How would you describe the Nigerian investment landscape with particular regard to the power sector?
The Nigerian investment landscape as a nation is evolving; for power sector it is in its incubator stages in terms of attracting much needed investments across the electricity value chain. An attractive investment landscape is characterized by strong economic indices, sustainable business operations, demand and growth prospects, stable recurring cash flows, and a stable legal/regulatory regime.
The major challenge in the power sector at the moment is bringing it to a healthy financial state. The distribution companies are currently going through a tariff review process that will put in place cost reflective tariffs. In designing tariffs consideration is being made to the sustainability of the business, affordability and willingness of customers to pay higher tariffs in the face of poor power supply, which would be the testimony of so many customers.
In achieving this Distribution companies will have to level tariffs such that they under recover their expected revenues in the early years and over recover in later years. This throws up a significant deficit that needs to be financed. Generation levels need to rise significantly beyond 4700MW, which is about the peak that has been achieved so far. To make this happen the associated infrastructure to transmit and distribute the electricity generated has to be reinforced and expanded.
Related gas issues need to be addressed, which requires looking into the pricing of gas-to-power, construction of new pipelines and security over the network to prevent vandalism. With over 160 million people living in Nigeria with less than 50% access to electricity, this definitely presents a great opportunity for investment in Africa’s largest economy.
How important is WAPIC on the region’s power calendar?
From my perspective, WAPIC is gaining momentum in the regional power industry and it is a credible platform to discuss solutions to the current plethora of challenges in the industry.
The annual WAPIC conference will once again present the global investing community with another opportunity to access Nigeria’s efforts at reforming her electricity sector and provide huge investment openings in a market. It is a significant event, and I am very pleased to have been accorded the opportunity to participate at the event.
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