- Says investors who play by the rules will recover their investments with a decent profit
- Cautions Sector leaders against statements that could cause panic, endanger national security
The Minister of Power, Works and Housing, Mr. Babatunde Fashola SAN, on Tuesday in Lagos called on the Private Sector to embrace the investment opportunities offered by the nation’s privatized Power Sector saying the return on investment clearly outweighed the challenges in the sector.
The Minister also cautioned leaders, especially, in sensitive public and private sectors of the economy, like Energy, to be mindful of what they communicate to the public at any time pointing out that their positions demand some introspection and moderation in public communication.
In his National welcome address at the Power Nigeria Exhibition held at Eko Hotel and Suites, Victoria Island, Fashola said the opportunities exist because the sector was transiting from Government control and operation for 63 years between 1950 and November 2013, to Government regulation and private sector operation in the last three years.
The Minister told the large array of exhibitors and investors, “As Mr. President recently remarked in the United States, this is an investment destination that the rational investors cannot ignore”, adding, “Are there challenges? Yes, there are. Those are the risks of entrepreneurship. But the opportunities and the return on investment clearly outweigh the challenges”.
Noting that one of the challenges in the sector was liquidity, Fashola said in addition to laying down adequate steps to address the challenges, Government would provide an environment that would enable the private sector thrive, deepen its investment and contribute to its stock of incremental power.
“Our policies seek to ensure that investors who play by the rules will recover their investments and a decent profit, while we protect consumers from people who want to profiteer”, the Minister said adding that in the face of challenges, the public have a right to know what was going on in the sector.
Fashola, who reiterated Government’s commitment to and focus on improving the collective power experience and the need “to act expeditiously in order to stimulate the economy back to growth and inclusion”, however, said Nigerians must be mindful that the transition was only less than three years on, and so must manage their expectations for results “within the context of the unfruitful power experience of 63 years”.
Describing as simple and methodical Government’s approach to solving the challenges within the sector, the Minister said it would start from getting incremental power from all sources; solar, coal, hydro, gas, bio-mass, nuclear, wind and whatever is possible; adding that there is gradual and sustained progress in this regard in spite of the setback caused by vandalism and sabotage of power assets.
Noting that the monthly meetings of power operators and stakeholders constitute one of the initiatives for constant interaction and problem-solving so that issues and problems could be resolved in an efficient and businesslike manner, Fashola listed other challenges within the sector to include liquidity issue. He added, however, that Government was aware of the issues “ranging from the volatile foreign exchange rates to MDA debts, to collection losses”.
“These issues require all operators in the value chain, not only Government, to act with a common commitment, with transparency and with candour”, the Minister said reiterating that the challenges in the sector were part of the occasional investment risks that make reward worth the venture.
On Government’s approach to solving the liquidity problem, Fashola, who stressed that government would pay all properly verified debts, disclosed that government has already started working with ministries and departments to ascertain the actual quantum of debts, with a view to solving them.
“The Nigerian Bulk Electricity Trader (NBET) is working to raise funds to provide financial security for the sector”, the Minister said adding, however, that what government needed now was the full disclosure from all operators in an open manner to assist it ascertain that the debts were legitimate so that it could take the next steps.
The Minister, however, frowned at a recent media publication credited to the Managing Director of Egbin Power Station to the effect that total darkness nationwide was imminent as a result of debts owed the power station pointing out that what the sector would not need now was a media war between operators about who was the cause of the problem.
Fashola declared, “What we do not need are sensational and exaggerated media statements that can cause panic in the industry. That does not solve the problem and neither does it help us serve the people on whose behalf we hold office and whose patronage sustains our businesses”.
Referring specifically to the media publication in the Punch newspaper of September 18, 2016, with the headline, “Nigeria may soon be in total darkness, Egbin CEO”, the Minister declared, “What we do not need are unguarded statements that either mislead the public or threaten our national security, because debts are owed”.
Describing the statement as being in bad taste, inflammatory and insensitive to national security, the Minister added, “Yes, Egbin is being owed. Egbin had been owed before this administration. But unpaid debts to Egbin or any other operator may lead to the power plant being closed down, which would be regrettable and must be avoided; but it does not mean that Nigeria will be in darkness”.
According to him, “Leadership positions in critical services such as energy, are positions of enormous responsibility which demand some introspection and moderation in public communication”. He added that the statement fell short of the whole truth about the debts owed operators in the sector.
“What the Managing Director did not tell the newspaper is the number of meetings my ministry and other senior government officials have had with the owners of Egbin, unless he is unaware, which would also raise doubts about what he knows”, Fashola said adding that the CEO also failed to tell the newspaper that some payments were approved this year for Egbin and some other operators and that this was a continuing system of claims and settlements.
Saying it was not his style to take up individual newspaper reports, Fashola pointed out that because “the ominous proclamation of national darkness borders on national security” he was compelled by a sense of duty to assure Nigerians that government was working to solve the problems that were being complained about.
The Minister also recalled another “somewhat misleading statement” credited to the same person, claiming that the transmission system could not support the 1320 MW from Egbin or 5000 MW describing it as not true. He explained that instead of renewing the contract of Manitoba, government, after some consultations decided to develop “a more robust expansion and management plan”.
“Today, the carrying capacity of the National Grid has grown from TSPO
5300 MW and it is still growing because our contractors are back to work, and the expansion program continues while we are solving problems”, Fashola said adding, “This factual situation flies in the face of the incorrect assertion that the grid cannot support 1320 MW by Egbin or indeed 5,000 MW”.
The Minister declared, “All of us are leaders in our positions, whether public or private. In the face of challenges, we owe the public disclosure because they have a right to know; but we owe a greater duty, to inspire hope in them rather than cause panic among them. That is why we are leaders”.
On the suggestion that the transmission system should also be sold, the Minister, who cited India, South Africa, Brazil, Mexico and China as examples of countries that have privatized their power sector, pointed out that none of those countries privatized the generation, transmission and distribution segments at the same time.
“Best practice has been to privatize two and leave one and there is no rule about which one to privatize or leave”, he said adding that subject to what the Government-in-Council may decide, his personal view was that while still making the best of the privatization of generation and distribution, it was sensible to wait for those sectors to stabilize, achieve efficiency and service delivery before even contemplating privatization of transmission.
Arguing that his position appeared reinforced by the aforementioned liquidity issues and the current ability of government to at least fund some of its transmission projects, the Minister said, “it challenges Government to do its best so that you can do your business and contribute to building this economy”.
Welcoming the investors and exhibitors and thanking them for responding massively, Fashola noted with delight that their attendance spoke eloquently to the possibilities of enterprise and reward in the power sector, adding, “The number and array of exhibitors at this event clearly speaks volumes about the investment appetite for Nigeria’s power sector”.
“More than anything that I could possibly say about the attractiveness of the Nigerian power sector; these exhibitors cum investors, who have voted with their feet by coming here, say it all”, he said adding that it vindicated the recent remarks by President Buhari in the United States that the sector was an investment destination that no rational investor could ignore.