PHCN sale: Matters arising

NOVEMBER 26, 2013

I have followed with dismay the protracted cliffhanger of a negotiation that went on between the Federal Government and erstwhile Power Holding Company of Nigeria workers’ union in the run-up to the sale and eventual handover of the electricity monopoly to the new investors.

I know for a fact that ships are routinely sold in mid-voyage, with assets, liabilities and pending litigation duly assigned. The PHCN or any such organisation was meant to remain a going concern. Why then did the discredited workers seek to hold the nation to ransom? The companies, by whatever new name called, were not about to leave town.

It is instructive to note that at no point did anyone suggest that any entity other than the government, in exercising its control of one of the pinnacles of the commanding heights of the Nigerian economy, was owing the PHCN workers, whether fired or retained. Why then did the government appear to allow the union of unproductive workers to dictate the terms of the discussion? It is conceivable that the government could have accepted to pay off every single ghost on the bloated PHCN payroll. However, the very fact that the management and staff, beneficiaries of the unsustainable status quo, had deliberately created a convoluted paper/electronic trail, would have still made it impossible to pay off everybody on a specific date, any date.  The distribution companies and generation companies must go on with their newly acquired mandate. I imagine that one year from now, there would still be a few “PHCN staff” not yet settled because they were never employees of the PHCN ab initio!

The real tragedy is that the unproductive and unteachable management and staff of the moribund PHCN essentially ran their very own company aground. They even made no plans or provisions for their own retirement, defying the notion that people would normally act in their own enlightened self-interest. Then, we, the people, have had to appropriate money earned elsewhere to pay them, after their stealing us blind. Following this template, I shudder at the thought of when (not if) we decide to sell off the Nigerian National Petroleum Corporation. We may then have to trade in half our oil fields and throw in whatever crown jewels that we may still own in order to see off our very “hard-working and productive” brethren at the NNPC.

I imagine two alternative scenarios for dealing with this situation:

The first is to declare the PHCN insolvent and allow the courts to take care of the evolving situation. The labour union would then have something really serious to worry about, not the current feast-for-all. Will the workers go on strike? Who cares? What difference would that make to their “very happy” customers?

The second is to value the DISCOS and GENCOS prior to sale and injection of fresh capital and allocate shares to our “hard working” brethren equivalent to 40 to 60 per cent of what is being owed them. Those who survive the reorganisation would either work hard to see to the profitability and growth of their investment, or see it vanish into thin air. Those that don’t will take to prayers and offering all manner of encouragement to their erstwhile colleagues to ensure that this new experiment works, so as to save their own investment. As it is now, it is a win-win situation, no matter what, for the former PHCN staff. Not fair at all.

In short, I recommend that our state owned monopolies must from now on be run with limited liabilities. The absence of such limitation engenders the “which-one-concern-me” attitude that led to the current mess under discussion. The laws governing bankruptcy must be modified to accommodate state monopolies.