The Nation Newspaper

Category: Industry

  • Preference for foreign goods threatens local brands’

    Preference for foreign goods threatens local brands’

    Experts and operators in the manufacturing sector have identified consumers’ lack of confidence in local items as being responsible for the sector’s poor growth.

    The Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, lamented that the challenges of indigenous manufacturers who are competing unfavourably with imported products arose because Nigerians prefer imported products more than locally made ones though they are of the same quality.

    “This has made local manufacturers resort to engraving foreign labels on their products to satisfy the local consumers who just love products with foreign labels,” he said.

    Also, Chairman, MOMAS Electric Meters Manufacturing Company Limited, Kola Balogun, regretted that Nigeria’s preoccupation with importation was doing a lot of harm to the local manufacturing sector.

    Balogun, who declared that the company is a strong believer in the local content policy of the Federal Government, said that Nigeria can no longer be dependent on other countries for its technological requirement and should, through a systematic approach and strong belief in the ability of Nigerians to develop and create value, come up with appropriate policies to encourage indigenous companies.

    He revealed that his firm is almost 100 per cent local content in human resources and materials, by employing young and enterprising Nigerians and equipping them adequately with requisite training locally and internationally.

    “We have invested a lot of resources in our people through training and retraining. Some of our engineers have been trained in India and in the US to ensure they compete favourably with their counterparts anywhere in the world,” Balogun said

    He said that with tenacity of purpose and appropriate technology, including smart technology and ruggedness, the company has become the manufacture of integrated circuit and silicon conductors. Noting that it is a bold step in the sector for an indigenous company because of its high technology value, he expressed concerns that the country was too comfortable importing items while the zeal to support local industry was waning.

    He said his company had developed world-class products to provide post-paid and prepaid electricity meters using the latest technologies in design and production. According to him, all the raw materials and personnel were locally sourced while young Nigerians were employed and trained to handle sensitive operations in the metering company.

    “We have invested a lot of resources in our people through training and retraining. Some of our engineers have been trained in India and the United States to ensure that they compete favourably with their counterparts anywhere in the world,” Balogun said, noting that it remains a challenge competing with foreign firms who had been given the necessary support by their home governments.

    He said: “We find it hard to compete favourably in the area of pricing if we have to go by international pricing index. When it comes to exports, most countries subsidise most companies that export products from their countries but we have a peculiar case in Nigeria.

    “If electricity passing through this area is used on our equipment, most of them will be damaged. So, we don’t depend on public power supply. We spend a lot generating power and that adds to the cost of production. The devaluation of the naira has also made it impossible for us to be at par with our foreign counterparts in terms of pricing.”

    He said what needs to be defined in the Local Content Act is that priority should be given to Nigerian companies that are good.

    Group Managing Director, Western Metal Products Company Limited, Robert Tung called for increased tariff on imported products as a way of discouraging imports and also protecting local content. Tung, who said his company had been in existence in Nigeria for the past 50 years, added that his products are of the highest quality but distributors usually insist that he puts foreign names on them.

    Tung urged Nigerians to be proud of goods manufactured locally, advising the government to discourage people from always looking for imported goods, as some of the imported items are of low quality. He also charged the  government to embark on an advocacy campaign that emphasises the ‘made-in-Nigeria’ brand.

    Tung, whose company produces high quality tiles, wire rods and all sizes of nails, said the former Governor of Ogun State, Otunba Gbenga Daniel, had insisted on writing “made- in-Ogun State, Nigeria” on bags containing nails. But some Nigerians did not like that, so he added some Chinese inscriptions on the bags.

    Managing Director, Bank of Industry (BoI), Mr. Rasheed Olaoluwa, also frowned on the practice of Nigerians who are obsessed with foreign products. He attributed the attitude to inferiority complex, saying, “I think we need to get over this inferiority complex among our citizens. A product that is made in Nigeria to the highest standard should make us proud, as opposed to longing for a made in China product.

    “It is an orientation that we need to change and I am hopeful that as more and more companies begin to try some of these products and realise that they are made in Nigeria, more and more people will feel comfortable.”

  • Paints manufacturers’ tale of woes

    Paints manufacturers’ tale of woes

    About 70 per cent of raw materials used in the paint industry are imported. With the slide in exchange rate of the naira , coupled with lack of infrastructure and rising insurgency, local paints manufacturers are in a quandary, fearing that many firms in the sector may be forced to fold up, reports Assistant Editor CHIKODI OKEREOCHA.

    After two decades of uninterrupted operations, achieving 20 per cent market share, Chemstar Industry Nigeria Limited, manufacturer of Finecoat and Shield Paints, should be celebrating its success.

    The company, which began operation in a room in 1996 with three workers and two distributors,  boasts of over 1,000 workers and  2, 000 distributors spread across the country.

    It has also established factories in Johannesburg, South Africa; Accra in Ghana and Turkey. However, despite achieving between 60 and 65 per cent capacity utilisation, the company marked its 20th anniversary with measured excitement. Its turnover in the previous year, The Nation learnt, was low and, perhaps, did not warrant a loud anniversary.

    “Because of rising insurgence in the North, our turnover has plummeted, especially in the previous year from what it used to be,” Group Managing Director, Aderemi Emmanuel Awode, declared at the company’s 2014 Customers Forum in Lagos, as part of activities marking its anniversary.

    He said the company’s turnover plummeted as a result of rising cases of insurgence in the Northern part of the country, including Abuja, where about 65 per cent of the company’s turnover was realised. He also said high duties and tariff on imported raw materials were not healthy for business growth.

    Awode echoed the frustrations of other paint manufacturers, as well as other operators in the manufacturing sector whose businesses have been badly hit by ceaseless bombings by the dreaded Boko Haram insurgents in the north.

    Since 2009, when the crisis started, manufacturers whose businesses are located in the Northeast and Northcentral – the epicenter of the sect’s activities – have been recording unprecedented low turnover. Because of the bombings and kidnappings, manufacturers, including paints manufacturers, are unable to distribute their goods to the affected states in the North, a situation that eats into their profit margins.

    The Nation learnt that many people no longer want to go to the North for any reason, and this is affecting the distributive trade sector of the economy. Operators in the Small and Medium Enterprises (SMEs) sector, are worse hit by this restriction in movement due to their limited space, branch network and available funds. “The tempo of economic activities in the North has declined, access to markets by companies in the South has reduced, resulting in loss of sales; while many enterprises have relocated,” says Lagos Chamber of Commerce and Industry (LCCI) President Alhaji Remi Bello. He lamented that it had become difficult to attract investors because the risk of long-term investments had become enormous.

    The Chamber’s Director-General (DG), Muda Yusuf, also noted that the insecurity  had become a major challenge for investors, stressing that the economy of many of the affected states is on the verge of collapse with implication for investments and job losses.

    Yusuf, while explaining the outcome of an evidence-based account of experiences of members of the Chamber and the larger business community on investment climate in the second quarter of last year, said the challenges of the operating environment for business intensified in the second quarter across all sectors, and there were concerns over weak consumer demand reflecting the downturn in the economy.

    He said while the hospitality industry in the volatile states has been paralysed, many operators, especially SMEs, were relocating to other states with the attendant challenges.

    The DG also said many firms have lost about 30 per cent of their sales, as they could no longer access most part of the northern market. “Our report shows that manufacturing firms sourcing raw materials from the North are facing serious challenges, while projects funded by banks in the affected states are now at risk,” Yusuf said, adding that serious perception problem has been created for the country, as many bank branches have been closed, while sales representatives of many companies have fled the affected states, and many projects under construction in the North abandoned.

    Although Awode expressed optimism for a quick end to the Boko Haram insurgence for business to thrive, his optimism may have been short-lived following the threat of the slide in the naira exchange caused by sharp drop in the price of crude oil. He said that most of the raw materials used in the paint industry are imported.

    “About 70 per cent of our raw materials are imported, while payment for the raw materials is done in dollars. Import duties or tariff are on the high side. These and other challenges are confronting the growth of paints industry,” he lamented.

    The Chemstar GMD is not alone in his lamentation. Chairman of DN Meyer Plc, another major paints manufacturer, Sir Remi Omotosho, decried the trend where over 70 per cent of raw materials for paints and other products’ manufacturing is sourced from abroad despite that some of the raw materials for paints are available locally. He regretted that the drive for local substitution embarked upon in the country in the 1980s was abandoned and replaced in the 1990s by the import syndrome, with people relying heavily on imports.

    Sir Omotosho recalled that the Raw Materials Research and Development Council (RMRDC) was set up to explore alternative sources of raw materials for the local industries, regretting that all of a sudden, RMRDC disappeared from the radar. “That agency ought to be revived,” he told The Nation, in an earlier interview.

    While emphasising that a lot of materials used in the production of goods are available locally, the industrialist regretted that those who should be developing local raw materials would rather go and import them for sell.

    “There is need for the government to get RMRDC back in place in a purposeful, focused manner, visionary in its approach by collaborating with manufacturers to get a lot of the input produced locally,” he insisted, adding that there is need to employ a carrot-and-stick approach in the drive for local substitution. “If you rely on local raw materials, manufacturers will be compelled to contribute to a research fund for that body because we are going to benefit at the end of the day. If, however, you want to rely upon imported raw materials, tariff should be able to take care of that,” he said.

    Indeed, the paints industry is heavily raw materials import-dependent. And for paints manufacturers, already weighed down by skyrocketing cost of production due to dearth of infrastructure, the prevailing high exchange rate is overkill. First, it means that paint makers who borrow to import raw materials will do so at higher interest rates. Secondly, with the naira devalued, paints manufacturers now pay more naira for each unit of goods they import.

    While some of them now find it extremely difficult to finance their import bills, those who manage to do so contend with shrinking margins of profit. The toll is heavier on small scale paint manufacturers.

    According to experts, paint is composed of the following raw materials: pigments, solvents, resins, and various additives. While pigments give the paint its characteristic colour, solvents make it easier to apply. Resins aids dispersion; and additives serve as everything from fillers to anti fungicidal agents. Hundreds of different pigments, both natural and synthetic, exist. The basic white pigment is titanium dioxide (TiO2), selected for its excellent concealing properties while black pigment is commonly made from carbon black.

    Other pigments used to make paint include iron oxide and cadmium sulphide for reds, metallic salts for yellows and oranges, and iron – blue and chrome – yellows for blues and greens and even calcined kaolin, which the Chinese produce and export for the paint industry.

    Most, if not all these raw materials, are imported with huge foreign exchange despite that some of the agents can be produced locally. This was why Omotosho insisted that developing local substitute for imports by reviving RMRDC in line with the local content initiative is necessary if Nigeria must realise her dream of becoming an industrialised nation. “After satisfying her local needs, Nigeria may even export to other countries,” he said, noting: “If we are compelled to rely on our own internal resources I can assure you that those who are importing will begin to see the need to develop local substitute for the imports.”

    He said the government could encourage the drive for local substitution for raw materials through some sort of incentives since the government is mostly affected by the problem of import syndrome. “If we are producing the raw materials here, you know that people will be employed in those outfits manufacturing those raw materials. They will also be paying income tax and a lot of benefits will accrue to government,” he pointed out, adding that by doing so, Nigeria will stop creating employment for others, particularly in a country where the rate of graduate unemployment is very high.

    Besides, the Chairman of DN Meyer said those who are selling to local manufacturers are not producing them here; they import and sell to us.

    “Even when some of them say they have their own factory, they bring the raw materials and add some additives and sell to you. You can still do better than that because some of those basic things they are using to which they add some other agents can be produced here if we are dedicated and organised,” he stated.

    However, raw materials import with its attendant foreign exchange burden is not the only factor responsible for the less than sterling performance of paints manufacturers. Other challenges facing the industry include dearth of infrastructure, especially stable electricity supply, poor road network, multiple taxation, and high import duties and tariff, among others. For instance, almost two years after the privatisation of the power sector, manufacturers are yet to see any appreciable improvement in electricity supply, forcing them to rely heavily on in-house power supply at huge cost. Yet, power constitutes the single critical infrastructure to rev the manufacturing sector and create jobs

    These factors contribute to the high cost of production, which is said to be responsible for the high cost of goods produced locally compared to imported ones. The cheaper price of imported goods is blamed for the penchant of Nigerians to patronise imported goods to the detriment of locally produced goods. This is why many local industries, including paints manufacturers that could not stand the heat of the competition in the same market with imported goods are fast disappearing from the industrial landscape.

  • $10b investment: Will it boost power supply?

    $10b investment: Will it boost power supply?

    Erratic power supply may soon be a thing of the past. A Chinese firm and two local investors are poised to inject $10 billion (about N1.99 trillion) into the manufacturing of lighting equipment and accessories to boost electricity supply. The investment may be the wedge for solar energy adaptation in the country,  Assistant Editor OKWY IROEGBU-CHIKEZIE reports. 

    Nigerians may soonn start enjoying regular power supploy,  following plans by a Chinese firm and its local partners to invest $10 billion (about N1.99 trillion) on energy.Under the deal Hongye-Sinari Group, Niger-Sino Industries Limited and Hamaded Logistics will build a solar energy accessories’plant. When  operational, the plant would serve industrial and housing estates, schools, hospitals and malls,  Director, Energy Generation, Hongye-Sinari Group, Mr. Xu Rongchang said.

    He explained that the investment would lift the country out of its power problems

    Noting that Nigeria has enormous potential that needs to be harnessed, Rongchang said what the country needed at the moment are products capable of reducing energy consumption, such as Light Emitting Diode (LED) products and other high quality electrical materials that comply with global standards.

    With their eyes set on playing a significant role in the energy sector, he said the companies specialize in the manufacture of lighting equipment and accessories; solar energy.

    Shedding more light on areas of investment by the Chinese firm, the head of the Chinese delegation, Mr. David Yang Xoaohua, said the company is also into the manufacture of agricultural equipment, which it also believes will be a good start, especially in the light of the agriculture revolution in the country.

    Xoaohua, while addressing members of the Organised Private Sector (OPS) in Lagos, during the week, said the company would also invest in construction. He said the company is one of the biggest players in real estate in China.

    “We have developed an industrial park worth $15 million and our corporate head quarters is on 8,000 square metres,” he added.

    Stating that the company has branches in over 100 countries with over 5,000 workforce, and investible fund of over $10 billion,Xoaohua said with such enormous funds, the company needed to have clear rules of engagement, an enabling environment and a good legal framework that protects investors and investment.

    He told the OPS members that his firm was in the country to ascertain the level of security and safety of lives and investments, adding that, fortunately, his team has confirmed that the country’s challenges are over blown as they can be surmounted with the right investment policy.

    The leader of the Chinese delegation said after a careful study, the firm came to the conclusion that Nigeria, being the largest economy in Africa, remains the best place to invest with high returns on investment.

    Indeed, since the rebasing of the Gross Domestic Product (GDP), which put Nigeria as Africa’s largest economy with GDP size of $500 billion, coupled with her population size of about 170 million, Nigeria has been the toast of foreign investors, despite serious infrastructure and security challenges.

    Despite the challenges,  Xoaohua believes that with a level playing ground by the government and other necessary agencies, the partnership would thrive and create a mutually-beneficial business for the country.

    “Our aim is to help the nation in the areas of infrastructure development and the mechanization of its manufacturing process, develop the energy sector to boost manufacturing and other forms of businesses. It’s a win-win situation as it provides opportunity for massive employment generation. This is one area we learnt the government is working hard to bridge. There will be no case of dumping of fake and substandard goods as we will set up our manufacturing plant,” he added.

    The Managing Director of Niger Sino Industries Limited, a building and construction manufacturing company in Maryland, Lagos and a former commissioner in Lagos State, Mr. Olanrewaju Saka-Shenayon, assured the Chinese investors that the government would provide a level playing ground. He said the government expects any investor to play by the rules.

    Saka-Shenayon, who was instrumental to the tripartite agreement, said having been in government he appreciates the role private sector operators can play in enterprise and infrastructure development.

    He gave Hongye-Sinari Group a clean bill, noting that it is a strong brand in China and in the over 100 countries it operates. He said this was what spurred him to invite the group to Nigeria. He stated that there is no better time for the Chinese investor to invest in the country than now, especially with its core competencies in manufacturing and real estate, which are huge job creators.

    Saka-Shenayon hailed the synergy between the Chinese company and the local investors as one that would not only transfer technology but build skills, create wealth and grow the nation’s GDP. Besides, the synergy, he said, would further build and re-enforce Nigeria’s profile as Africa’s largest economy.

    He pledged the cooperation of the OPS, noting that with the huge funds the investor is bringing into the country, the nation will be better for it.

    Managing Director, Hemadeb Logistics Limited, Mr. Olatunde Akin Bohun, said as a real estate developer in the Lekki/Ajah axis, he is excited about the coming of the Chinese investors because of the expertise and investible funds they are bringing into the sector.

    He said: “We have a 100 acres real estate development deal with Exxon Mobil and real estate partnership development agreement with some state governments in the Southwest on housing development that will be powered with solar energy. This makes our partnership with the Chinese firm a plus. Currently, we are also developing a five-star hotel on the Lekki/Ajah axis, the medical college of Afe Babalola University worth $10 million including a 140 mega watts plant in some Southwest states.”

    Pointing out that some of the challenges faced by indigenous investors in real estate are high cost of funds and fund mis-match, Bohun as mutually benefiting to parties in the tripartite agreement.

    Others at the event seen by not a few stakeholders as an endorsement of the investment deal included Chairman, Nigerian/China Business Association in China, Mr. Sebbs .P.C. Azubuike, Mr. Akin Abiola and engineer and the Executive Chairman, PEC Estates & Construction services Limited, Mr. Henry Adjbrope and Mr. Olaniyi Taiwo of Hemadeb Logistics Limited.

  • U.S to boost Nigeria’s food safety, export

    U.S to boost Nigeria’s food safety, export

    Nigeria’s effort to improve food safety and boost the export market is to enjoy the support of the U.S. Government through its Agency for International Development (USAID). A statement issued by the U.S. Embassy said the support aimed to drastically reduce food-borne and food-related illnesses in Nigeria.

    The statement said USAID and the U.S. Department of Agriculture had been working with the Nigerian food industry since 2013 to revise the national food policy. “Since 2013, the U.S. Government, through USAID and the U.S. Department of Agriculture has worked with Nigerian food industry stakeholders in the public and private sectors, and with development partners.

    “The aim is to revise the national food policy and develop an implementation strategy. These efforts have laid the foundation for the work of the recently inaugurated committees charged with ensuring that food safety systems in Nigeria are on par with international best practices,” the statement said.

    It said the interventions supported by the U.S. Government would improve food safety, thereby helping Nigerians avoid food-borne and food-related illnesses. According to the U.S. Government, additional support to the ‘farm to table’ food production and processing value chain will ensure that Nigeria’s agricultural exports conform to international standards and food safety requirements.

    It said the ‘farm to table’ programme would also create more profitable agricultural entities and contribute to the diversification of the Nigerian economy. The statement said that a four-day national training on food safety, supported by the United States Government, was ongoing in Abuja.The training was organised in partnership with the Federal Ministry of Health and the UN Food and Agriculture Organisation. The statement quoted the USAID Mission Director in Nigeria, Dr Michael Harvey, as saying that the training is part of the U.S. Government’s long-term effort to support the National Food Safety

  • LCCI opposes bill on firms’ compulsory listing

    LCCI opposes bill on firms’ compulsory listing

    Should  companies with shareholders funds and yearly turnover, exceeding N40 billion and N80 billion become Public Liability Comapnies (PLCs) listed on the Stock Exchange?

    No, says the Lagos Chamber of Commerce and Industry (LCCI), which is opposing the Private Companies Conversion and  Ling Bill 2013 now before the National Assembly.

    The bill is seeking to compel vibrant firms to become PLC’s and listed on the exchange.

    Instead, the Chamber is advocating the creation of an incentive regime that would encourage voluntary listing on the exchange. It asked the National Assembly to discard the Bill and take steps to amend the Companies and Allied Matters Act (CAMA) 2004.

    In a communiqué signed by its Director-General, Mr. Muda Yusuf, after a stakeholders meeting to discuss the Bill, LCCI noted that the Private Companies’ Conversion and Listing Bill 2013 contravenes the provisions of existing laws in Nigeria, which encourages the right to own property, movable or immovable, as well as the right against expropriation of private property as contemplated by sections 44 of the 1999 Constitution as amended and section 25 of the Nigerian Investment Promotion CommissionAct, 2004, respectively.

    Quoting section 25 (1) (b) of the Nigerian Investment Promotion Commission Act, CAP. NI17 LFN, 2004, LCCI said it categorically provides that “No person who owns, whether wholly or in part, the capital of any company shall be compelled by law to surrender his interest in the capital to any other person.” The statement said the Bill which did not emphasise the need to amend the ‘out-of-tune-with-reality’ CAMA, which was enacted in 1968 but last amended in 1990 without recourse to the new ways of doing business is a minus.

    It further stated that the Bill serves as a disincentive to entre-preneurship and foreign investment, which the government has continually advocated as a means of creating employment for the teeming unemployed youths and reducing poverty. In addition, the Bill, LCCI said, is replete with bad draftmanship. It noted, for instance, that the Bill adopts a definition of a private company under the (CAMA), but goes further to extend the definition to cover “any body corporate, firm or partnership or any entity that participates in the sectors contemplated” in the Act.

    He said the inclusion of firms and partnership in the definition is curious as one wonders if the Bill expects the qualifying professional firms to equally go public and be listed on the floor of the stock exchange. Equally worrisome is the use of the phrase “public liability company” throughout the Bill. LCCI argued that the phrase is not defined in the Bill and CAMA uses no such phrase.

    “The term used in CAMA is “public limited company”. The phrase “anybody corporate” could also mean that the Bill covers State owned corporate bodies such as the Corporate Affairs Commission (CAC), Nigerian National Petroleum Corporation (NNPC) and the Central Bank of Nigeria (CBN), “ the statement said.

    Yusuf argued that in the face of falling oil prices and the need for government to generate more revenue from taxes, the tax reliefs proposed by the Bill to companies that comply with its mandatory conversion and listing requirements is not desirous at this critical moment, especially in view of the fact that the companies that would benefit from the relief constitute about 32 per cent of diligent tax payers in the country.

    He further argued that the Bill signifies a drastic shift in Nigeria’s policy on foreign direct investment. He stressed that a lot of companies have come into Nigeria on the belief that Nigeria operates a free enterprise system that guarantees them the right to own and repatriate their hard earned funds. To him, the Bill negates this concept of free enterprise in Nigeria and has the undesirable consequence of constituting a disincentive to foreign investment in Nigeria.

    He therefore, called for its rejection in its entirety, insisting that the Bill, which is currently before the House of Representatives and has scaled second reading should not be allowed to see the light of day.

    Prior to this time, LCCI had on January 27, 2015 organised a Stakeholder’s forum to discuss the Bill. The forum was attended by representatives of NSE and the private sector, including the multinational companies. At the end of the forum, representatives of NSE agreed to the tenets of the Bill, but not in its current form. The NSE therefore, sent representations to the National Assembly as to what they think the Bill should contain.

    However, representatives of the private companies, the multinationals and other stakeholders present would have none of that. They were unanimous in rejecting the Bill in its entirety.

    The controversial was sponsored by Deputy Chairman, House of Representatives Committee on Capital Market Institutions, Honourable Chris Emeka Azubogu. The Bill, when passed into law, will compel a private company that falls into the category to, within 12 months from the commencement of the bill, take all necessary steps to convert from a private limited liability company to a public company within the provisions of the CAMA.

    Such a company shall, within 12 months from the date of conversion, take all necessary steps to list its shares on a stock market for brokerage. A private liability company, which the provision of the bill applies, shall maintain or cause to be maintained proper accounts and records to enable fair view to be formed of its assets, liabilities, income and expenditure.

    Thehope was that the bill would deepen the capital market and also boost the economy, a position now being hotly contested by the LCCI.

     

  • ICRC decries dominance of foreign experts in project structuring

    ICRC decries dominance of foreign experts in project structuring

    The dominance of foreign experts is responsible for the low local capacity in project transaction structuring in Nigeria, Acting Head of Communications, Infrastructure Concession and Regulatory Commission (ICRC), Mrs Deborah Okafor, has said.

    In a statement signed by Mrs Okafor in Abuja, the Federal Capital Territory (FCT), she said the Director General of ICRC, Aminu Dikko, made the statement at the first quarter 2015 meeting of the Public Private Partnership Units Consultative Forum (3PUCF).

    Represented by Dr. Chidi Izuwah, Director of PPP, the DG said that effort must gear towards encouraging local experts.

    The 3PUCF is a brain child of the ICRC and it provides a platform for Heads of PPP Units in Federal Ministries, Departments and Agencies (MDAs) to share knowledge and experience. It also ensures synergy in efforts towards institutionalising the Federal Government’s PPP Programme.

    Principal Private Sector Specialist, African Development Nigeria Field Office, Mr. Emmanuael Akinwunmi, said that the idea of regional PPP hub was to stimulate more private sector led intervention in the region. According to him, the challenge in accessing project finance in the country is usually due to shortage of integrity and ideas rather than lack of money.

    He said that opportunities were available within African Development Bank (AfDB) to both public and private sector agencies in the areas of funding for project structuring, execution and capacity building.

    Mr. Nurudeen Lawal, from the National Planning Commission, emphasised the importance of the roles of MDA’s in ensuring the successful implementation of the National Infrastructure master plan.

    Representative of the Nigerian Investment Promotion Council (NIPC), Abubakar Yarima, identified legislation as one of the bottlenecks to Foreign Direct Investment (FDI) in some sectors, particularly rail and power sector. He called for a review of existing laws in these sectors.

  • Nigeria gains N777b from agric interventions

    Nigeria gains N777b from agric interventions

    Nigeria recorded N777 billion as income from various intervention programmes in the agricultural sector in 2014, Minister of Agriculture Mr. Akinwumi Adesina has said. He spoke during the week in Abuja while briefing members of the Senate Committee on Agriculture on the performance of the ministry’s budget in 2014.

    The Minister said the money went to the rural economy as many local farmers benefitted from the interventions and were currently performing well in their farms.

    Adesina, who also defended the ministry’s 2015 budget before the committee, announced a crop insurance for farmers in the country.

    He said that no fewer than five million farmers would benefit from the programme, explaining that it was intended to build the confidence of farmers and encourage more people to farm. “The main economic value of all the interventions that were done on rice, maize, sorghum, wheat, soy beans, cassava and others added N777 billion worth of income back into our rural economy.

    “This has helped to create significant amount of wealth for our farmers in the country. As you know, we added about 21 million metric tonnes of food to the domestic food supply and that goes all over from rice to maize, cassava, sorghum, and to soy beans. All of that has added an average of N777 billion of revenue back into the economy; that is money going back into the hands of farmers and communities,’’ he said.

    The minister stated that anybody that goes into many parts of Nigeria today, particularly the north, and particularly for rice farmers, for example, will notice that those that actually pay first to buy tickets to go to Mecca are rice farmers. “That tells you how much things have changed for them; we have been able to create significant amount of wealth across the country from agriculture,’’ he added.

    Adesina disclosed that the agriculture sector witnessed a revolution in maize in 2014 with 14.9 million metric tonnes production from nine million metric tonnes recorded in 2009.

    Similarly, the wheat industry witnessed a revolution with new varieties that yielded an average of six tonnes per hectare of land with 240,000 metric tonnes produced in 2014 on a 75,000-hectare.

    He said that the ministry had also liberalized the insurance market and opened it up for private sector companies to invest in insuring farmers, adding that the Nigerian Agricultural Insurance Corporation (NAIC) had been completely revamped.

    “NAIC is now offering a new product which is called ’Planting with Peace’ so that our farmers will have access to crop insurance. We are hoping to reach about five million farmers by this year and then we can scale it up; it is a very important issue for us,’’ he said.

  • ‘Biotechnology’ll boost farming, alleviate poverty’

    The use of modern biotechnology will boost farming and alleviate poverty among Nigerian farmers, National Chairman, All Farmers Association of Nigeria (AFAN), Mr Karbir Umar, has said.

    Umar stated this in an interview with the News Agency of Nigeria (NAN) in Abuja while commending the Senate for the passage of a bill seeking to establish the National Bio-Safety Management Agency.

    Biotechnology is the use of modern scientific techniques, including genetic engineering to improve or modify plants, animals or micro organisms.

    The National Bio-Safety Management Agency will regulate the application of biotechnology in the country and ensure that it does not have negative effect on human health and the environment.

    Umar said when the technology is applied it would boost yields and increase income of farmers in the country. “This is a welcome development; it will take our farmers out of poverty and out of subsistence farming.

    “Biotech enhances the yields of seeds; with minimum input, it will produce the desired high quantity, which when sold will increase the income of farmers,” he said.

    The AFAN chairman said the association was partnering with local and international seeds companies to further increase seeds accessibility to farmers.

    He appealed to the Federal Government to open up more windows for financing and the possibilities of processing all agricultural produce in the country.

    The chairman acknowledged that the government was making efforts to fund agriculture through the N220 billion micro, medium and small enterprise fund.

    He urged farmers to key into various government programmes and vote wisely in the forthcoming general elections, saying that if there is peace and security in Nigeria, agriculture will replace oil.

  • Volkswagen targets cost-saving strategies

    Volkswagen  said it has adopted some cost-saving targets. It’s Chief Executive Officer (CEO), Martin Winterkorn, said in an interview on German TV Channel ZDF that the company was on track with efficient programmes to achieve the targets.

    He said he hoped the programmes would help the company to narrow the profit gap with international rivals.

    It would be recalled that the Europe’s largest carmaker sold a record 10.1 million vehicles across the multi-brand group last year.

    But the company is seeking to cut costs at its core division by five billion euros ($5.66 billion) over the next two years.

  • Can renewable energy ignite consumers’ hopes?

    Can renewable energy ignite consumers’ hopes?

    Getting gas to fire the power plants has been a Herculean task. Unreliable supply infrastructure and pipeline vandals have continued to compromise its distribution to various plants. The authorities are, however, looking at renewable energy as an alternative. Will the  diversifying of sources of power supply improve electricity supply? Assistant Editor CHIKODI OKEREOCHA asks.

    It’s an idea whose time has come. The rethink in favour of diversifying sources of power supply to guarantee improved electricity supply to Nigerians and operators in the industrial sector is coming at an auspicious time. The strategy, which seeks to explore alternative power sources such as renewable energy such as coal, solar, wind, and biomass, is coming at a time the excitement and optimism that greeted the unbundling of the sector.

    However, the handover of the sector to private investors has brought agony and frustration to consumers as there has not been any visible improvement in electricity supply more than a year after the sector was privatised. Rather, electricity supply has worsened and tariff gone as high as 100 per cent in  Africa’s most populous and largest economy.

    Although the Minister of Power, Prof. Chinedu Nebo, has continued to plead with the consumers to be patient, saying that it takes a long time to build power plants. According to him, issues of pipeline vandalism and getting gas to power the plants have been tasking.

    The Minister, who spoke with reporters in Lagos, said: “Vandalism is taking a toll on us. A situation where our own compatriots vandalise the oil and gas pipelines, especially the gas pipelines that supply gas to the power stations, since 70 per cent of all of our power generation is from gas-fired turbines and 30 per cent is from hydro. We have not been doing coal, we have not been doing renewable; we have not been doing biomass, so we really are hamstrung. So, the government is now working on diversifying to make sure that we have a good, robust fuel mix.”

    Noting the need to think out of the box, Nebo disclosed that licences had been issued to investors interested in generating electricity through coal and solar power. According to him, the government was working towards generating 10 per cent of the country’s electricity from coal.

    The Nation learnt that under the plan, government would build coal-fired plants in Enugu, Benue, Kogi and Gombe states. The plan, it was learnt, kicked off about a fortnight ago when the Federal Government signed a Memorandum of Understanding (MoU) with One Nation Energy Platform Ltd. for the production of 500 megawatts (MWs) coal-fired power plant in Enugu.

    Nebo signed for the the government, while the Chairman of the company, Dr. Uzoma Obiyo, signed on behalf of the company. A statement by the Ministry described the agreement as a welcome development for the government’s quest for a robust energy mix that would support the nation’s aspiration for development of the power sector.

    The statement noted that the coal-power project will also provide stable power devoid of challenges of sabotage from vandals. It said citing the coal powered plant in the Enugu area was a welcome development as Ugwuaji, a settlement in Enugu State, houses one of the biggest transmission sub-stations in the country.

    It also described the coal deposit in Nigeria as very clean, and that the processing of the mineral resource for energy delivery would not be a cumbersome process. It further said the Southeast zone alone had enough coal deposits to deliver 5,000 Mw of coal fired power to Nigeria.

    Earlier, the government through the Nigerian Electricity Regulatory Commission (NERC) granted an operating licence to Trombay Power Generation Limited for a 500 MWs power plant to be located at Wajari village on Dadinkowa Road, Yamaltu Local Government Area of Gombe State.

    Chairman of NERC, Dr. Sam Amadi, who handed over the licence to the company in Abuja, noted that coal power plant “is becoming important in the effort to diversify our fuel source.”

    Dangote Group is also investing a whopping $250million in three coal-fired power plants in its cement plants in Obajana, Kogi State, Ibeshe in Ogun State and Gboko, in Benue State. The company, last year, imported its first consignment of coal from South Africa.  Dangote Cement Managing Director, Devacumar Edwin, explained that the decision to look towards coal fired power plants was informed by the worsening situation of power supply caused by continuous drop in gas supply to power generating stations.

    Edwin said: “As you know, the gas and the fuel oil supply situation is going from bad to worse every day and all the manufacturing industries and all the power plants are affected.”

    He added that because of the difficulties the companies that bought the power plants are experiencing as a result of inadequate gas supply, there are fears that they might not be able to settle their obligations to the banks. He said to continue hoping without taking action will amount to watching one’s investments go down the drain.

    “We are trying to be proactive because if we keep slacking, nobody will come to our aid. So as much as we are going to appeal to the government for help, we have made investment so that our business will continue to thrive,” he said, adding that the Group’s investment in coal has created opportunities for the sector and that the move will reduce the company’s cost of production.

    He, however, said the group was looking at exploring the opportunity in the local coal industry as supplies from within the country would be cheaper in the long run. For the group and other investors in coal-powered electricity generation, the local coal industry holds lots of promises. For instance, Nigeria has about 22 coalfields spread over 14 states, including Adamawa, Anambra, Bauchi, Benue, Cross River, Edo, Enugu, Gombe, Imo, Kogi,  Kwara, Nassarawa, Ondo and Plateau states. Available geological data suggest that Nigeria’s coal reserves, which can be described as proven and capable of being exploited in commercial quantities are about 639 million tonnes.

    Also, the inferred reserves – resources present, but with a less assured reliability of commercial recoverability – are about 2.75 billion tonnes. Interestingly, Nigeria’s coal, according to experts, is unique because of its low sulphur and ash content. It also has low thermoplastic properties, making it very attractive for power generation.

     

    The imperative of

    renewable energy

     

    At various fora, Nebo said pipeline vandalisation is the major reason for the challenges of power supply in the country. He explained that about 2,300MW was lost in the past few months due to the vandalism of five gas pipelines that supply power to the national grid.

    According to him, the affected pipelines include the Escravos-Lagos Gas Pipeline System (ELPS) with a generation capacity of 800MW and the Trans-Forcados pipeline with capacity of 800MW.

    Others are Trans-Niger pipeline with capacity of 500MW, the Alakiri-Onne gas pipeline and Chevron gas plant with capacity of 2,672 MW, which were also affected.

    At the last count, about 20 ruptured pipelines have been identified, all due to sabotage, according to the Nigerian National Petroleum Corporation (NNPC). The corpoation reported that saboteurs were responsible for the destruction of Escravos gas pipeline in 2013. It also said the Escravos-Warri stretch of the ELPS and the Trans Forcados crude pipeline were also destroyed, adding that investigations by the Nigerian Gas Company (NGC) shown the pipelines were punctured. “The cumulative effect of the above interruptions is a real degradation of power supply to Nigerians,” NNPC said.

    However, pipeline vandals are not the only ones wrecking havoc on the nation’s electricity supply. Persistent low water level has also compromised the hydro-power dams. The Minister, however, assured that rehabilitation was ongoing at the Kainji and Shiroro dams to upgrade them.

    Nebo, during a visit to The Nation as part of his tour of media houses, also said the government was thinking of picko-hydro that can be powered by the smallest stream to generate power at least for a little community of people.

    The government has also begun the building of the 700 MW Zungeru dam and will soon begin work on the 3,050 MW Mambilla power plants, both of which have been on the drawing board for decades. At least 17 small and medium hydro power plants are being developed across the country.

    It is expected that when the Kashimbilla power plant is fully functional, it will generate an additional 40 MW, while the Dadinkowa dam will rake in 34 MW.

     

    Solar, biomass to the rescue

     

    Although the Federal Government, The Nation learnt, is planning to add 2,483 MW of electricity to the national grid this year through renewable energy sources, part of it would come from solar. As Nebo pointed out, one of the celebrated milestones in the power sector is the flag-off and commissioning of Operation Light-up Rural Nigeria projects in three rural communities of Abuja, namely Durumi, Shappe and Waru. He said residents in those villages, who hitherto had never seen electricity, marked uninterrupted solar power supply for one year.

    Already, plans have reportedly reached advanced stages to replicate the projects in hundreds of communities across the country, while also encouraging the private sector to key into it for wider spread.

    Similarly, biomass is increasingly becoming attractive as an alternative energy source. According to Nebo, the option would ride on the huge waste generated in major cities across the country such as Lagos, Kano, Port Harcourt, Enugu, Kaduna and Ibadan, among others.

    “We can aggregate these and put more power plants here and there, and feed them directly to the distribution network of the country and that is embedded generation and distributed power,” the Minister explained.

    Another alternative energy source that holds promise is wind energy. For instance, Nigeria has wind plant in Katsina State. However, the project, which is over 97 per cent completed, ran into a hitch following the kidnapping of the French national in charge of the project. But the Minister expressed hope that the project would be inaugurated soon.  He said there was no reason some parts of Nigeria would not benefit from wind energy.

    According to him, Jos in Plateau State and Katsina in Katsina State have a lot of wind velocity to support wind-powered electricity.

     

    Renewable energy policy

     

    For electricity consumers, the renewed hope in renewable energy received more impetus from the National Policy on Renewable Energy and Energy Efficiency. The Minister said Nigeria, which hitherto did not have a renewable energy policy, now boasts a draft policy. The Minister said the policy has been taken to the National Executive Council (NEC) for approval.

    Presenting the Draft National Policy on Renewable Energy and Energy Efficiency at a stakeholders’ workshop in Abuja, Director of the Electrical Inspectorate Services (EIS) in the Federal Ministry of Power, Abayomi Adebisi, said that under the policy, 8,188MW will be achieved with Renewable Energy (RE) by 2020 on a medium term, while the long-term target is on the realisation of 23,134 MW by year 2030.

    Adebisi said RE would contribute by 1.3 percent in the year to the national grid with a corresponding increase of 8 per cent and 16 per cent, between 2020 and 2030. “While large and small hydropower would contribute 2,121 MW and 140 MW to the renewable energy generation this year, it is also expected that solar accounts for 117 MW, with biomass electricity at 12.3 per cent,” he said.

    He also added that the policy development was being facilitated by some partners with a grant from GIZ, a German agency. “We sourced for grants from GIZ, then we pooled over 30 documents from people who had once done something on renewable energy. We got a committee of experts to develop the policy, and the draft was approved by the ECOWAS Centre for Renewable Energy and Energy Efficiency (ECREE) in May 2013,” Adebisi explained.