AfDB Vice-President addresses Power Sector Conference in Nigeria
The Federal Government of Nigeria hosted a High Level Power Sector Conference on Monday, February 10, 2014 in Abuja. The event, which was organized by the National Council on Privatization (NCP), convened key local and international players in infrastructure, particularly from the power and energy sectors, with the main objective of scaling up stakeholder engagement.
The African Development Bank (AfDB) was represented by Vice-President Zondo Sakala. In his remarks, VP Sakala congratulated the Federal Government of Nigeria for its continued commitment to growth, macroeconomic stability, and the transformation of the socio-economic conditions in Nigeria. He also commended Nigeria for being recognized as one of the countries with the potential to influence the global economy and hence be part of the new powerhouses categorized as the MINT economies (Mexico, Indonesia, Nigeria and Turkey).
He noted, however, that performance could be improved by addressing the challenges such as huge infrastructure deficit in the power sector faced in the region and in the country. In his words, “there is no doubt that many of the development challenges facing this country, like youth unemployment, poverty and inequality, would be drastically minimized once the power supply deficit is resolved.” The VP proceeded to quote the US Secretary of State, John Kerry, who once said “Access to energy is the essential ingredient of economic development. You can’t create jobs in the dark.”
Sakala advised that in order for Nigeria to succeed in Power Sector Reforms, three critical challenges had to be addressed.
First, is the issue of long-term finance for the new generation and distribution companies valued at $7.5 billion between now and 2020. The AfDB is providing a Partial Risk Guarantee (PRG) to private investors to the tune of US $380 million to help crowd-in investments in the sector, and a soft African Development Fund loan of US $3.1 million for capacity building to support the privatization program.
There is also the difficulty of obtaining right-of-way for transmission line development. Here again, AfDB is providing support to improve interventions in the power transmission systems to the tune of $150 million
The third challenge is insufficient gas supplies to some of the power plants across the country.
In conclusion, Sakala added that with its huge endowment of gas reserves estimated at 185 trillion cubic feet, the time is ripe for Nigeria to pay the necessary, serious attention to this vital sector – both to meet increasing domestic demand and to develop regional markets. He ended by reaffirming AfDB’s commitment to support the power sector reform through its private sector window, as was done in the case of the Nigeria Liquefied Natural Gas.