The Chairman, Presidential Task Force on Power, Mr. Beks Dagogo-Jack, on Tuesday, June 3, 2014 said the Federal Government had sourced $3 billion to invest between now and 2018 for transmission capacity expansion.
Dagogo-Jack stated this at the policy dialogue on power organised by the Lagos Chamber of Commerce and Industry, LCCI.
He said: “Government is doing a lot to furnish the energy sector with long term financing. Government has been very proactive in the sector. It has also put in enough money for the bulk trader to secure transactions for power.
“If the bulk trader does not have capital, it cannot sign a contract or a PPA with anybody to develop power.”
He explained that the size of the funding required to reach the 20,000MW goal suggests that current investment capabilities may prove another bottleneck to power supply growth.
Dagogo-Jack said presently, funding is provided through domestic banking institutions and are limited by balance sheet and sector credit limits that will be tapped out by both the 2013 Power Holding Company of Nigeria, PHCN, privatisation and the expected 2014 Niger Delta Power Holding Company, NDPHC, privatisation.
Factors for expansion
He said: “To expand the current capacity to finance the sector reform, any of the following might be considered: domestic and public-sector financing solutions.
“The Federal Government would support financing efforts by any of the following: directly through debt or equity investments; or indirectly through special purpose vehicles or financial insurance to recycle domestic and private-sector banking balance sheets.”
As regards foreign and private-sector financing, he said that international banking and capital market participation would be dependent on improved and sustainable market commercial performance and Federal Government investment insurance.
On developing a proper market culture, he said the decades of having a vertically-integrated, government-run power company has impacted on the psyche of many, both within and outside of the sector— from customers to contractors.
He also said new patterns of behaviour need to be established if the market would be developed and grown, adding that the concept of contractually-defined behaviour with its associated incentive structure will take time to establish its roots.
