Chukwueloka Umeh, CEO, Century Power Generation Limited has called on the Federal Government to remove all bottlenecks stifling the gas and power sector to drive private investments and economic growth in the country.
According to him, the government can only successfully and effectively diversify its economy away from crude oil to agriculture and manufacturing when it can adequately provide its power needs for industrialization and growth.
Umeh said it is unthinkable that despite the fact that Nigeria has the world’s ninth largest gas reserves, it still grapples with power generation and distribution issues in spite of millions of dollars spent on foreign experts, countless committees, and public-private stakeholder meetings, among others.
He said investors are not plowing the much-needed resources into gas and power projects for several reasons, including constantly changing regulations, difficulty in enforcing agreements, ease of doing business, and unrealistic tariffs.
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“The Federal Government needs to relax its regulations enough to allow a real gas and power sector to come into existence and actually grow in a measurable form, driven by the private sector in partnership with the government,” he said during an interactive webinar recently with journalists.
“It is time to do things differently. We should stop the endless committee meetings, conferences and engagements,” he added.
He urged the government to pick a set of regulations, such as the ones that birthed the only project-financed power plant in the country -Azura power- respect contracts and the rule of law to give local and foreign investors confidence to invest.
He says that market forces and competition should be allowed to drive gas and power tariffs rather than allowing the prices to be set by a regulator.
Umeh argued that government’s role should be limited to providing appropriate regulations that will catalyze private entities to drive the much-needed diversification in the country.
He cited the example of several private estates in Lagos where steady, uninterrupted power is being supplied to as a result of the cost-reflective tariffs that the residents pay, which is far less than what they would have paid to operate fuel or diesel generators with the related health and safety hazards they come with.
He stated that such a model can be replicated on a larger scale across the country if the companies within the entire gas and power value chain are allowed to work under relaxed regulations as well as charge cost-reflective tariffs.
Speaking further on the issue, Umeh praised the government’s efforts so far to deregulate the power sector but urged it to do more and do it with more urgency to help stem the alarming growth in the unemployment rate in the country.
Umeh argued that once the power industry is working and adequate power supply is guaranteed, investors will begin to see the country as an investment destination.
“We must, however, understand that the privatization of power does not guarantee immediate availability of power because it takes at least three years to build a power plant from groundbreaking to actual generation,” he said
“Private companies should be encouraged and incentivized to build power plants as well as strengthen transmission and distribution networks knowing that their investments will eventually be recovered through cost-reflective tariffs,” he added.
