PRESS RELEASE: POWER SECTOR LIQUIDITY: FASHOLA COUNSELS DISCOS ON EQUITY SHARING WITH NEW INVESTORS
In the quest to address the problem of inadequate liquidity in the electricity industry, the Minister of Power, Works and Housing, Mr Babatunde Fashola, SAN has advised owners of Power assets especially in the distribution arm of the electricity value chain to embrace new commercialbehaviour suitable for operating optimally in the new commercial environment of the Power Sector.
Fashola made this remark in Abuja while receiving a delegation from the Nigeria Economic Summit Group (NESG), led by its Vice-Chairman, Mrs. Sola David-Borha. He said power asset owners should be ready to bring in more funds by offering to dilute their stakes in exchange for sorely needed inputs like meters, transformers and other equipment required for systems upgrade, insisting that it would make more business sense to give up some shares in exchange for funds and capital.
The Minister reiterated that if this advice is acceded to, it will make for redistribution of their risk assets in exchange for equipment and capacity to drastically reduce the prevailing high occurrences of commercial and technical losses.
He further reminded the Power asset owners that the success of the privatization exercise of the sector solely rest on the distribution end in the value-chain hence, they should step up their collections, so as to meet the time-lines agreed with Government for all parties to respect agreements and take full responsibility for their actions.
The Minister commended the leadership of NESG for expressing the Group’s willingness to partner with his Ministry in proffering solutions through constant engagements with the NESG/Private Sector led economic think-tank working on the 3 main sectors under his purview, which are critical areas of growth and development in the nation’s economy. He said that Governments exist because of the private sector’s large segments of people, from the unemployed to the big corporations.
He enjoined distribution companies to brace-up in overcoming some of the challenges currently faced by the Power Sector, while also reminding Nigerians that the new tariff regime which is cost-reflective is not to short-change customers but to improve on the level of liquidity available to the entire electricity value chain.
The Minister assured that Government is on-course regarding tackling gas to power through the gas master-plan in conjunction with all relevant agencies, while also working on a modular model for the proposed reform of the Transmission grid adding that the nation’s network as currently configured must be changed to bring in more private sector participants.
In the area of roads, the Minister said that because of funding constraint, no new projects would be considered but roads that will carry the heaviest traffic like cargo, merchandising routes and those critical for movement of agricultural products, are the ones that would be focused on and are also widely spread across the length and breadth of Nigeria.
“As soon as the article of faith-the Budget is released, we will fast-track work on these projects.”
The Minister counseled the group to embrace Government’s new thinking under the Public Private Partnership (PPP), which would be devoid of unnecessary litigations and misconception by planning to under take completely new projects without wanting to take over existing ones.
The Minister wants the Made-in-Nigeria campaign to be replicated in the Housing sector, “l will like to see some day, a Nigerian House built with locally produced building materials, from the foundation to the finishing, which we all collectively agree to in the area of design and alterability while taking into consideration our diverse cultural values”.
Speaking earlier, the leader of the group, Mrs. David-Borha had appealed to the Minister to assist in the areas of enabling legislation that would reduce conflict in the course of implementing projects conceived under private public partnership. She also requested that Government should tackle some critical roads that would guarantee traffic flow, which she said has been a major concern for investors.
While she commended some Government initiatives which would assist a great deal in making power projects bankable, Mrs. Borha said the present drive in embedded generation and off-grid power solutions are all steps in the right direction.