Reports indicate that Nigeria’s Sovereign Investment Authority (NSIA) is planning a takeover of underperforming government assets such as power plants.
The move suggests operators of the country’s sovereign wealth fund want to move from managing portfolio assets of the country to being a government enterprise that manages assets.
The company did not state whether it has acquired the competency and experience to manage some of the assets it seeks to takeover, if its plans succeed.
According to Reuters, Stanley Orji, the head of the NISA explained that they are already in advance discussions with the government to take over a power plant that is 85% complete.
“We are looking at many industrial projects and government-owned enterprises that are either moribund or not performing sub-optimally,”
Why they are pivoting
NSIA CEO, Mr. Orji, claimed the rising inflation and state of the government’s fiscal revenue means there will be budget constraints for critical social spending which could also impact capital injection into the sovereign fund.
- “Orji noted that imported inflationary pressures and the COVID-19 pandemic meant that the government would have to allocate significant resources to social spending that may affect capital increases for the fund.” Reuters
- In an official statement last following the release of their 2021 results in May, Mr. Oji explained that the NSIA will continue to drive direct investments in its core areas of healthcare, toll roads, gas industrialisation, technology, ESG and Financial markets infrastructure, toll roads, power, and agriculture.
- They also said Asset transfer will be an important component of our growth strategy in the medium to long term as we see significant opportunities in the power and real estate in the Federal Government portfolio of assets.
Agriculture:
- The Presidential Fertiliser Infrastructure is one of the Authority’s most successful intervention programmes. The restructured entity also turned a profit for the first time which is remarkable for what has been perenially a subsidized program.
- PandaAgric – NSIA expects to commission Panda Agric in mid-to-late 2022. Panda Agric is an investee company under the NSIA-UFF US$200m Agriculture Fund set up in 2016. Approximately 96 percent (720ha) of the targeted 750ha of centre pivot irrigation coverage has been achieved.
Technology
- It invested in a hyper-scale cloud data company – Kasi Cloud Limited. The company focuses on enabling cloud and digital transformation in Africa starting in Lagos, Nigeria. Kasi has commenced the construction of a “Tier IV” data centre worth US$250 million in Lagos.
Gas Industrialization
- Under its gas industrialization initiative, the Authority made significant progress in conceptualizing the development of the Ammonia and Di-Ammonium Phosphate production plants in partnership with OCP. We have secured a site for the plant and studies are ongoing including the early stages of selecting an EPC company.
Toll Roads
- The three road projects being implemented by the NSIA under the Presidential Infrastructure Development Fund (PIDF) namely the Lagos-Ibadan Expressway, Second Niger Bridge, and Abuja-Kaduna-Kano Highway have reached advanced stages of construction.
Healthcare:
- They have pilot healthcare centres that deliver and operate 3 Centres where over 60,000 patients have received care.
- Both NSIA-Kano Diagnostic Centre and NSIA-Umuahia Diagnostic Centre have provided services to over 50,000 patients while the Cancer Centre has attended to over 10,000 patients.
The Nigeria Sovereign Investment Authority (NSIA), recorded a total comprehensive income of N147 billion in 2021, a decline of 8.2% from the N160 billion recorded in 2020.