The Nation Newspaper

Tag: investment

  • N/Assembly accused of delaying investment in oil, gas sector

    There has not been any major investment in the Nigerian oil and gas sector at least in the last four years and there has not been additional increase in the nation’s oil and gas reserves in the last ten years due to non- passage of the Petroleum Industry Bill (PIB), which has been before the National Assembly for many years, the Managing Director and Chief Executive Officer, Frontier Oil Limited, Dada Thomas has said.

    Thomas said that Nigerians should hold the National Assembly accountable for lack of passage of the Petroleum Industry Bill. He noted that the bill has been in the making for more than four years until now we have only May 29, 2015 for this current regime to be over. “I don’t believe that the bill would be passed into law before then, I think the PIB will have to be addressed by the incoming National Assembly,” he stated adding that the country has lost so much for the non-passage of the bill.

    The Federal Government has over the years set a target to achieve oil reserves of 40 billion barrels 4 million barrels per day production but how this vision could be realised remains doubtful as the government lacks the political will to pass the important bill into law, industry stakeholders said.

    Speaking with The Nation at an oil and gas event in Lagos, Thomas stated that as long as there is a cloud of uncertainty as to whether or not to pass the bill, the exploration and production companies may not want to invest as they ought.

    “The damage is that there has not been any exploration in Nigeria to find new oil or gas reserves. We need to make sure that the cloud of uncertainty which is the lack of passage of the PIB is removed so that people know the rule of the game. With the uncertainty removed, the regulators will be able to know what their roles and responsibilities are, and every stakeholder including the communities will know the rules of the game in the operation of the industry,” he said.

    Thomas urged those at the corridors of power to put politics aside and think of the economic wellbeing of the people and the nation first and foremost. He said: “They should put politics aside and do what is good for Nigerians and investors so that we have a bill that would address all the concerns and needs of the various stakeholders including the investors. We need to show commitment to the growth of the industry.”

    The Managing Director, Treasure Energy Resources Limited, Rivers State owned Oil and Gas Company, Eddie Wikina, in a telephone interview also agreed that the government is prolonging investments in the country due to non-passage of the bill, which he described as prolonging the evil day.

    He also mentioned corruption and insecurity as other major factors that push investment out of the country. According to him, if the bill is passed into law it would help to check the level of corruption in the Nigerian National Petroleum Corporation (NNPC). He said that the government has severally mismanaged the funds appropriated to the corporation by having wrong priorities.

    Since the NNPC is not autonomous of the federal government, it acts on instructions. Wikina said that the government is aware of this and continues to play down on the passage of the bill so that corruption would continue to thrive in the system

    “Such a bill as the PIB has been shrouded in so much secrecy that certain unscrupulous elements begin to profit from the quagmire. Such a bill should be openly debated in the Senate and passed immediately in the interest of the nation,” he stated urging the government to pass the bill within the remaining three months.

  • Nigeria still investment destination, says Dangote

    Nigeria still investment destination, says Dangote

    The President of Dangote Group, Aliko Dangote, has urged Nigerians to see the country’s economic challenges as a wakeup call for the citizenry to rededicate themselves to the task of nation-building through production activities.

    Dangote, who spoke with a delegation of cement distributors who visited his office in Lagos, added that Nigeria still remain the destination of choice for investments despite the economic and security challenges.

    He noted that though economic downturn was ravaging most countries of the world, including Nigeria, “the situation is not insurmountable, if properly addressed”.

    He added that the challenge could also serve as a stepping stone to a more economically stronger Nigeria in future.

    The Chairman of Dangote Cement Plc explained that with good support for the government, the challenges would soon be a thing of the past and Nigeria would come out stronger.

    His words: “I have always said it that Nigeria is a good place to invest. God has given us in Nigeria what many other countries don’t have and they keep searching for it. We have got fertile land for agriculture, we have the minerals resources and we have oil. All we need to do is to harness them for our good.

    “The present challenges we are facing should not deter us from growing our economy. It shouldn’t stop us from investing. It’s just a passing phase. Other countries that we referred to as “developed” started from somewhere. They all experienced some of these challenges in the past. So, I want us to see these challenges as obstacles towards attaining greatness.”

    Dangote told the distributors that it was for these reasons that he had continued to invest in Nigeria’s economy.

    “If Nigerians do not invest in their country, other people would not come. They will want to see our success story before they can come,” he said.

    He promised the distributors that his companies would continue to live up to expectation to ensure that their interests were protected at all times, noting that as a matter of policy, his companies have put in place arrangements to consider relations of his distributors for job opportunities once there is opportunity.

  • ‘Falling oil investment ‘ll hit U.S. economy’

    If capital and workers could move instantly and without friction between industries, the plunge in oil prices would be unambiguously positive for the U.S. economy in the short term as well as the longer one.

    Despite the growth in shale production, the United States is still a net importer of around five million barrels per day of crude and refined products, according to the Energy Information Administration.

    In the long run, cheaper fuel prices will benefit U.S. consumers and businesses more than they hurt oil and gas producers and royalty recipients.

    In the real world, however, capital and workers cannot be redeployed seamlessly between industries. The impact of falling oil prices is being felt almost immediately in the oil and gas patch while the full benefits for the rest of the economy will take time to filter through fully.

    Oil and gas has been the fastest-growing sector of the U.S. economy over the last decade so anything that causes investment and employment to stall will have a noticeable negative impact on the economy as a whole in the short term.

    Capital spending by businesses in the “mining, quarrying and oil and gas extraction” sector (which is dominated by oil and gas producers) increased at a compound annual rate of more than 16 percent between 2002 and 2012.

    Investment rose almost five-fold from $42 billion in 2002 to $194 billion in 2012, according to the latest edition of the Census Bureau’s Annual Capital Expenditures Survey (ACES) (link.reuters.com/qyh83w).

    Over the same period, business capital spending in the rest of the economy increased at a compound rate of just 2.7 per cent per year (link.reuters.com/tyh83w).

    In 2002, the mining sector accounted for just 4.6 per cent of economy-wide capital spending. By 2012, resource extractors accounted for 14.5 per cent of all spending on structures and equipment.

    The mining industry was responsible for 36 per cent of all the increase in business investment in the United States over the decade, according to Census Bureau data.

    The most recent ACES survey numbers are for 2012. Given the enormous oil exploration boom, however, it is very likely capital expenditure rose further in 2013 and the first half of 2014, both absolutely and relative to the rest of the economy. So, the oil and gas sector was probably even more important by the middle of 2014 than it had been in 2012.

    This investment boom is at risk as oil and gas producers slash their investment budgets for 2015 in response to the 60 per cent decline in oil prices since June, last year.

  • Real estate expert calls for investment in housing

    Executive Director, Amen Housing Estate, Eleko Beach, Epe, Lagos, Mrs. Sade Gbadamosi, has urged investors to complement government efforts in the rural transformation drive.

    Addressing reporters at the commissioning of the Amen Estate, she said the scheme would assist the middle-class members of the society to own their houses at affordable rate.

    She added that the scheme will decongest the overcrowded cities, noting that housing is becoming a problem in Lagos because of the influx of people and plan to make the state a mega city.

    “It is to assist in decongesting our cities and we want to use Lagos State as example. It is to encourage government at all level in its housing scheme. This is to make house available to people in areas that are a bit far from the cities,” she said, adding: “The low cost houses help the urbanisation of the communities that have for long been neglected, through what we have done people will be shifting to places where there are space and healthy places instead of choking themselves up in congested area.”

    Gbadamosi said the estate was well secured, with facilities to meet the demand of the middle class society.

    “As you can see for yourself, we have created a wonderful estate that has all facilities to make life comfortable. There is a generator that offers electricity for 24 hours. We have what a normal estate should have but I have to tell you that at Amen Estate you have much more.”

  • My investment plans for Lagos, Abuja

    My investment plans for Lagos, Abuja

    Mohammed Alabbar sits atop a 35 billion-dollar company called the Emaar Group. The outfit owns, among other top notch properties, the tallest building in the world, Burj Khalifa; the biggest shopping mall in the world, the Dubai Shopping Mall; one of the biggest water fountains in the world and one of the best hotel chains in the Middle-East, the Address Hotel and Apartments. He told OKORIE UGURU how he started one of the world’s biggest business empires and his plans to invest in Nigeria. Excerpts: 

    How long have you been in business?

    We started our development business about 18 years ago. They call us a developing country but we are not really a developing country. We are a young country. This country (UAE) is about 45 years old. So, when I compare ourselves with the city of London that is 400 years old, and New York that is 200 years old, we are babies.

    Of course, we are behind. Our people just want to live a normal life. They just want to stay in a comfortable place, civilised. Apart from the kids having their bicycle routes, we want to make sure we have electricity and running water. We want to make economic progress and safety and have a little bit of hope.

    I spent seven years of my life in Singapore, I was in Singapore originally, but I came back to Dubai in 1992. I did a little bit of what some will call economic development for seven to eight years. I was doing a lot of business relations, stuffs like that. I had a lot of young people, about 200 of us. We really did an incredible job. We had so much fun.

    After seven to eight years, I decided that I could see progress in the city and infrastructure was important. When I started the company, I had no money. That was the challenge. I drew a business plan and people believed in it and, I think, my credibility, based on the work I had done. So, investors put in about $15 million. The rules allowed me to go public at that time and I raised another $15 million from the market. But I never thought it was going to be this big. I really like to do things well.

    We started development and drew up designs. I really like to do things well. I like reputation. I just believed I was in a business where if anybody wanted to buy a home from me, it was the most important decision in one’s life; and that is the biggest chunk of investment for anyone. You’re buying a house for investment or you are buying it to live in, that is the most incredible moment of your life.

    What would you say has been your business philosophy?

    Our philosophy here, me and my staff, is to do a good job. While we want to make profit, we still want to do fabulous jobs. Instead of making three dollars, because we wanted to do things well, we ended up making five dollars. People paid us more than we thought in our financial feasibility because they wanted to trust someone. We started that way and we continued.

    We got lucky. We like to do large projects. We did 2,000,000 square meters, 4,000,000, and this is our third largest project that we have done (Downtown Dubai), and this is huge. We had done Dubai Marina, which is 6,000,000 square metres. We finished that and we came to town. This is about 3,000,000 square metres.

    But all along we see ourselves and all of you travelling to London, Paris, New York, Kuala Lumpur and we say ‘Waoh! What beautiful places you have there. I get quite annoyed. I think they are good, but can’t we be just as good? We want to be proud of ourselves. We want to make some money while we are doing business, but can we do things right? This (last) year, we will finish with 80,000,000 visitors. I never believed that this would happen in my lifetime.

    We have 1,500 sensors, so, I can tell you exactly how many visitors we have every day. And we are growing at about 10 per cent. But we control it. We manage the roads. We manage the flowers. We clean the bathrooms, the parking lot. Every day, we add one security. Everything is totally managed by us. We are so lucky to be trusted to do this. That in my life time I am able to build a monument like this or a large mall (Dubai Shopping Mall), the one I am doing in Cairo, it is such a great gift and we should be able to do a good job.

    Don’t you think you can replicate these in Nigeria?

    We are a young country and need to do more of the same thing in Nigeria. There is so much we can do. If we are making two dollars, why not do a good job? Isn’t that nice? To have a good brand, a good name is very critical for us. I am sure there are a lot of young people and older people in Nigeria who are probably doing the same thing. They are doing good quality work in technology, banking, real estate and so on. So, I think we are just being passionate about what we do.

    But when you look at Nigeria, you look at Africa, there is so much that can be done in Nigeria. People complain about power supply issues and all that. I know it is a problem, but as we progress, it will be solved. We once had power cuts in the city (Dubai) too. This is a growing thing. We are very lucky. We are only 1.5 million people. Nigeria is about 170 million people; that is a different scale. I am sure it can be fixed and I wish it can be fixed as soon as possible. We can’t wait too long because we are all connected to technology. We are connected to the television. We see how other people lived everywhere and we just want to live as good. Whether we are practising democracy or whatever, we want decent life for our families.

    I am in the business of providing reasonable, comfortable quality life. If it is the house you live in, how the road is laid, how it is maintained, how the playground of your kids is done, how the clinic is put there for your service, the nursery and school for your kids and the office building’s design, that is the business we are into. This site alone contributes four per cent of Dubai GDP. You know the velocity of business is so much. We are a big tourist attraction by the way.

    Would you attribute all this to good planning?

    Yes, we planned well, but we never knew it was going to be as big as this. We planned it by studying Las Vegas. There is a fabulous stuff in Vegas. We studied Paris, London and New York and we saw the fabulous stuff they had done, and we tried to go and talk to these people. For example, we have the Three Crown Boulevard here. We brought in the people who are working in museums and we said: ‘Let’s talk about designs.’ More importantly we told them: ‘Can we talk about mistakes? What are the mistakes we have in Chancery Museum? They said very simple: we have problems with parking because Chancery Museum does not have any parking space. We said okay, but what do you suggest we do? They said we think you should put the parking first and put your boulevard on top. We made space for 5,000 car parks, and then put a boulevard on top.

    If you drive by the boulevard, there is actually a kingdom underground. We said okay, what is the other shortfall? They said it is very embarrassing that toilet is a problem; that with all these tourists, there is no place to go to toilet. We said waoh! So, we have 55 toilets underground and we make sure they are clean. Of course they want security and technology and we put those that in. But for us from the Middle East, I can’t put a mosque in this congested area. So, in our car parks, we have five mosques for men, five mosques for women.

    Are you also making money from the parking space?

    No we are not. But if we want to succeed, if we want to have a good environment, we have to provide these services and we make money from the real estate. We installed our fountain for 180 million Euros. You think I can charge people for the fountain? No, I can’t. But we discovered that every building that we have built with a view to the fountain, we make more money from the building than we paid for the fountain. I never knew that.

    At the same time, we made mistakes. We adjusted some, and some we could not adjust. Today, we would like to take this experience to countries all around us. We are taking this to Nigeria. We will build one in Abuja and one in Lagos. These are great cities in the world, not only in Africa. In my job, I follow up designs in detail, and the marketing. I have got a strong team who manages the finance. We make sure that we do things right and there is always money in the bank. So, we’ve got a good team that manages that side. I manage the design, marketing and strategy sides.

    Is your background in design and architecture?

    No, my background is science. It is interesting. My parents and I lived in a government-owned house. When I got a job, the first thing I did was to borrow money and renovated my mother’s house, which was our house. I remember in those days, I think I liked designs, I like adjustments. So, I changed that government house that we lived in to something smart. I think design and construction is something that I like.

    Where did you pick that skill from?

    I don’t know. My grandfather, my uncles are all mathematicians and they are really into designs. They are quite good. Maybe it is something in the DNA. A lot of times, things in our DNA affect how we behave.

    What was your first vision?

    When I was in Singapore, I was flying back and forth. In Singapore, when you open the newspaper, the biggest news was always Mr. X,Y, Z, owner of a real estate doing this or that. Property was always the big news. When I came back to Dubai, it was still growing but not as much as now. Then you had one building built by Mr. Abdullah, one by Mr. John, and in between, you had maybe road, maybe not. I said it would be nice to do things right; plan the roads, landscape the roads, make sure the road and buildings are designed well and in harmony. I said it would be nice for someone to do this with a development company that has comprehensive planning. That was how it all started. I was lucky because Dubai was moving forward. That was pure luck.

    What would you say has been your driving force?

    When I started, as I said, I didn’t know it was going to get this big. There are two elements: one, because we became public. I live in a society that when I go public, I take your money and invest. In our society, and I am sure in Africa, the business that I take your money to invest and I don’t make money for you is unheard of; or I take your money and I lose it. No way. That is just not acceptable in my society. Now, maybe some people did lose money, but ethically, the home I come from and the society too, I think taking people’s money, it was a lot of pressure, unbelievable pressure up till this moment.

    Number two, today we’ve got to the size where we are. We’ve got about $35 billion company. We are profitable. Do we need to run around to do projects in Morocco or do project in Nigeria? I don’t have to, but I think we need to enrich the world and enrich ourselves. These are opportunities. Okay, we are a company, we make money, but we need to come and make a change. For me, I am so excited to participate because Dubai is not as big as Nigeria, a huge country such as Nigeria needs business partners; it needs good, decent hotels. It needs beautiful neighborhood for people to live in. It needs a downtown for people. It is just common sense for me. But on top of that, I am very passionate about designing new neigbourhoods.

    Funny enough, I don’t know how I did it. My first project was 500 homes. The site was about 400 hectares. Why I started that way and why I like big size? Because I like to control the environment and control what happens in it, good or bad. It has worked.

    In some countries, if you hear a person talk like this, you would say he has a political ambition…

    No, I don’t. Being a public company is enough pain for me.

    How do you expect to sustain this?

    You should have an open mind. You look at the world, look at the market you are in, and you always search for opportunities, surround yourself with good people. Make sure you have good business principles as you do your business, and one of them is that we want people to trust us. We have to have discipline, without discipline you cannot do a thing. You can’t.

    You have the Burj Khalifa, the tallest building in the world. You also have the biggest shopping mall in the world. Did you set out with projects like this in mind?

    At the beginning, we just wanted to make sure that in the first two years, we succeeded. No clue at the beginning of what we wanted to do, to be honest with you. But we tried to do things and it is working and we say let’s push the boundary, let’s get bigger, let’s do things well. You know as you do this, you make mistakes, you learn, you become better. And then after, you say well, I can do bigger things because I have done this, I have done that, I have enough people, I have knowledge, I have ability. The original thinking was very simple: how can I do this business? I barely have money to start the company. And how can I make money for myself while I am becoming successful? It is really a very simple vision.

    Now, as this comes up, till today, it doesn’t make a difference. What makes the difference is what we’ve been able to achieve. We’ve been able to add value to our society, to our investors. We built quality structures, we have good reputation.

  • 11 PFAs exceed investment limits, others

    Eleven Pension Fund Administrators  (PFAs) overshot their investment limits in the second quarter of last year, the National Pension Commission (PenCom) has said.

    It said Section 7 of the Pension Reform Act 2014 on ‘Regulations on Investment of Pension Fund Assets’ stipulates that not more than 10 per cent of the total pension assets under management shall be invested in all instruments/securities, which include equity, money market and debt issued by a corporate entity.

    It said: “PFAs shall ensure that not more than 45 per cent of pension assets under its management are directly or indirectly invested in any one sector of the economy.’’

    PenCom’s Director-General, Mrs Chinelo Anohu-Amazu, said in its Second Quarter Report made available to journalists that during a routine examination of 11 PFAs in the period under review,  the PFAs were found guilty of delays in the payment of retirement benefits; receipt of pension contributions without appropriate schedules; unresolved customer complaints; failure to fill certain vacant management positions; and non-implementation of disaster recovery plans.

    She said the examination, which was risk-based, covered 11 areas of the PFAs’ operations.They included company, board and management operations; information and communication technology; pension administration; benefits administration and payment arrangements; and fund management.

    She said: “Other areas included risk management and compliance, service delivery as well as internal control systems.The draft report of the routine examination had since been communicated to the boards of some of the PFAs.

    “The examination report had since been discussed with concerned PFAs’ management and commitments were obtained for remedial actions to be carried out by the operators examined.”

    The PenCom chief added that evaluation of risk management reports forwarded by the operators showed that some operators faced operational risks associated with receipt of contributions without appropriate schedules. She said they also faced litigations, concentration of portfolio investment, and non-funding of RSAs by employers, adding that the affected operators were advised by the Commission to strengthen their mitigating measures to avert the identified risks.

    She further said the Commission received and reviewed the actuarial valuation reports of 10 Defined Benefit Schemes for the year ended 31 December, 2013.

    “The reports revealed that some of the schemes had some funding gaps as at the end of the reporting period.

     

    Consequently, the affected scheme sponsors were directed to come up with funding arrangements with a view to clear the identified shortfalls.

    “During the quarter, the Commission received and reviewed 28 corporate governance reports from licensed operators. The reports indicated some violations of the Code of Corporate Governance by the operators.

    “The review further showed that some operators did not evaluate the performance of their Boards, Board Committees and Directors; and did not hold inadequate number of Board meetings as stipulated by the Code.

    “In addition, some Board members did not attend Board and Committee meetings regularly. Subsequently, the affected operators were asked to address the issues of non-compliance with the Code of Corporate Governance.

    On the Returns Rendition System of the operators, Mrs Anohu-Amazu said 30 operators rendered returns on the funds under their management and their company accounts to the Commission through the Pension Returns Rendition System (PenRRS).

    “The Commission scaled up its compliance and enforcement strategies to enhance compliance with the provisions of the Pension Reform Act (PRA) 2004. Consequently, sanctions were applied in line with the Compliance Framework.

    “In addition, the Commission had participated in public enlightenment programmes as well as collaborated with various stakeholders to enhance compliance,” she added.

  • ‘Prioritise investment in youth devt’

    The Executive Director of Civil Society Legislative Advocacy Center (CISLAC), Auwal Musa Rafsanjani has urged the three tiers of government, the federal, state and local government, to target investment in skills development for the youths.

    He said it is the best option to enhance productivity in the labour market.

    Speaking on how the government could improve the lives of the most vulnerable in the country as a result of the slump in oil price in the international market, he said: “With the recent United Nations  (UN) Millennium Development Goals (MDGs) acceleration framework focusing on decent work and reducing maternal mortality,  we urge the three tiers of government to target investments in skills development of the youth population as the best option to enhance their productivity in the labour market. This is necessary because investment in skills development of the youth population will enhance their productivity in the labour market.”

    The CISLAC’s boss said considering the post-2015 development agenda, and the broad consensus that the current MDGs must not be sidelined, issues on poverty eradication should remain in focus by government.

    “For decent jobs to be created in both short and long run, it is more important for government to target improvements in secondary and tertiary education whilst incorporating practical and vocational skills,” he said.

    He noted that smart social policies such as programmes that help the unemployed find jobs or systems that provide social security to vulnerable members of the society cannot just be considered a cost.

    He said: “We must not be lulled into the notion that the crisis is over, and that no further action is required because the job queue is getting longer, and because on the surface, the Nigerian economy may appear to have regained some stability, but the real economy is still in troubled waters.”

  • Pension investment funds nearing $7b

    Ontario Teachers’ Pension Plan and Public Sector Pension Investment Board are nearing a $7 billion deal for Canadian satellite company Telesat Holdings Inc. after months of delays and discussion breakdowns, Bloomberg has reported.

    Under the terms being discussed, the funds will acquire Loral Space & Communications Inc. (LORL), a publicly traded shell company that owns 63 per cent of Telesat, for about $85 a share, or $2.6 billion, said the people, who asked not to be named discussing private information. While a deal could be announced next month, talks may fall apart again given the parties’ inability to reach an agreement in the past, the people said.

    The pension funds are planning to wind up with equal ownership and voting stakes in Telesat, the people said. PSP, which currently holds about 67 per cent of the voting rights and 37 per cent of the equity in Telesat, would increase its ownership to 50 per cent and reduce its voting rights, while Ontario Teachers’ would control the other half of the company.

    Telesat has been on and off the block for years. Loral and PSP, which already owns 37 per cent of Telesat, called off a sale effort in 2011, after offers from bidders including EchoStar Corp. and Carlyle Group LP fell short of expectations. Talks started again this year before stalling in June because Mark Rachesky, Loral’s largest shareholder, couldn’t agree with PSP on a price to sell the company, failing to bridge an equity gap of about $100 million, people said then.

    Three-way talks between Loral, PSP and Ontario Teachers’ restarted last month after Ontario Teachers’ and PSP raised their offer, the people said, leading to renewed negotiations.

    Representatives for Loral, Ontario Teachers’ and PSP declined to comment.

  • ‘We ‘ll engage more in long term investment’

    With the 2014 Pension Reform Act, Pension Fund Administrators (PFAs) can now engage in long term investment in equity and infrastructure that have more economic impact as opposed to the short term investment, Pension Fund Operators Association of Nigeria (PenOp) Chairman, Misbau Yola, has said.

    Yola, who is also the Managing Director of Legacy Pension Limited, said the PFAs will however, need to bring a workable means of channeling pension fund into these areas.

    He noted that employees, employers and other stakeholders within and outside the industry now understand that their pension is safe under the supervision of the National Pension Commission and the administration of the PFA along with the Pension Fund Custodian (PFC) who are the custodian of the pension fund.

    He stated that this is also because there has been no case of fraud since the inception of the new pension scheme, the Contributory Pension Scheme in 2004. Nigerians are now more comfortable with the scheme and we expect that more people will join the scheme, he added.

  • Current tariff regime, vandalism disincentives to investment

    Current tariff regime, vandalism disincentives to investment

    Ibadan Electricity Distribution Company (IBEDC) is one of the distribution firms licensed last year following the unbundling of the power sector by the Federal Government.  Its areas of coverage spans Ogun, Oyo, Osun, Ekiti, Kogi, as well as parts of Kwara and Niger states. Its Managing Director, Fortunatus Leynes,  says ending vandalism and an upward review of cureent electricity tariff would go a long at improving power supply. He spoke in Lagos with senior journalists, Group Busines Editor, Simeon Ebulu  was there.

    From your experience in the past, will you say the the decision of the government to deregulate the power sector was right?

    Yes, because there has been an improvement in electricity supply in the country in the last one year. The government decided to deregulate the sector because of its desire to have reliable power supply in the country.

    With what has happened in the last one year, the country is gradually getting close to achieving that as electricity supply is becoming better. This is something that the country had found difficult to achieve for many years. This has been achieved because of the privatisation of the companies involved in power generation and distribution.

    Your view that electricity supply has improved may be personal to you. Some will have a contrary opinion. Do you agree?

    The facts on ground speak for themselves. I may not be able to speak for other franchise areas, but in our own franchise area, electricity supply has improved greatly. As I speak with you, the minimum number of hours of supply in most parts of our franchise area is 15. I am not saying that is enough; of course we are working to improve on that but that is the fact. Electricity supply has improved. If there are areas that are getting less than 10 hours of supply, it must be due to a local problem which will be addressed.

    What are the challenges you have to confront before coming this far?

    The major challenge we have had is insufficient power supply from the national grid. This means that we do not have enough power to distribute to our customers. Unfortunately, many of the customers do not seem to understand the way it goes; they do not realise that we cannot distribute more than we receive from the grid.

    We are the ones they blame whenever there is inadequate supply of electricity. But it is pertinent to note that as a distribution company, we are at the tail-end of the electricity supply chain. It is what is delivered to us that we distribute to our customers. However, we understand the way they feel and we are doing our best to address their concern.

    Another challenge we face is tariff. I want to tell you that the tariff we take from the customers is too low. The tariff is not enough for us to finance the purchase of transformers, lines, poles, wires and other electrical equipment needed for our operations.

    We also have the challenge of vandalism. Very often, members of the public vandalise our equipment and facilities. This has not been helpful to us at all. It has resulted in huge financial losses to our company. The implication of this is that the resources that should have been deployed to increasing capacity would be used to effect repairs. So, downtime will continue to be high for as long as our equipment and installations are vandalised.

    We have appealed to all our customers to see our facilities as their property and protect them because it is only when the facilities are allowed to function very well that we can assure them of regular power supply.

    We have also called on communities to ensure the security of the facilities for the good of all. The importance of regular supply of electricity cannot be overemphasised, but one way of guaranteeing this is for the people to desist from vandalising our facilities because it is these facilities that will ensure that electricity gets to houses and offices.

    What options do you have about increasing the power supplied to you from the national grid?

    You know we are not the only one in the business; so there is a limit to what we can receive from the national grid. Until power generation improve, there’s very little we can do because whatever is generated has to be shared among the distribution companies.

    However, we are planning to augment our supply through embedded power generation. This is our way of increasing power supply to our network and it will enable us to increase power supply to our customers. We have already communicated our intention to the Nigerian Electricity Regulatory Commission (NERC), and we are awaiting their response. We shall start work on it as soon as we get the go ahead from NERC.

    How will the embedded power generation work?

    We shall have a number of this in different parts of our franchise areas and add to our network. We shall not add the power so generated to the national grid, it will go straight into our own network. We are taking this step because we owe it a duty to our customers to supply them regular electricity. What they expect from us, is service, not excuses. As far as they are concerned, whenever there is power outage, it is our fault; they do not want to know whether we receive enough power supply from the grid or not, that is not their business. It is our belief that by taking this route to increase power supply, we shall be adding value to them and improving the overall electricity supply in the country.

    Are you going to add power generation to your original mandate of power distribution?     

    No, we are not the ones that will be generating the power. We plan to engage different companies in the embedded power generation scheme, but they know that whatever they are able to generate we shall buy from them. That is part of the beauty of the deregulation of the sector.

    So, to answer your question, we shall remain a power distributing company;  we have no intention of adding power generation to what we are doing. We are motivated to do this because of our determination to give first class services to our customers.

    Is achieving uninterrupted electricity supply in this country such a tall dream?

    Honestly, the way to get that is what the government has embarked upon and that is deregulating the sector so that private people with requisite experience and technical know-how can come into the sector. At the risk of sounding immodest, I want to say that in the last one year, our company has been able to improve power supply in our franchise areas.

    One thing Nigerians should realise is that investment and appropriate technology follow liberalisation and deregulation of critical sectors. With the deregulation of the sector, investments will come from far and near and so will latest technology. These are two critical factors for having uninterrupted power supply.

    For instance, apart from the initial investment that our company made in this business, we are currently discussing with a consortium of banks to raise $160million which we want to inject into the business. This money will be used to improve facilities in our network.

    Why are we able to do this? It is because we are a private business. If it were a government business, the bureaucracy involved will make it difficult. By the time the money is released, the technology for which it is meant would have become out-dated.

    Private businesses are result-oriented, they want to get the result that will make their businesses sustainable. This can only be assured when they deliver quality services to their customers and the only way to deliver quality services is by continuous investment in the business. That has been the secret of the improvement in electricity supply in the last one year.

    I know that Nigerians are justifiably impatient about having regular electricity supply, but they should just give us some time. Now, I speak for our company because I don’t know what others are doing. We are trying to attract the right people and inculcate in them the right attitude. We are also investing in the right technology to drive the network. With all that we are doing, in the next two to three years, our company will make the difference. I can assure you.

    How close are you to achieving your set objectives?

    I will be honest with you, it has not been easy because when our business plan was developed, it was based on some parameters- such as customer count and amount of power available. But when we got into the business, the reality on ground was different from what we were told. This has largely affected our operations. We have had to review our targets in line with the reality on ground.

    So, to be factual, we have not achieved all that we thought we would achieve in one year. But altogether, it has been a good year and we are looking forward to a better outing next year.

    What are your views on the regulation of the power sector in Nigeria?

    I will say the power sector in the country is a highly regulated one and at this stage of the sector, I think it is necessary. The regulator of the sector, the NERC, is very strict about compliance. Non-compliance with laid down rules attracts serious sanctions. This has been helpful to both the operators and our customers as it keeps us on our toes, knowing that an agency is watching. What we all want is regular supply of electricity for the improvement of our lives and businesses.We, as an organisation, play by the rules. So, we do not have any problem with the regulators.

     How were you able to manage the transformation from a publicly owned agency to a private one?

    One of the good things that the government did with the privatisation is the decision to pay the terminal benefit of all staff of the legacy company. That means we could start on a fresh note. It gave us the freedom to pick the best hands in the legacy company and blend with the best hands from outside and the combination has been wonderful. As our customers will attest, power supply has improved greatly. Some areas enjoy 22 hours of electricity supply, some 18, some 15. These are by no means the best, but considering where the power sector was, it is a huge improvement.

    Talking about how we were able to achieve this, efficient management of resources, regular training of our workforce, deployment of world class technology and prompt responses to complaints, were key, and still are.

    I give you an example. The substation at Akanran/Olorunsogo in Ibadan was destroyed by some irate youths in January, 2012. Nothing was done about that for about three years. The people were left in darkness for almost three years. Of course this had a negative effect on businesses in that area and it also meant a loss of revenue for the company.

    As a private business that is not dependent on subvention from government, we knew we had to do something about it, especially because our mission is distributing power, transforming lives.

    We spent about N150 million to renovate the substation. The people are happy with us for putting an end to their pains; we are happy with ourselves for transforming the lives of our customers.

    You said the tariff you charge is too low. What in your view would be the ideal tariff?

    I cannot give you a figure because it is NERC that announces the tariffs and it depends on some parameters to arrive at these. We just think that considering what goes into the business, the tariff should be a bit higher. But then the final say lies with NERC, there is no point second-guessing the Commission.

    So what should be your customers’ expectation as you start your second year?

    Our customers should expect improved services as we put in more money to buy transformers and rehabilitate our electrical facilities. We have the plan to replace all obsolete equipment we inherited from PHCN, but they should know that this will definitely take some time.

    As part of our first anniversary activities,  we are upgrading transformers to various  communities across the franchise area. Thi s is targeted at improving power supply to  them.