Stories by Ugo Amadi
Dr Ransome Owan, Group Managing Director, Aiteo Power has advised Federal Government and the National Assembly to split the Petroleum Industry Bill (PIB) for easy passage as it affects economic growth.Owan gave the advice during his paper presentation titled “The emerging investor-owned electricity industry in Nigeria and prospects for economic boom” in West African Power Industry Convention (WAPIC) in Lagos. He said that the bill which is regarded to be complex for a country like Nigeria needs to be broken into manageable size as to have an easy passage by the National Assembly.
According to him, both government authorities and policy makers should look at the bill carefully and find a way to split the bill into smaller pieces for easy passage into law.“The bill as a whole was too complex for passage and this gives rooms for delay which hamper economic development growth of the energy industry. “It would have been better to break it into a manageable state to allow it move forward,” he said.
Owan said that the PIB aimed to unify all the necessary legislations in one bill and provide a clear framework for investment in Nigeria’s energy sector, adding that the privatisation of the entire Nigerian power industry was the most ambitious anywhere in the world.
Owan, said that 10 new power plants had been auctioned for 5.6 billion dollars and sale of the national utility company fetched over 3 billion dollars as of November 1, 2013. He added that the Independent Power Projects (IPP) were underway to close thepower demand gap of about 40GW.
The managing director said that the handover of the Nigerian electricity distribution and generation to the private sector last year was a ‘watershed moment’. He also said that the transaction was largely funded by local banks without Foreign Direct Investment (FDI).Owan said that the power industry is challenge of incoherent and disjointed planning and lack of reliable feed stock to generate when assets are ready. Noting that lack of sound structural framework for long-term financing at reasonable rates also contributed to the challenges in the power sector growth.“The greatest life changing experience will be powered by our industry as the main tangent for growth and reversal of fortunes for all Africans.
“The lack of attention to one of the most capital and technology intensive industry by many national governments has been the bane to the blight of many,’’ Owan added.
He, however, urged participants to seek propitious relationships to light up the continent, adding that the abject lack of power was most acute in African. He said that this, therefore, collaborations were apt to deliver value, adding that WAPIC was a good platform for the exchange of ideas which were business relation development. The expert said that African lending banks needed to develop new and innovative tools to bring liquidity to the sector.
He said that it had been long to reach financial-close on power projects. “It should be made even much easier to obtain acquisition finance over project because lenders and project sponsors are closer to the cash than project development that takes much longer.“A case in point, Nigeria is selling ten new constructed power plants requiring acquisition finance, yet we find top tier lenders that are prohibited from such finance. “There is limited way of participation, if institutions such as African Development Bank (ADB) can lend to domestic banks and they in turn lend to project owners “ A de-risk project should be more attractive than a long-term development project,’’ he said.