Cole’s company has put its cash behind the long-term development of the Nigerian economy, taking advantage of the government’s liberalisation of the power sector to invest in a 1,300MW thermal plant in Lagos State. The company also has a majority stake in the Ikeja Electricity Distribution Company and First Independent Power, which owns four power plants in Rivers State.
Nigeria’s perennial shortages of electricity have long been a drag on its economy, but it is only in the last few years that a concerted push towards privatisation has imparted a new momentum to the sector. Liberalised tariff regimes and the unbundling of generation and transmission of electricity have enticed international and domestic players into power.
However, with the privatisation process still incomplete, some analysts have warned that the country’s tightened fiscal situation means that the government could struggle to meet its own obligations to invest in infrastructure, while the consumer-facing distribution companies could get caught out by the tumbling currency.
Cole, again, believes that this could throw up further opportunities, as the government turns to the private sector to solve its problems.
“Infrastructure has always been best developed by private organisations who can look into the long term, find a way to fund it, then create a model that makes that infrastructure make money and pay back,” he says.
That’s a model that can only come to pass when difficulties exist, where governments find it extremely hard to fund great, huge projects for political reasons.
“Perhaps it’s not a bad thing that we don’t have a free-flowing, $150 oil market, with too much money to spend on projects. I think the long-term prognosis for me is probably a better one.”
Sahara is one of a small number of Nigerian corporates – outside the banking sector – that have moved out into the rest of Africa. The trading business, which is the quickest and easiest way to enter any market, is already up and running in Ghana, Côte d’Ivoire, Gabon, Angola and Tanzania, and the company is still actively looking for opportunities to move upstream into production and exploration assets. It is also looking to invest in the power sector outside of Nigeria, and has announced plans to build a 2,000MW thermal plant in Ghana.
“Where there is a will and an opportunity, we will go,” Cole says. “Where we can find people who are brave enough to come with us.”
Finding finance for capital intensive projects such as power infrastructure and oil and gas production not always easy, even for established players like Sahara, Cole says. The expansion of stronger banking groups out of Nigeria and South Africa across the continent has helped, he says, but is not a solution in and of itself.