A former Executive Director, Asset Management Corporation of Nigeria (AMCON), Mr Kola Ayeye, has called for synergy between the Central Bank of Nigeria (CBN) and the Nigerian Electricity Regulatory Commission (NERC) to reposition the power sector for enhanced performance.
Ayeye made the call in a statement issued in Lagos on Sunday. He said it was time to admit the failure of the last power privatisation exercise, and recommended that NERC, CBN and commercial banks invite global players into the power sector.
According to him, the player will commit to generate, transmit and distribute a minimum of 20,000 megawatts daily within five years and increase same to 30,000 megawatts daily by the tenth year.
“We will be contracting to pay for power successfully delivered to the consumers rather than contracting for the execution of power projects.
“Execution of power projects has produced poor results after huge investments in excess of 16 billion dollars.
“The nation has invested massively in power projects with poor results, so we should change the model. Rather than contracting to execute power projects, let’s contract best-in-class players to deliver power.
“It is not our business how they generate, transmit or distribute the power. They are to deliver the power. They will only get paid for the power they deliver to the consumers.
“Such big players exist and the size of the Nigerian power market is sufficient to attract them,” he said.
Ayeye, Managing Director, Growth & Development Asset Management Limited (GDL), advocated for the contract with the new concessionaire be backed with a 10-year payment guarantee for power delivered to the consumers.
According to him, the payment guarantee could be provided either by the African Development Bank (AfDB), World Bank or other first class international banks.
“This contract will be between eight billion dollars to 12 billion dollars and is definitely of a sufficient scale to attract a global best-in-class operator,” he said.
The expert decried the level of default of both electricity Generation Companies (GenCos) and Distribution Companies (DisCos) to the banks, saying that such entities should be reconcessioned.
Ayeye said the concession could be through voluntary collaboration with CBN/NERC/banks or through receivership where the operator refuses to cooperate.
He noted that such radical reform in the power sector was necessary to address the abysmal performance of the present players who had failed to deliver constant power to Nigerians.
“In the civilian dispensation, we have gone 20 years and the power situation has only marginally improved.
“If we do not introduce radical reforms, another 20 years will lapse and the sector will not record any change,” Ayeye said.
Speaking on the country’s tariff structure, he said investors should not use the nation’s current tariff as an excuse for under-performance of the sector. “Tariffs are no longer a big problem. The current tariffs are already close to international parity,” he said.
The expert noted that the power sector was an essential requirement for output growth in the nation’s manufacturing sector. “Unless the manufacturing sector grows, unemployment will continue to grow.
“We must solve the power problem. We are making incremental progress but what we need is a quantum leap,” he said.
Ayeye said that adequate electricity would boost employment and manufacturing sector growth, saying that power is a catalyst for economic and social development.
