President Goodluck Jonathan on Thursday touted Nigeria as an investors’ haven but lamented that Nigerians spend about $13bn every year on generators.



Jonathan, who addressed international power sector investors at a presidential retreat in Abuja, said that all that Nigeria required to develop its generation, distribution and transmission capacities was about $10bn per annum.



He said, “Today, less than half of our citizens have access to electricity and according to the Central Bank of Nigeria, we expend about $13bn every year providing power from diesel generators when we require only about $10bn per year in investment over the next few years to develop our generation, distribution and transmission capacities.”



Listing Nigeria’s large population and its huge gas deposits as reasons why he believed that Nigeria was an investors’ haven, Jonathan said that his administration was ready to do business with credible businessmen in the power sector.



He said, “We are very clear about what we want from the power sector reform. I believe that Nigeria is a power investors’ haven. With a population of more than 140 million people and its position as the seventh largest deposit of natural gas, a major fuel for power in the world, we are ready for business.”



The President noted that the reliance by Nigerians on generators as a major source of power supply had inflated the cost of goods and services in the country by about 40 per cent.



He said, “Generating power from generators adds more than 40 per cent to the cost of goods and services in Nigeria and this we can ill-afford.



“Our mission, therefore, is for Nigeria to reach power reliability and sustainability within the shortest possible time so as to catalyse the much needed development.”



Jonathan whose address was titled,’ Power sector reform: Opening Nigeria for business’, also informed the investors that, from 2011, the Federal Government would cease further investments in power generation and distribution.



“From next year, the Federal Government of Nigeria will cease further investment in power generation and distribution and our plan is also to concession the management of the Transmission Company of Nigeria,” the President said.



The Federal Government, according to him, “will complete processes for already initiated hydro power projects.”



The President argued that continued investment in the power sector by the government was not the solution to Nigeria’s power problem.



“One of the things that Nigerians have come to agree on is that throwing ever-increasing amounts of government money that is better spent on improving education or healthcare (into electricity) cannot be the solution to Nigeria’s power problem”, he said.



Jonathan used the transformation of the country’s telecommunication industry as an example of the type of change expected from the privatisation of the power sector.



He said, “In less than 10 years, the liberalisation of the telecommunications sector has seen the number of telephone lines rise from under 400,000 to over 70 million in Nigeria.



“Our people now expect a second economic revolution that will have a much greater impact on economic growth and employment creation.”



Jonathan also told the gathering that Nigeria needed “high quality investors with the track record that ensures they will bring world class expertise and industry best practices” to the power sector.



He said, “We are looking for distribution companies with the experience to rapidly reduce commercial and technical losses on our network. We are looking for generation companies that can operate with great efficiency and rapidly expand services to underserved parts of Nigeria.



“Remember, this is a country with tens of millions of potential new power consumers. We need firms that can grow quickly.



“Our national interest dictates that we encourage investors who are willing to stand with us for the long term, not those without the requisite pedigree in the sector.”



The President said that Nigerians were prepared to pay cost-reflective tariffs for electricity.



“An opinion poll sponsored by the World Bank has confirmed that Nigerians are willing to pay cost-reflective tariffs for electricity.This is hardly surprising given the fact that some of the poorest Nigerians, including artisans and small business people, spend considerable amounts on petrol-powered generators,” he said.



Jonathan told the investors that his administration was taking steps to minimise risks in the power sector by providing credit support mechanisms for new managers of privatised state power assets.



He added, “Investment in independent power plants will also be encouraged by our new regulatory climate and my administration has not hesitated in taking the advice of our reform and regulatory team to take steps to minimise risks to investors to the barest minimum.



“We will resource the Nigerian Electricity Bulk Trading PLC which will buy power from the generation companies on behalf of the privatized distribution companies until such a time when they will have established their credit worthiness.



“We have also taken steps to provide partial risk guarantees to back the Bulk Purchaser as well as suppliers of gas to the generation firms with the assistance of the World Bank.



“We have also established the Nigerian Electricity Liability Management Company, which will assume the non-operating assets of the privatized government assets, ensuring that the new managers of former state assets are not encumbered by unresolved liabilities.



“We are confident that because of the potential of the Nigerian market and the quality of investors we are determined to attract, these transitional credit support mechanisms will only be temporary.”



Also speaking at the retreat, the Minister of State for Power, Mr. Nuhu Wya, noted that the poor state of the power sector had greatly contributed to Nigeria’s weak Gross Domestic Product.



Going by the current situation in the power sector, Nigeria would be losing $130bn per year by 2020, Wya said.



He added that, “There is a clear link between GDP and electricity consumption. We have estimated the negative impact of current supply constraints on the Nigerian economy as being in the region of $130bn per year by 2020”.



The retreat, organised by the Nigerian government and the Commonwealth Business Council, was also attended by many Federal Government officials and members of the diplomatic community.






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