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‘Why govt, investors must revisit power privatisation contract’

‘Why govt, investors must revisit power privatisation contract’
Nigeria is currently experiencing economic recession and this underscores the need to diversify to other areas. Which areas of the economy do you think government should focus on for revenue generation?
The continuous contraction of the economy will continue to impact negatively on the revenue generation capacity of the economy. Government must reflate the economy. Most states’ economies are technically insolvent, crippling the economies of such states and affecting the revenue generating capacities of those states. We must develop the rural and the informal sectors. There is a latent potential in these sectors that we can harvest to boost the revenue of the country. However, we must first invest, develop and provide enablers for the sectors.

The fight against corruption is a good way to reposition the economy. Also, we need to guarantee the safety of lives and property in order to have a robust economy. I would give good marks to President Mohammadu Buhari in the area of security.

Yet, there are certain things I think the President needs to do to fast-track economic recovery. He needs to encourage local production. The economy also needs to be diversified and our infrastructures need to be fixed. So far, we have not seen much effort in this regards.

The country has been battling with providing regular electricity without tangible success. What is your advice to the Federal Government in respect of this?
The poor state of electricity supply remains a major concern to every well meaning Nigerian including the government. The expectation from privatisation was that electricity supply would be more stable. However, Nigerians have witnessed more supply volatility and increase in electricity tariffs relative to any sustained improvement in electricity supply.
There is a need to actually do a critical review of the electricity supply industry in the light of current challenges faced by the sector.

There is a need to also ensure that the privatised companies and the government complied with the privatisation contract. We need to explore alternative electricity generation sources in addition to gas. The high dependence on gas for power generation is a major source of electricity supply insecurity. This is complicated by the fact that the gas is concentrated in a highly politically volatile geopolitical zone and that the country has no visible gas storage system to mitigate the effects of supply disruption.

Moreover, the high technical and commercial losses are yet to come down. Also, there is inadequate investment across the electricity supply value chain. The possibility of mergers and acquisition of some of the privatised companies with foreign companies, who would possibly bring in technical and additional investment should be explored and encouraged by the government.

There is no doubt that improved electricity supply will reduce the cost of electricity and improved competitiveness of the productive sectors of the economy. It will lower costs of production, lower costs of products, and boost demand and improve profits of firms. This will have a virtuous effect on employment and economic welfare of the citizens.

Nigeria still depends on fuel importation due to the inability of the refineries to meet local demand of petroleum products. How do we come out of spending billions on imports?
I do not think the government can waive any magic wand to make the refineries to work at internationally acceptable capacity utilisation level. My preference is that the refineries should be privatised and the private sector should be encouraged to take over both the risk and returns associated with the market economy.

Continuous interference of the government in the commercial aspects of the downstream sector is still a major factor hindering the efficiency of the sector.

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