The power sector has suffered a total investment deficit of N750 billion in the past three years of privatisation New Telegraph has learnt. Investigations revealed that the shortfall accumulated based on N250 billion annual investments promised by both the Federal Government and the investors in power distribution.
A document on privatisation earlier made available by the investors seen by this newspaper, showed that the new owners of power assets made clear intention to invest N250 billion annually in each of the years between 2013 and 2018 (five years wind covered by privatisation document).
Confirming the figure, chief executive officers of two distribution firms stated that the deficit was recorded based on ceiling placed on investment for them by the Nigerian Electricity Regulatory Commission (NERC).
The Federal Government had set a N50 billion investment ceiling for investors in the distribution stratum of the industry and the Chief Executive Officers (CEOs) of Benin Electricity Distribution Company (BEDC), Funke Osibodu and her counterpart at the Eko Electricity Distribution Company (EKEDC), Oladele Amoda, told this newspaper at different fora that this embargo is one of the major causes for the investments deficits. Corroborating Amoda’s view, Executive Director, Association of Nigerian Electricity Distributors (ANEED), Sunday Oduntan, maintained that notwithstanding the shortfall, the total value of power assets through investments and liabilities had hit $5 billion mark in the last three years.
This $5 billion figure, Oduntan said in a document obtained by this newspaper, is what the Federal Goverment would have to refund if it plans to retake the assets it sold to eleven DisCos across the country. Investors have coughed out about $2.3 billion to purchase the power assets in 2013.
“We don’t pray that it will get to that level, but as we speak, government will need to look for $5 billion if it wants back the assets it sold in 2013,” Oduntan said. He urged government to disregard calls for takeover of power assets.
Meanwhile, Managing Director of BEDC, Funke Osibodu, has said that the solution to the country’s recession amidst a rapidly growing population, declining wealth and rising unemployment, is to change Nigeria to a sustainable and inclusive political and economic environment, where everybody can create wealth.
She made the postulation in a keynote address presented at the 11th Founder’s Day of American University of Nigeria titled: “Beyond oil…….Sustainable development for all Nigerians” held in Yola, Adamawa State, last weekend. Osibodu pointed out that rather than moving towards prosperity, Nigeria has been moving away from prosperity, thus creating an extractive political and economic institutional environment where wealth “is extracted from a small subset of the population.”
She said: “Irrespective of what we want to believe therefore, we are still a poor nation, with several of us representing the privileged few of less than 10 per cent, who must contribute to changing Nigeria to a prosperous nation – the future that we all dream and pray for.”
According to the Benin Disco CEO, the recent drop in oil price as well as the significant drop in reserves is a painful blessing in disguise for Nigerians, stressing: “We need to stop focusing on externally led, import led short term trading business and move significantly and continuously to internal led, locally dependent goods and services in order to grow our economy in a sustainable way.”
Reviewing the measures taken by the Central Bank of Nigeria (CBN) to manage the foreign exchange (forex) reserves available to the country, Osibodu advised the apex bank to avoid negative news or sanctions to calm the forex market and engender confidence of operators. She canvassed heavy funding of bureau de change to reduce huge demand in the parallel market and quickly eliminate speculative and rent seeking arbitrages currently existing in the market, with a view to closing gap between the parallel and official markets.
Speaking on the power sector, Osibodu enumerated current realities in the nations’ power sector. She said about 14 per cent of power generated is lost due to poor network infrastructure; about 36 per cent of power generated is lost to commercial theft or illegal consumption and none payment of bills; constant vandalism of gas pipelines in the Niger Delta to limit increase power generation.
Besides, Osibodu declared that huge investment of at least N250 billion was required yearly to clean up the network and generate more power. “Nigerians must understand that the process is not a short term fix, but a long and continuous journey.
When I tell people that you need five years before you can see result from investments being made, they feel it is too long,” she added. The BEDC CEO also advised that the Federal Government should change from consumption and rent seeking government spending to broad-based investment led spending, and that it should actively develop state infrastructure whilst also encouraging and supporting broad-based private sector led infrastructure and institutional development on roads, power, education, health and refineries, among others