Renewable energy, gas may benefit from FG incentives in 2017

Analysts say renewable energy and gas projects could see more investments flowing to them in 2017, if the Federal Governments provides the necessary environment to trigger such flow of funds.

Unarguably, the prospect for renewables looks promising going into 2017.

While the solar companies that signed the PPA with NBET are constrained by funding and uncompetitive tariff plans, sector practitioners say these constraints can be overcome.

“In my view, the outlook for 2017 looks very positive. We are going to see a lot more deals and if government continues this momentum, we will see more private sector participation,” said

Godwin Aigbokhan, renewable energy market adviser, National Competitiveness Council of Nigeria.

Aigbokhan further said, “A critical area that attention has to be paid is in capacity building. We need more technical expertise in the sector.

He further proposed that two constraints of technical capacity and funding would need to improve. He called for banks to establish renewable energy sub desks and that government should coordinate better with donor agencies to drive deeper adoption of renewable energy.

Anita Nana Okuribido, president of the Council for Renewable Energy, Nigeria, (CREN) told BusinessDay that fiscal policies like tax holidays for renewable energy companies and infrastructure should be implemented.

“That is how it is done abroad. In Germany for example, they are always having tax holidays. Components like batteries should be duty-free or reduce the rate to allow for increased adoption,” she said.

Industry watchers also believe that the year 2017 may likely not see speeded investment in gas infrastructure, unless the identified grey areas that bedeviled the sector in 2016 are tackled.

Domestic gas projects will become more profitable if indigenous companies are given access, Dada Thomas, managing director, Frontier Oil Limited observes.

According to Thomas, “the only incentive for indigenous companies willing to continue to invest in gas for domestic use is if government provides an enabling environment”.

Thomas says that freeing gas for local investors is the first step toward encouraging willing investors to develop gas for the domestic market.

“A gas project 70 percent of it is in dollars because of the technology, the equipment is not resident in Nigeria. You have to spend dollars to get a gas project going. So if government does not address this investment and income currency mix match, there will be no future investment in gas project in Nigeria” he said.

Clay Neff, Chairman, Oil Producers Trade Section (OPTS) in a recent presentation recommended that in 2017 part of measures the federal government needs to put in place to effectively unlock the gas sector is to implement the Gas Supply Aggregation Agreements contract Regime; Transition to a willing buyer and willing seller gas market.

Neff opine that government ensure a power tariff that provides a commercial return, Set globally competitive fiscals for gas, attract investment in gas infrastructure development and complete critical National Integrated Power Project (NIPP) transmission lines.

He further said that in 2017 if the federal commits not just in principle but actually settle the outstanding debts, establish bankable credit support facilities for future gas sales then the sector would surely grow.

 

ISAAC ANYAOGU