Hopes of Steady Power Supply Fades as FG Courts $20Bn Investment

Nigeria’s erratic public power sector would require an additional capital investment inflow of about $20 Billion over the next 36 months to maintain a steady output, dashing hopes of any quick fix to the country’s notoriously unreliable public power supply, Nigeria CommunicationsWeek can now report.

Also, last week, the Bureau of Public Enterprises (BPE) confirmed long held public perception on the correlation between steady public power supply and economic growth.

The BPE, a Nigerian government agency charged with the overall responsibility of implementing policy on privatization and commercialization of public enterprises stated that inefficient power now cost the country three per cent GDP growth per annum.

Ms. Bolanle Onagoruwa, Director General of BPE, said at a Breakfast Session of the American Business Council held last week in Lagos that the country cannot allow power outages to stifle economic growth.

Onagoruwa said in her presentation: Investment Opportunities and Current Status of Privatisation in the Power Sector,” warned that economic growth is needed to finance new and expanded capacity in the power sector.

“We need to choose technologies that are proven, reliable and that will be cost effective,” said Onagoruwa.

She noted that the on-going reform in the Nigerian power sector is designed to attract major private sector investments.

Onagoruwa noted that: “While acquisition costs for the Power Holding Company of Nigeria (PHCN) successor companies may be equity based, investors will require access to long term financing in order to refinance to raise funds for further investments; invest in major rehabilitation; and capital for the greenfield IPPs (Independent Power Plants).”

Nigeria CommunicationsWeek gathered that the requirements needed for investment in the sector: include to acquire and rehabilitate six generation and 11 distribution successor companies; 10 NIPP generation plants (4,770 MW of new capacity), related NIPP transmission and gas distribution network assets, as well as related expanded distribution asset being built at a cost of $8 billion by Nigeria’s three tiers of government (funded by oil revenues) and over 14 Independent IPPs that have received licences.  

Onagoruwa stated that ddeveloping countries like Nigeria cannot continue to rely on global multinational and bilateral institutions to finance their power infrastructure.  She added that new and replacement generation capacity will need to be financed by both domestic and international financial markets.