Nigeria scraps Canada power contract in privatization setback

Wed Nov 14, 2012 7:00am EST
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By Joe Brock and Felix Onuah

ABUJA (Reuters) - Nigeria has terminated a $24 million electricity contract with Canada's state-owned Manitoba Hydro, the presidency said on Wednesday, in a setback for plans to privatize a moribund power sector that is holding back economic growth.

The hiring of Manitoba to manage the national power transmission network had been seen by industry experts as a major step forward for the reform process.

The presidency said President Goodluck Jonathan annulled the deal because "due process was not followed in the award of the contract". But his decision could add to fears about political interference in the sector that analysts say are holding back badly needed foreign investment.

Africa's most populous nation of more than 160 million holds the world's ninth-largest gas reserves but is blighted by power cuts which last several hours a day, forcing businesses and individuals who can afford them to rely on diesel generators.

Economists say a successful power privatization could push growth in Africa's second largest economy into double digits, from around 6.5 percent now. Yet critics question the integrity of the process, which looks set to leave much of the sector in the hands of powerful local oligarchs with scant experience.

"Mr. President has cancelled the Manitoba power contract with immediate effect," Presidency Spokesman Reuben Abati told Reuters.

"Mr. president would not want to comprise due process in anyway ... I assure you that this does not in any way affect the ongoing privatization of the power sector," Abati later added.

Choosing a firm to manage transmission took more than five years, in a process supported by the World Bank.   Continued...