Why Nigeria’s power sector is unattractive to investors – Nnaji

No Comments » June 15th, 2017 posted by // Categories: Energy Development Project

Summary of Reasons:

1.  lack of cost reflective tariff ( a regulatory challenge)

2.  gas supply constraints

3.  poor transmission network

4.  non-credit worthiness of distribution companies (DisCos)

5.  over leveraged power assets;

6.  value chain misalignment;

7.  lack of will to enforce agreements (a  regulatory/legal challenge)




Why Nigeria’s power sector is unattractive to investors – Nnaji

A former Minister of Power, Prof. Barth Nnaji, on Thursday said Nigeria’s power sector is not attractive to investors because of harsh operational environment and regulatory challenges.

Nnaji, who is the Chairman of Geometric Power Limited, spoke at the Natural Gas Business Forum in Lagos.

The workshop, organised by the Nigerian Gas Association (NGA), has the theme:  “Embracing new realities: Resetting our gas to power industry.”

He said the Federal Government has not addressed the concept of cost reflective tariff and other major issues that would guarantee return on investment.

The former minister said participants at a recent power summit in Copenhagen, Denmark, said they are not willing to invest in Nigeria’s power sector because of several challenges.

According to Nnaji, fears expressed by the international investors included lack of cost reflective tariff, gas supply constraints, poor transmission network, non -credit worthiness of distribution companies (DisCos), over leveraged power assets, value chain misalignment and lack of will to enforce agreements.

He said several power projects have been stalled due to financial constraints and tariff problems.

“There must be attachment of tariff to currency movements and adjustments must be done. Tariff review will help DisCos to recover costs and pay for gas,” he said.


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