FG limits states’ intervention in power generation – Fashola

GovFasholaLagosState12 December 2013, Lagos – Lagos State Governor, Mr. Babatunde Fashola (SAN), Wednesday said the Power Reforms Act which the National Assembly enacted to regulate the power sector, limited how the 36 states of the federation could intervene in power generation.

He said the state alone contributes about $90 billion to the country’s Gross Domestic Product (GDP), thereby attributing the achievement to the robust input of small-medium enterprises in the state.

Fashola disclosed this at the third corporate assembly he addressed at the Lagos House, Marina along with Commissioner for Commerce and Industry, Mrs. Olusola Owuru and Chairman of Lagos Internal Revenue Service (LIRS), Mr. Babatunde Fowler, among other actors in the corporate world.

The governor, who expressed the position when captains of industries asked him at the assembly to extend Independent Power Plants (IPPs) to industrial estates across the state, explained that when the Alausa Power Plant was set up, the intention of the state government was misunderstood.

He added that the Alausa Power Plant elicited a statement credited to the Nigerian Electricity Regulation Company (NERC) that the states “cannot distribute power.”

He acknowledged that the state government had no intention “to distribute power. We are regulated by the power reform act on how we can intervene in the sector. The power we are generating through the IPPs are for our own use, under the principle of embedded generation which the law allowed.

“When we provide power for small estate like Isolo industrial estate, we do that because we own the estate. We can do self-embedded generation but we cannot sell power to the residents. Those are part of the assets that the distribution companies have bought,” Fashola explained.

The governor said if the state government “has intention to generate power it will need to embark on separate agreement with the owners’ of that distribution companies. But by doing self generation, what that means is that we take ourselves away from the national grid.”

He, however, expressed confidence in the privatisation of the power sector, noting that the solution “is better. I believe they will work. But what I think we have not done is to be honest with ourselves about what to expect, which is post the sales of the assets. There is still a lot of work to do.

“My own understanding is that it will take some time before we can connect all the homes. The electrification is going on, but it will take some times before we get the gas to all the stations and I think that the expectation must be appropriately moderated. We have taken a step in what I think is in the right direction, by bringing more private participation, capital and skill into the power sector.”

He, therefore, explained that the essence corporate assembly, explaining that it “is because the number of what you contribute in the aggregate to the economy fortune of the country and to the sub-region, the number showed a GDP of about $90 billion, generated by Lagos alone.”

According to the governor, the size of the economy is the fifth largest on the continent. So, it is important to have the constant discussion and feel of the purse of this group.

-m This Day

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