Against the backdrop of 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.
He noted that in the face of the cyclic oil prices, Nigerians must now see a nation without oil and immediately start diversifying to agriculture and manufacturing. In order to do this successfully, he suggested that the gas and power industries need to be unshackled and supported to encourage substantial private investments and growth.
Speaking during an online interactive session with the media, Umeh said that it is still unthinkable that despite the fact that Nigeria has the world’s ninth-largest deposit, it still grapples 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.
“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 said investors are 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.
The Federal Government he said needs 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.
Umeh who stated that market forces and competition should be allowed to drive gas and power tariffs rather than allowing the prices to be set by a regulator argued that government’s role should be limited to providing appropriate regulations that will catalyse 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 is being supplied to as a result of the cost-reflective tariffs that the residents pay, which is 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 can be replicated on a larger scale across the country if the companies within the entire gas and power value chain are allowed to work under relaxed regulations as well as charge cost-reflective tariffs.
Speaking further on the issue, Umeh praised the Federal Government’s efforts so far to deregulate the power sector but urged them to do more and do it with more urgency to help stem the alarming growth in the unemployment rate in the country.
Umeh argued that once the power industry is working and adequate power supply is guaranteed, investors will 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 have been disrupted due to the global pandemic and that money is in limited supply in Nigeria because of the country’s over-dependence on oil for foreign exchange given this situation, diversification is 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.
Century Power Generation (CPG) Limited is an indigenous company that prides itself in developing and implementing local solutions to local problems.
At CPG, stable and reliable power generation is understood as the pathway to energizing Nigeria’s economic growth, and therefore, is committed to powering businesses, factories, homes and institutions.