The Nigerian Government says the privatised power sector will open up for new investment process to enable new investors invest further in the development of the sector.
Zainab Ahmed, minister of state for national planning, said this in Abuja.Ahmed said the plan by government became necessary given the challenges in the sector.
“The power sector has been privatised,” she said. “But I am sure that every Nigerian will testify that the privatisation has not worked out well. What we set to achieve in terms of the development of the power sector has not yet happened.”
She added: “We have now come to a point where government, which is a shareholder in power sector, and the other investors must come together and decide to cede some of their holdings to the fresh investors.”
“The ceding of the holding to the fresh investors will enable them to inject new funds and new expertise to enable us to grow the power sector the way that will serve Nigerians,” she added, noting that the process will involve government negotiating with the existing owners, and deciding the right level of holding that would go for another round of sale.
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She said that the opening of the power sector would also entail the review of tariff “to the extent that we said that the power sector will be opened up to a new investments process.
According to her, “It is very clear that no new investor will be coming without having a satisfaction of the level of tariff that will be attained in the industry.That will be a discussion that will be heard with the new investors; it is very clear to us that the level of tariff that we have now is not sustainable.”
She disclosed that where the tariff will go will be a subject of negotiation between government, existing investors, the new investors, and the consumers.
“So we try to attain an optimal level, but there will be an impact on the tariff,” she added.
However, the minister said that the starting point for the review of the entire process will be the distribution companies (DISCOs), and that distribution of electricity was most pressing.
On government borrowing, she said that government did not just decide to borrow at 21 or 22 per cent, but that the market actually determines the (interest) rate of government borrowing .
“The point we are making is that because the government is borrowing heavily, the financial sector is now concentrating on borrowing to government, and the private sector gets little or no attention,” she clarified. “So government must reduce its level of domestic borrowing to free the space so that the financial sector is able to borrow to the private sector.“
