- Title: NIGERIA: Foreign investors to buy into power sector
- Date: 16th October 2013
- Summary: ABUJA, NIGERIA (RECENT) (REUTERS) VARIOUS OF DELEGATES AT POWER HAND-OVER CEREMONY VARIOUS OF NIGERIA'S PRESIDENT, GOODLUCK JONATHAN HANDING OVER DOCUMENTS TO PRIVATE BUYERS VARIOUS OF DELEGATES SEATED (SOUNDBITE) (English) GOODLUCK JONATHAN, NIGERIA'S PRESIDENT SAYING: "To the Nigerian people, who have demonstrated such great patience and confidence, putting up often with darkness, noisy power generating sets, pollution and the daily disruption in their lives, I say better days are coming." LAGOS, NIGERIA (RECENT) (REUTERS) VARIOUS OF POWER INSTALLATIONS DELEGATES WALKING INTO POWER CONFERENCE VENUE BANNER READING: "POWER INVESTORS SUMMIT - NIGERIA" DELEGATES AT REGISTRATION DESK VARIOUS OF BEKINDO DAGOGO-JACK DISCUSSING WITH A JOURNALIST (SOUNDBITE) (English) BEKINDO DAGOGO-JACK, CHAIRMAN, PRESIDENTIAL TASK FORCE ON POWER SAYING: "Huge interest from businesses across the world indeed we had a representation from the US business community complaining that they were not properly notified and that they seem to have been left out of this opportunity and they were actually pressurizing diplomatically to see if there could be a bit of an extension on the deadline for expression of interest." VARIOUS OF GENERATORS/ ONYEKACHI UKOMADU, LAGOS RESIDENT STARTING GENERATOR IN HIS BASEMENT UKOMADU WALKING INTO HIS LIVING ROOM UKOMADU HELPING HIS CHILDREN WITH THEIR HOME WORK (SOUNDBITE) (English) ONYEKACHI UKOMADU, LAGOS RESIDENT SAYING: "I think it will be a huge relief for everybody, I keep saying that I wouldn't mind paying half of what I spend on running generators, I'm not even talking about acquiring the generators just to pay my power bills and have constant power and then also do away with the noise which I think is also, and the smoke you know that comes out, I don't think it's really friendly so having you know, we keep hearing that something is happening, private companies are coming in and all that; we think it is absolutely the best way to go because the government has never been good in managing utilities." VARIOUS OF MANAGING DIRECTOR, QUADRANT COMPANY WORKING ON HIS COMPUTER (SOUNDBITE) (English) BOLAJI OKUSAGA, MANAGING DIRECTOR, QUADRANT COMPANY SAYING: "Now, what an improved power regime will do is that it will immediately jump-start production and I'm not even talking at large scale level alone but at micro level because what you'll find is that we'll be able to then grow a lot of productive activity at the medium to small scale level and because if there is access to power, that will also give you know a lot of incentives to producers. If we can shoot up production to about 20 percent of GDP, then that begins to tell me that the Nigerian economy is beginning to work and I reckon that power you know electricity will have a lot to do in that regard." VARIOUS OF FOLA FAGBULE, ASSOCIATE VICE-PRESIDENT, AFRICA FINANCE CORPORATION WORKING (SOUNDBITE) (English) FOLA FAGBULE, ASSOCIATE VICE-PRESIDENT, AFRICA FINANCE CORPORATION SAYING: "Ultimately, the consumers and the ordinary folks in Nigeria will be the ones underwriting any investment that is going into the sector, any profit will be coming out of the pockets of the consumer, the ordinary users both corporate and residential and so consumer protection is something that a lot of attention has to be paid to on the part of the regulator to avoid undue monopolistic situation, to avoid situations where consumers are taken advantage of in terms of tariffs and in terms of the interface between the utilities and the consumer." STREET IN LAGOS
- Embargoed: 31st October 2013 12:00
- Keywords:
- Location: Nigeria
- Country: Nigeria
- Topics: Business,Industry
- Reuters ID: LVABME55J16FRC1WVHONLINYP8RB
- Story Text: Nigerian President Goodluck Jonathan recently handed ownership of the bulk of the state electricity company to private buyers, completing one of the final stages of a privatisation process meant to end decades of debilitating power shortages.
Despite holding the world's ninth largest gas reserves, Nigeria only produces a tenth of the amount of electricity as South Africa for a population three times the size.
Jonathan's efforts to privatise the sector and draw in investment have been slow and costly but may be the best chance yet to unblock a major bottleneck to development.
Improvements could be felt in 2-3 years, experts say.
"To the Nigerian people, who have demonstrated such great patience and confidence, putting up often with darkness, noisy power generating sets, pollution and the daily disruption in their lives, I say better days are coming," President Jonathan said after handing private buyers certificates of ownership at a glitzy ceremony in his villa.
Nigeria's sell off of state power assets meant to end decades of electricity shortages has mostly attracted local oligarchs, while foreign firms with the technical know how have tended to shy away from the risks.
Bekindo Dagogo-Jack, the chairman of the presidential task force on power says this may be changing.
Speaking on the sidelines of a power conference in Lagos, he predicted a 'second wave' of privatisation as the local tycoons sell assets to foreign players, after showing that this messy sector with massive pent up demand can be profitable.
A second round of bidding, this time for brand new power plants, had seen a lot more interest from outside than the round concluded recently for old assets, which went to local buyers.
"Huge interest from businesses across the world indeed we had a representation from the US business community complaining that they were not properly notified and that they seem to have been left out of this opportunity and they were actually pressurizing diplomatically to see if there could be a bit of an extension on the deadline for expression of interest," the chairman said.
The Power Holding Company of Nigeria (PHCN) keeps the lights on for only a few hours a day, forcing those who can afford it to rely on expensive diesel generators that burn up billions of dollars from the Africa's second largest economy.
Onyekachi Ukomadu, a resident in Lagos spends 158 to 253 US dollars monthly for petrol and servicing of his generator which he utilises on a daily basis.
"I think it will be a huge relief for everybody, I keep saying that I wouldn't mind paying half of what I spend on running generators, I'm not even talking about acquiring the generators just to pay my power bills and have constant power and then also do away with the noise which I think is also, and the smoke you know that comes out, I don't think it's really friendly so having you know, we keep hearing that something is happening, private companies are coming in and all that; we think it is absolutely the best way to go because the government has never been good in managing utilities," he said.
Fixing electricity could reduce business costs by up to 40 percent, add 3 percent to GDP and cut the mass unemployment that fuels unrest seen in oil theft in the south and a bloody Islamist insurgency in the north, economists say.
Some 40 billion US dollars has gone into several power reform drives in the last 20 years, much of it wasted.
The PHCN was split into six generation and 11 distribution firms, all sold separately, for about 2.5 billion US dollars in total.
The private buyers will take physical ownership of the infrastructure next month.
Two remaining companies are expected to be sold within six months.
Bolaji Okusaga, managing director, The Quadrant Company, a public relations firm, says the transformation will cut across and affect even small and medium scale business owners who rely heavily on generators.
"Now, what an improved power regime will do is that it will immediately jump-start production and I'm not even talking at large scale level alone but at micro level because what you'll find is that we'll be able to then grow a lot of productive activity at the medium to small scale level and because if there is access to power, that will also give you know a lot of incentives to producers. If we can shoot up production to about 20 percent of GDP, then that begins to tell me that the Nigerian economy is beginning to work and I reckon that power you know electricity will have a lot to do in that regard," Bolaji said.
Fola Fagbule, associate vice-president at the Africa Finance Corporation says an important aspect to be considered is the protection of consumer rights.
"Ultimately, the consumers and the ordinary folks in Nigeria will be the ones underwriting any investment that is going into the sector, any profit will be coming out of the pockets of the consumer, the ordinary users both corporate and residential and so consumer protection is something that a lot of attention has to be paid to on the part of the regulator to avoid undue monopolistic situation, to avoid situations where consumers are taken advantage of in terms of tariffs and in terms of the interface between the utilities and the consumer," he said.
Nigeria is also planning to sell off 10 more newly built state power plants, all gas-fired, by next year.
A successful privatisation process that improves supply would leave President Jonathan with a lasting legacy, and help answer critics who complain about the slow pace of reforms and question his record on graft and security.
It may also be the best chance yet to unlock the potential of Africa' most populous nation and second biggest economy. - Copyright Holder: REUTERS
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