By Precious John
Following the recent global plunge in oil prices primarily as a result of the Covid-19 pandemic, the CEO of a power generating company, Century Power Generation Ltd, Dr. Chukwueloka Umeh says there is no better time than now for the Federal Government (FG) to take definitive and courageous steps towards diversifying Nigeria’s economy.
In the face of the cyclic oil prices, the oil magnet said we must now see a Nigeria without oil and immediately start diversifying to agriculture and manufacturing. In order to do this successfully,he argued, the gas and power industries needed to be unshackled and supported to encourage substantial private investments and growth.
Speaking during an online interactive session with journalists, Dr. Umeh said that it was still unthinkable that despite the fact that Nigeria had the world’s ninth-largest deposit, it still grappled with power generation and distribution issues in spite of millions of dollars spent on foreign experts, countless committees, public-private stakeholder meetings, and so on.
Said he: “Nigeria should essentially be a gas-producing country that happens to produce some oil. It is time to do things differently. We should stop the endless committee meetings, conferences and engagements. Pick a set of regulations, such as the ones that birthed the only project-financed power plant in Nigeria to date, Azura power, respect contracts and the rule of law to give local and foreign investors comfort, and just get it done. We have all the expertise we need to make the industry work, so let’s stop searching for the perfect solution elsewhere. Take whatever we have, and just make it work.’’
He added that investors were not ploughing the much-needed resources into gas and power projects for several reasons, including constantly changing regulations, difficulty in enforcing agreements, ease of doing business, and unrealistic tariffs. According to him, the Federal Government of Nigeria needed to relax its regulations enough to allow a real gas and power sector to come into existence and actually grow in a measurable form, driven by the private sector in partnership with the FG.
Market forces and competition, he said, should be allowed to drive gas and power tariffs rather than allowing the prices to be set by a regulator. He argued further that government’s role should be limited to providing appropriate regulations that would catalyze private entities to drive the much-needed diversification in the country.
He cited the example of several private estates in Lagos where steady, uninterrupted power was being supplied to as a result of the cost-reflective tariffs that the residents paid, which he said, was far less than what they would have paid to operate fuel or diesel generators with the related health and safety hazards they come with. This, according to him, could be replicated on a larger scale across the country if the companies within the entire gas and power value chain were allowed to work under relaxed regulations as well as charge cost-reflective tariffs.
Speaking further on the issue, Dr Umeh praised the Federal Government’s efforts so far to deregulate the power sector but urged it to do more and do it with more urgency to help stem the alarming growth in the unemployment rate in the country.
Dr. Umeh argued that once the power industry was working and adequate power supply was guaranteed, investors would begin to see the country as an investment destination. “We must, however, understand that the privatization of power does not guarantee immediate availability of power because it takes at least three years to build a power plant from groundbreaking to actual generation. Private companies should be encouraged and incentivized to build power plants as well as strengthen transmission and distribution networks knowing that their investments will eventually be recovered through cost-reflective tariffs.”
One of such projects is the Century Power Okija IPP, which is projected to generate about 1500 MW of power when its three phases are completed.
He pointed out that a lot of businesses had been disrupted due to the global pandemic and that money was in limited supply in Nigeria because of our over-dependence on oil for foreign exchange given this situation, diversification was urgently required to help the economy rebound in a sustainable manner. “If we go back to basics by thinking of a Nigeria without oil, we can begin to look at developing other sectors such as gas, manufacturing, agriculture, just to name a few,” he concluded.