in the cases in the power sector and subsidy payment in the downstream sector of the Nigerian petroleum industry. The corrupt practices mentioned above serve as another major medium through which primitive accumulation takes place, as such interventions and sharp practices are mere rewards for the earlier favours received from the business class. The most pathetic part of this corruption is that government officials’ share of the loot is stashed away in foreign banks through the assistance of their cronies in the banking industry, in order to avert detection and prosecution by financial crimes regulatory agencies. Part of this loot is spent by government officials on flamboyant and ostentatious lifestyles, as shown by acquisition of multibillion-dollar mansions, exotic SUVs, private jets, jewellery, frequent foreign trips/holidays, medical tourism, parties and sponsorship of their wards in expensive foreign schools. Several cases of corruption on the part of serving and past government officials that have been handled by financial crimes agencies in Nigeria attest to this.
The few cronies of the political class that invest in the Nigerian economy mostly engage in the service sector, such as the hospitality industry, and in real estate, transportation, and importation of finished products, rather than investing in real manufacturing and production, which would have reinjected the accumulated capital into the economy. The implications of this for the Nigerian political economy is that the accumulated funds do not translate into capitalist investment and growth, as a substantial part of the gains are spent on ostentatious consumption, and the rest spirited out of the country illicitly to avert discovery by regulatory agencies.
In sum, this article has demonstrated that the award of contracts and privatisation in the power sector reflected the interest of financiers in the then ruling PDP. Contracts were awarded on a crony basis and served more as an attempt by the Nigerian government to reward financiers of the PDP presidential election campaigns since 1999; in addition, the privatisations served as a ‘payback’ to crony financiers of the party. Their capability to manage the companies created out of PHCN efficiently and effectively was not taken into consideration, thus the crisis in the energy sector remains unabated.