Sustained underinvestment for over three decades is hurting Nigeria’s power sector severely. This was the thrust of the presentation by Taiwo Okeowo, deputy managing director and head of investment banking division, FBN Capital, at the 2014 Power Roundtable organised by BusinessDay Conferences.
Okeowo said the underinvestment was not limited to capital investment but also extended to people and skills. He observed that underinvestment in human capital in the power sector was evident in the fact that before privatisation, the average age of PHCN workers was 52 years.
He commended the government for making power generation and distribution purely market-driven but pointed out that gas supply was still a hurdle, adding that once the gas supply issue is sorted out in addition to the transmission issue, power sector financing would become bankable and attractive.
Eyo Ekpo, commissioner, market competition and rates, Nigerian Electricity Regulatory Commission (NERC) in his own contribution, said that about $360 billion is needed as of today to stabilise the power sector in Nigeria.
Ekpo identified the five levers which will make the power sector to work as policy framework, regulatory environment, structure of the market, bankability of the market structure and human resources.
He however added that the recent review of gas price to $2.5 per standard cubic feet (scf) has brought about a buzz in the gas sector and said that very soon, Nigeria would see a lot of traction in the gas processing sector.
Benjamin Dikki, director-general, BPE in his contribution, outlined the three factors which have impeded the privatisation of the Transmission Company of Nigeria (TCN) as the decayed infrastructure in the transmission sector which makes it unattractive to the private sector, quantum of the investment required for the refurbishment of the transmission infrastructure and the fact that at Nigeria’s capacity of 4,000MW it is totally commercially unviable and unrealistic as revenue from that capacity cannot sustain the infrastructure.
“Until we get to 100,000MW, privatising TCN will not make sense, Dikki added.