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Business News

Power sector liberalisation will yield $30 billion investment in 3 years

@ChikeMustafa has assured that the liberalization of the power sector will attract over $30 bn worth of investment in the next three years,

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Despite Power Supply constraint, Nigeria's industrial sector shows growth prospect

The Executive Vice Chairman of Alpha African Advisory, Mr. Mustafa Chike-Obi, on Monday, assured that the liberalisation of the power sector would, in the long run, draw over $30 billion worth of investment to the power sector in the next three years.

Chike-Obi, who was also the previous Managing Director of the Assets Management Corporation of Nigeria (AMCON), disclosed this at the monthly capacity-building forum of the Finance Correspondents Association of Nigeria (FICAN).

Affordable power supply: The ex AMCON boss said it would make the sector profitable and allow Nigerians to have a cheap and stable electricity supply.

He noted that since every Nigerian have the right to a stable electricity supply, just as every human being is entitled to possess a telephone or a good car, the only way to get the projected amount of investment is by billing the ones who require the power supply the most, the market price.

What should be done: The ex AMCON boss explained that if the power business is made profitable whereby tariff on electricity is taken out and power companies are granted the permission to sell to individuals they choose at a market-driven price, many investors will willingly come into the sector.

He sighted Ikoyi, in Lagos as an example. He explained that in some places in the area, residents pay around N50 to N60 per Kilowatt-hour, and they get about 90% of power supply. He added that a generator costs about N160 per kilowatt-hour with its attendant inconveniences.

“Most people who have generators will be happier to pay N160 per kilowatt-hour of electricity, but the government said no. We can only charge Nigerians N60 per kilowatt-hour.

“But if you allow these power companies to sell at N160 per kilowatt-hour, they will make so much money from the rich people at the beginning that they will start creating more power.”

Present challenge: This might be slightly difficult as electricity tariffs might increase, following FG’s plan to raise $4.7 billion to recapitalise the electricity distribution companies (DisCos) as well as upgrade power distribution equipment in the country.

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    Columnists

    FGN Free Meter Program and getting power to the people

    Without effective penalties for erring DisCos and consumers, progress may still remain very slow.

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    Electricity, Buhari moves against Discos and agents that collect money for prepaid meters

    According to news reports, the Minister of Power, Mamman Saleh on Wednesday said the distribution of the four million free electricity prepaid meters pledged by the Central Bank of Nigeria would soon begin across the country.

    According to him, the government is wrapping up the distribution of its initial one million meters, which he labelled phase zero, and would soon begin the distribution of the four million sponsored by CBN, which he tagged phase two. He also noted that the Federal Executive Council approved N3bn for the execution of six major electricity projects in the country to upgrade Nigeria’s electricity facilities and improve power supply across the country.

    Ineffective metering remains a major drawback to the success of power sector reforms in Nigeria. While some consumers avoid paying for power consumed through meter bypass, some other consumers are made to pay for what they have not consumed through estimated billing by DisCos.

    DisCos have been largely unsuccessful with metering their customers.

    As far as inadequate metering is concerned, DisCos over time, have used this situation to their advantage via estimated billings. It appears that fully metering customers are currently being viewed as a disincentive, given that estimated bills can easily be manipulated.

    According to a report by the Nigerian Electricity Regulatory Commission (NERC), only 4,234,759 (40.27%) of the total customer population of 10,516,090 were metered as of 30 June 2020. Clearly, this validates the widely held view that there are a wide number of customers on estimated billing which gives room for illegal connection to the networks and in turn corrupt practices. NERC further revealed that only three out of 11 Electricity Distribution Companies in the country had metered more than 50% of electricity customers under their coverage areas as of June 2020.

    Effective metering in our view is one step ahead in solving the myriad of problems embattling the Nigerian power sector. Though supposed to be unpaid for, many customers in a bid to avoid the bureaucracy associated with getting meters have paid to get their own meters. We believe the provision of meters to all end-use customers will go a long way in ameliorating the liquidity squeeze in the power sector whilst also providing cashflow to the DisCos for investment in equipment needed to evacuate unused electricity to consumers nationwide.

    We laud the FG’s efforts at distributing meters freely to end-users, but we note that without effective penalties for erring DisCos and consumers, progress may still remain very slow.

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    CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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    Coronavirus

    Covid-19: WHO approves China’s Sinopharm vaccine

    WHO has announced the approval of China’s Sinopharm vaccine for Covid-19 vaccination.

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    Covid-19: First world nations oppose waiving intellectual rights for vaccine development

    The World Health Organization (WHO) has announced the approval of China’s Sinopharm vaccine for Covid-19 vaccination.  The vaccine is reported to have 79% efficacy against covid.

    This was disclosed today in a report by Reuters. The vaccine would also be the second Chinese-made vaccine after Sinovac vaccine and would be the first developed outside Europe and North America to receive WHO accreditation.

    “This expands the list of COVID-19 vaccines that COVAX can buy, and gives countries confidence to expedite their own regulatory approval, and to import and administer a vaccine,” WHO Director-General, Tedros Adhanom Ghebreyesus said.

    The WHO added that the easy storage requirements make it highly suitable for low-resource settings.

    “Its easy storage requirements make it highly suitable for low-resource settings,” a WHO statement said while also disclosing that the vaccine has been approved for people above the age of 18 to receive two shots.

    “On the basis of all available evidence, WHO recommends the vaccine for adults 18 years and older, in a two-dose schedule with a spacing of three to four weeks,” the statement added.

    The vaccine was created by Beijing Biological Products Institute, a subsidiary of Sinopharm subsidiary China National Biotec Group, with an efficacy of 79% for all age groups.

    The WHO however, admitted that few older adults (over 60 years) were enrolled in clinical trials, so efficacy could not be estimated in this age group.

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    In case you missed it

    The quest for vaccine efficiency got a major boost earlier this week as Nairametrics reported that the United States government announced that it supports the waiver of Intellectual Property Protections on Covid-19 vaccine development, in a bid to boost the fight against the pandemic, and says it will participate in the Okonjo-Iweala-led WTO negotiation to make it happen.

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