* Power outages biggest brake on economic growth
* Canadian firm's appointment was welcomed by industry
* Political interference key concern for foreign investors
By Joe Brock and Felix Onuah
ABUJA, Nov 14 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 privatise a moribund power sector that is holding back
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 gave no reason for President Goodluck
Jonathan's decision to annul the deal, which could add to fears
about political interference that analysts say are holding back
badly needed foreign investment into power.
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 privatisation 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, without giving a reason, adding that the power ministry
would make a statement later in the day.
Choosing a firm to manage transmission took more than five
years, in a process supported by the World Bank.
Standard and Poor's upgraded Nigeria's credit rating last
week but said a failure to push through reforms to areas like
power could put its more positive view at risk.
Manitoba was supposed to start work at the beginning of
September but transmission is still in control of the
government. Sources within the privatisation process said the
ministry of power was unhappy handing over to Manitoba.
"We had a clear contract and we were meant to be given
delegation of authority ... but that didn't happen," Don
Priestman, the head of the Manitoba-run Transmission Company of
Nigeria, told Reuters by phone.
"There are forces working against reform," he added, saying
a similar contract Manitoba has in Kenya was working well.
The power ministry did not respond to calls for comment.
Nigeria is in the middle of privatising the bulk of its
power plants and distributing networks, in a reform process
supposed to give foreign investors the confidence to provide the
estimated $10 billion-a-year the electricity sector needs.
Transmission is the key link between power plants and
sub-stations feeding end users, and its poor management in the
past has made investments in producing or distributing power
unprofitable, industry experts say.
Nigeria's lack of power helps perpetuate social inequality
in a country where the majority survive on $2 a day or less.