27 April 2012, Sweetcrude, ABUJA – Nigeria needs between $15 and $20 billion of investment over the next three years to buy and develop electricity assets, the Bureau of Public Enterprises (BPE) said on Friday.
“The country cannot allow power outages to stifle economic growth,” Bolanle Onagoruwa, director general of the privatisation agency, said in the statement.
“New and replacement generation capacity will need to be financed by both domestic and international financial markets,” the statement said.
The declaration by the BPE boss underlines the need for Nigeria to push forward with delayed power privatisation plans.
Nigeria plans to sell off 11 distribution and 6 generation companies by October as part of plans to privatise a power sector rife with inefficiency and corruption, the ministry of power told Reuters on Thursday.
Africa’s second biggest economy could be growing three percent faster if it solved chronic power shortages, Friday’s BPE statement said. Nigeria’s GDP grew 7.68 percent in the fourth quarter last year.
Nigeria holds the world’s seventh largest natural gas reserves but decades of corrupt governments have chosen to cash in on crude oil rather than investing for domestic power needs.
Nigeria only provides its 167 million inhabitants with around a quarter of the amount of electricity used by New York city, leaving those who can afford it to use expensive diesel generators and those who can’t to live without any power.
President Goodluck Jonathan laid out plans in 2010 to break up inefficient Power Holding Co of Nigeria (PHCN) and sell off generation and distribution units. But powerful vested interests, such as diesel generator and fuel importers, unions and power contractors, have delayed the sale.
The power ministry says it is confident privatisation will be complete by October and current power output of under 4,000 megawatts can be boosted to 6,000 by the end of the year and 10,000 by the end of 2013. Industry experts think this is optimistic based on the previous delays to plans.
The mobile phone sector provides an example of the potential returns that can be made from Nigeria’s growing consumer market. South Africa’s MTN and India’s Bharti Airtel are two firms that have benefited from rapid growth in Nigeria.
Nigeria is MTN’s biggest market and Bharti’s biggest African market.