Attracting investment in power plants

For more than five years running, the Federal Government has been engaged in the process of packaging a programme for the reform of the power sector under which the Power Holding Company of Nigeria (PHCN) will be privatised. More importantly, an investment climate clement enough to attract the private sector in the building of new power plants was supposed to be created under the plan.

Curiously, the entire project has remained on the drawing board. Except for periodic hollow calls on the private entrepreneurs to invest in the country’s power sector, no policy framework has been issued to enable investors understand the climate under which they would operate.

That Nigeria’s power sector is in such shambolic state as it is now is essentially down to the lethargy and inertia on the part of policy makers in energising the process for the entry of private investors into the sector. Nothing illustrates better, the harm the Federal Government is doing to the power sector, than the fact that state governments that had ventured into the building of power plants are unable to evacuate the generated power to consumers.

On Monday, July 5, 2010, Rivers State governor, Rotimi Amaechi, announced the imminent shutdown of the Omoku Power Plant which the state had spent billions of naira to build. After the 100 mega watts capacity plant, commissioned by President Goodluck Jonathan, had come on stream, now the governor is saying it makes no economic sense to continue to run the plant, as only 18 mega watts of the 100 generated was being evacuated by the PHCN.

Only last week, it was revealed that the African development Bank (AfDB) and the Islamic Development Bank (IDB) have lined up $3 billion and $2 billion, respectively, to fund power projects in the country. All they are waiting for is the policy framework for the privatisation of the sector. Similarly, the Lagos State governor, Babatunde Fashola, had repeatedly stated his willingness to take over two companies expected to be unbundled from PHCN – Eko and Ikeja distribution companies. And just like AfDB and IDB, he is waiting for Federal Government’s policy framework.

We do not accept this lethargy on the part of government. Nigeria is generally acknowledged as providing a huge market for investments in infrastructure, while the citizens are yearning for services they are willing to pay for. By delaying in releasing the policy framework for reforms in the power sector, the Federal government is practically shooting itself in the foot, and stagnating the country’s development.

It does not require rocket science or reinventing the wheel for the Federal Government to adopt the policy guidelines that will kick-start the injection of the desperately needed funds for resuscitating the comatose power industry.