The road shows designed to showcase investment opportunities in the Nigeria’s power sector held in Lagos, London, New York, Johannesburg and Hong Kong, appear to be yielding desired results as investors from various parts of the globe have besieged the country’s electricity industry with investment proposals.
Some analysts say the overwhelming response may not be unconnected to the carrot of five year tax holiday which the Federal Government has offered prospective investors in the power sector, while others suggest the World Bank’s instruments to insure investors’ investment against political risks in the country was a tunic to their confidence.
At the weekend, no fewer than 110 firms submitted Expression of Interest (EOIs) for the 80per cent shareholding divestment of the power station infrastructure being currently delivered by Niger Delta Power Holding Company (NDPHC).
Also, Nigeria and India reached agreement recently to site a solar power facility in Bida, Niger State.
This will be the first of a series of power plants planned to be sited in Niger State to provide additional megawatts of power for the national grid.
With the agreement signed at the power ministry headquarters in Abuja, the Indian firm, Bharat Heavy Electricals will begin preliminary studies ahead of citing independent solar-powered plants in selected locations in Niger.
Minister of Power, Permanent Secretary, Godknows Igali, who signed for the Nigerian government, said the country’s power sector would remain open to investment in hopes of unbundling the sector’s potential.
Sutanu Behuria, secretary of the government of India, who led the Indian side, expressed his country’s interest in the provision of funds in various forms for the development of Nigeria’s power sector.
Nigeria’s development partners had invested about N187.44 billion ($1.17 billion) in the country’s energy sector as at December 2012, under the Country Assistance Framework, CAF.
The partners, according to the CAF draft document for May 2013, are the African Development Bank, Agence Francaise de Development, Canadian International Development Agency, Department for International Development, Embassy of Japan, Japan International Cooperation Agency, and Embassy of the Republic of China.
Others are the European Union, High Commission of India, International Monetary Fund, United States Agency for International Development, United Nations System and the World.
The report, which was obtained by National Mirror, put the total commitment of the development partners as at the end 2012 at $13.018 billion, with the Nigeria’s energy and power sector accounting for nine per cent of the total.
According to the report, CAF is the common strategic approach of Nigeria’s development partners in support of the government’s development plans.
It noted further that CAF is derived from the programme priorities articulated in Vision 20:2020 and its implementation strategy, the Transformation Agenda (TA) 2011 – 2015.
In the power sector, the report said the partners will provide analytical and advisory activities in support of prioritizing sector investment in a context of limited financial resources.
The document further noted that the partners under the CAF programme will also assist the government in covering the payment risk of the Nigerian Bulk Electricity Trading Company, especially as it enters into a Power Purchase Agreements with Independent Power Producers, IPPs.
The partners will also support the Nigerian Bulk Electricity Trading Company, NBETC, to establish a culture of excellence and transparency, to give investors the confidence to develop cost-efficient electricity generation projects, the document stated.
The document noted further that “To improve the capacity and reliability of its generation, transmission and distribution systems, Nigeria needs to: ensure that the policy and reform agenda continues to move forward; institute cost-reflective tariffs and appropriate commercial practices.
“Nigeria should increase transparency in government investment decisions, sector subsidies and award of power purchase agreements; improve accountability by private operators and develop the Sustainable Energy for all (SE4all) agenda for rapid expansion of electricity access and related analytical data and reports.”
The report listed internal violence, insecurity, and uncertainty ahead of the 2015 general elections, economic volatility and fluctuation in the prices of oil in the international market as major risk factors that will hamper the implementation of the CAF programmes.
Information from National Mirror was used in this report.