Saturday, September 1, 2012

On Barth Nnaji’s resignation

I must say I am one of those who feel highly disappointed by the forced resignation of Nigeria’s former minister of power, Barth Nnaji.  I am not alone. His resignation has been a subject on social media with a good number of people expressing disappointment at his resignation. 

Barth Nnaji-Nigeria's former Minister of Power 

The disappointment has mainly been because most Nigerians have for the first time seen a dedicated commitment by a minister to make an impact in the perennially underperforming power sector. The clear evidence that he was making progress was not just the fact that most Nigerians were beginning to experience improved power supply in their homes but the powerful labour unions in the power sector were beginning to feel uncomfortable.

The entrenched interests in the Nigerian power sector in collaboration with some compromised staff of PHCN who have made their fortunes from the misfortune of Nigeria’s power situation suddenly realized that their days were numbered with the progress Nnaji was making in the power sector. Power was not only improving but the various timelines set for selling the successor companies to the dissolved PHCN was being adhered to strictly. Unlike before, it was obvious that the status quo in the power sector was about to change permanently.

His sudden resignation has however put the whole process under jeopardy, no matter what the government may want to say about it not affecting the whole exercise. Personally, I think the reason given for his forced resignation was lame. I see nothing wrong with what has been made to look like a wrong doing in some media.

I have had the privilege of going through some of the best codes of ethics and best practices from highly respected professional bodies and in all  conflict of interest situations, what is required is disclosure first and avoidance second.

From media reports, It was Nnaji that informed the committee that a company that undertook a contract for his company in the past was involved with the bid for some of the power assets and that also Geometric, which we all know was run by Nnaji before he became power minister was part of a  Eastern Nigeria Electric Company consortium bidding for the Eastern Nigeria Distribution Company.

Global best practice in this situation is disclosure of this potential conflict of interest, which Nnaji did. There is absolutely nothing wrong with those companies bidding for the power assets. A company that is technically qualified and financially capable to bid for power assets does not stand disqualified because it worked for the power minister in the past. Also, disclosing that Geometric was part of a consortium bidding for a  stake in Enugu Electricity Distribution Company was the right thing to do. The other action was ensuring that he abstained from the selection process of the successful bidders for Eastern Nigeria Electricity Distribution Company which from media reports, he did. 

 What was expected of the minister was not to be part of the decision making process in the bid evaluation involving the companies that could generate potential conflict of interest. From media reports, he also did that when he informed the technical committee evaluating the bids that two companies that were distantly related to him are taking part in the process and excused himself from the process.  As far as I can see from media reports, Nnaji met all the requirements of transparency and fairness that are supposed to be met in a process like this.

Wrong doing can only be ascribed in this situation if it can be proven that he may have passed information to any of these companies that are related to him that was not passed to other bidders and the companies have emerged without submitting the best bids.  From my reading of media, reports, I have not seen any such accusation.  In the US, Dick Cheney was the Managing Director of Halliburton before becoming Vice President of the US, and that did not stop Halliburton from winning contracts from the US government while he was the Vice President.

It is important that we do not hold public officers to impossible standards if we want to get credible people in the private sector to go into governance. Nnaji was not expected to close his private company down just because he wants to work for government. He took all the right actions he was supposed to do in such a situation by placing his shares in Geometric in a blind trust. This could explain why he found out only at the evaluation stage that his company was also involved in the bid. With a blind trust, he is not supposed to know what his company was doing while he is a minister.

It is really sad that, one of the acknowledged good hands in the current administration has been forced to resign. I sincerely hope, his resignation does not open the loophole for those who do not desire the success of the whole power reform programme to   compromise the process for their selfish end. There are still critical challenges ahead for the power reform process.  The greatest challenge is continuity. Bankers who are going to ultimately provide the finance to successful bidders are already concerned about the sustainability of the whole power reform process if it is not concluded within the lifespan of the current administration. Most bankers would definitely be reluctant to open their books to successful bidders if the whole process is not concluded before the 2015 elections.

The last time Obasanjo left and Yar Adua took over, the NIPP projects were all suspended, resulting in bad loans which created one of the excuses the Central Bank of Nigeria (CBN) needed to take over some banks. Nigerian banks may not want to take that risk again and the sudden resignation of Nnaji only shows that the risks associated with Nigeria’s power reforms are very real.

It would really be sad if the power reforms are derailed again. Succeeding with the power reforms may be Nigeria’s best chance to redeem its economy and remain as a nation. 

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