• Thursday, March 28, 2024
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Nigeria needs expanded reforms in power sector to widen investment opportunities, grow manufacturing base

Power: Experts prescribe ways out of liquidity challenge

The Nigerian government could tap into the benefits of the African Continental Free Trade Area Agreement, AFCTA to expand reforms into the power sector, a move industry sector analysts say could deepen investments into its underperforming power sector and widen opportunities for real sector operatives.

The African Continent took a bold step into a continental bloc market in January 1 2021,a move that portends huge economic benefits and expanded regional market which could see Africa harvest and harness opportunities in over 2.5 trillion dollar Gross Domestic Market and lift millions out of poverty through enhanced market and trade relations.

Expectedly, the first goods will begin to flow under an Africa-wide free-trade pact ,the culmination of more than five years of negotiations on cutting cross-border tariffs.

Industry analysts say with current reforms in the power sector, Nigeria must be able to consolidate it’s position as Africa’s largest economy with a defined reforms that could see investors explore opportunities in the generation,distribution and transmission value chain.

“Already,there is a diplomatic agreement in Nigeria’s power sector in supplying power to the neighbouring Togo,Benin Republic and Nigeria. The government must see opportunities of expanding power transmission to other African countries,especially now it is building on reforms in the power sector to attract more investments into the power distribution, generation and transmission value chain.”Chuks Nwani,an Energy Lawyer and Power Sector governance expert told BusinessDay.

Nigeria is currently undergoing some reforms in its ailing power sector,having attracted some facilities from the World Bank and African Development Bank, but Nwani noted that such reforms must be able to attract investors into the power sector expand opportunities in the manufacturing base of the economy.

Nwani noted that the Nigerian Electricity Regulatory Commission, NERC must uphold a market driven tariff, deepen licensing for embedded generation while sustaining periodic tariff review in line with exchange rate realities to attract the needed investments from the continental bloc market.

According to Nwani,”There is a plant in Asaba, and it has been completed for The Delta State government which is about 8.2 megawatts of power. NERC hasn’t licenced that for operations. This could weaken investors interest in captive power . Everyone must not be national grid. The regulator needs to work on this to expand investment options,”Nwani said.

Sunday Oduntan,the Executive Director of Association of Nigerian Electricity Distribution Company, ANED told BusinessDay that there is need for the government to sustain a market driven tarrif in order to open opportunities for investments.

According to Oduntan,the government must be consistent in driving a market driven tariff to sustain investor’s confidence in the sector.

Adetokumbo Kayode, former President of Abuja Chamber of Commerce and Industry, ACCI told BusinessDay that Nigeria has the biggest market in African but must show willing committment to develop the private sector and empower manufacturers to explore full export advantage of the AFCTA.

“Restrictive policies handicapping the private sector should be reviewed and relaxed.Multiple taxation that is killing businesses must be reviewed.Funding for crucial sectors of the economy should be channeled through credible business associations.Our government must urgently provide legal backing for the ease of doing business reforms.”Kayode said.

The World Bank report,notably has envisaged that 30 million Africans would be lifted out of poverty,with coming into force of the African Continental Free Trade Area Agreement; analysts,however believe the African government needs to address border barricade concerns,non efficient ports and harmonise a common acceptable standards that places premium on quality and global standards.

“African Continental Free Trade Area Agreement must explore opportunities in dispute settlement. Currently now,it is an area that is still lacking .Enforcement of dispute settlement is key in driving a one continental bloc market.”Ijeoma Uju,Partner in Templars law firm’s Corporate and Commercial practice group said in a Webinar on AFCTA monitored by BusinesaDay.

Ijeoma noted that there is need for the African countries to learn from the European Union in dispute resolutions and building a single customers union to enable deepening of trade facilitation and trade pacts across the continent.