Why Power Sector Privatisation in Nigeria has Failed—Egbin Power Chairman
**Targets 5000MW Generation in 5 Years
By Dipo Olowookere
Egbin Power Plc is the largest privately owned power generation company in Sub-Saharan Africa and accounts for over 20 percent of power generated in Nigeria.
In this interview, Mr Kola Adesina, Chairman, Egbin Power Plc speaks about the firm’s experience post privatisation, expansion plans and other issues in the nation’s power sector.
The new management took over the affairs of Egbin in November 2013. Where is the company today in its post-privatization plan
Despite these challenges, we have achieved and exceeded our post-privatization targets. From less than 400MWs, Egbin is generating 1,100 MW and shall hit 1,320 MWs in April 2018. Ordinarily, about 220MW that we began to overhaul should have been back since last year if the N140 Billion we are being owed by NBET had been paid. Now, we are struggling to ramp up our capacity because of liquidity challenges and growing and unsustainable debt. Evacuation of the electricity we generate has been a challenge too. Today, the plant can generate about 1,100MWs, but we cannot evacuate more than 600 MWs, because of frequency issues from the transmission end of the sector. The Transmission Company of Nigeria says the DISCOs are not receiving power. Therefore, they have to drop the load. For Egbin to break even and continue to operate well, we should be evacuating a minimum of 800 MWs every day.
What have you achieved so far
It has not been all smooth sailing. I make bold to say that Egbin has raised the performance bar in the sector through continuing investments in human capital and infrastructure resulting in ongoing drive for sustainable performance and expansion. We have had to contend with policy summersault and operational challenges occasioned by defaults in contractual obligations from Day One, the absence of a cost reflective regime, FOREX variance of over N200 per naira and inflation rate that rose from 8% at takeover to 18-19%, as well as debts owed to us by Nigerian Bulk Electricity Trader, NBET. Therefore, the considerable improvement Egbin has made, using the loan acquired in dollars to provide the infrastructure to generate the electricity, appears lost, because the company has not been able to recover its cost. The loan was in dollars, but power tariff is in the local currency. Therefore, what Egbin has lost between the time of acquisition and today is so depressing. The company has lost over 200% from each Naira invested in the acquisition of the plant. However, we remain committed to the project of lighting up Nigeria, this is what motivated our acquisition bid and we will most certainly surpass our targets ultimately.
How do you deal with debts owed by government agencies
Ordinarily, that’s simple! Just ask all MDAs to have prepaid meters. With that, those that have credits on their meters would have electricity. Once the credit is exhausted and no replenishment, then no electricity. I believe the government is doing its best in terms of getting the MDAs debts settled, but they can still do more to support a metering arrangement that will make payment by the MDAs seamless whilst accelerating ongoing efforts at settling the legacy debts. The DISCOs who have so much odds stacked against them also have debts to settle under a system where all the performance enablers have not been provided. The same DISCOs would be told not to raise the tariff beyond a certain threshold when you know the critical parameters that produce the tariff are not right, and as such the real tariff is not being charged. Yet, the authorities and all stakeholders acknowledge that money is required to upgrade the transformers, restructure the distribution lines, provide meters to consumers, etc.
How about plans to commence expansion of Egbin 2
We believe in Nigeria. From the beginning, we had articulated a vision to bring light to Nigeria. As part of that vision, we said from Day One that we will double the capacity of Egbin. But, how do you do that with all these challenges, including serious liquidity crisis, uneven playing field, policy summersault by government and mounting debts. The DISCOs would want to distribute electricity. But, they are limited by the tariffs and the differentials in the agreements they signed and the ones being implemented. They need all the enablers in place to perform optimally. We are determined to forge head believing that everything would come together soon.
Are you going to look from private capital to forge ahead
Obviously, that’s what we are doing.
So, where are you looking at
We have been engaging several partners in the quest for raising more capital. We are currently in discussions with some respected International organisations on various partnership models.
Where would that take you to
That would give us 3,120 MWs in four years’ time. But, we hope to attain a 5,000MW capacity in the next five years. Beyond Nigeria, we are making forays into other parts of Africa, where we plan to have strong footprints under the Sahara Group Electrifying Africa initiative. We have gone to Tanzania. We are making efforts to get into other nations we see as hubs. Recently, the Bureau for Public Enterprises said about 37% of privatized entities since its inception are not working. Nigerians say most of these entities may be in the power sector. Perhaps this is the best way to start.
What’s your view about the state of the sector today
At the moment, the power sector could do with more collaboration and synergy among all stakeholders to consolidate and enhance the gains from the privatization exercise.
How do you mean
The challenges in the sector are not only well known, but well documented. The system is not properly aligned to deliver service as desired. The sector is a value chain including all the players – gas suppliers, electricity generation, transmission and distribution companies. All stakeholders need to align properly to deliver electricity constantly to consumers. Today, a significant increase in gas supply has resulted in a ramp up in electricity supply from most of the power generation companies. Equally, there is significant growth in transmission capacity. Most the transmission projects previously uncompleted have now been completed. The wheeling capacity of transmission has improved proportionately to about 7,000 megawatts, MW of electricity. But, there’s a wide gap in what we are delivering. That’s where the challenge is. Electricity business is a global business. It’s nothing unique to Nigeria. The variables and enablers are known globally. There must be gas availability in the desired quantity and what can be piped from the location it is produced to the power plant. As long as one can do that optimally, there will be availability of electricity. The generation company must also have the capacity to take the gas and use in producing the power for the transmission company to be able to give the various distribution entities. But, it is evident from the state of the industry today that there are gaps. From the gas suppliers, a lot of money is invested in the development of gas fields, provision of infrastructure and supply facilities. They would need to recover their costs. The moment they cannot recover their investment, the appetite to continue to develop the gas fields would drop. To survive, they would begin to look for alternative markets where gas can be economically priced. From the generation perspective, the GENCOs import most of its machines and spare parts used in generating electricity. Again, don’t forget electricity is a regulated business in the country. There is a document called multi-year tariff order that puts into context different parameters for the tariffs charged by the GENCOs, Transco and DISCOs. The day the tariff is lower than the cost of production in the entire value chain, failure begins to set in. That is the position we have today in the Nigerian power sector. The gaps we are seeing is regulatory in nature, because the system is completely regulated, in terms of the standards, quality, pricing and operators activities. Pricing relates directly with availability of liquidity. If the commodity is appropriately priced, the production process would be oiled to continue to produce.
What do you think needs to be done to move to the next level
We need to dimension in the fullest essence possible what it would take to supply electricity – in terms of technical, legal, commercial, regulation, pricing, liquidity, infrastructure, spare parts and equipment, etc. When the market has been properly dimensioned, in terms of requirements for gas-fired, hydro and renewable plants, along with all the enablers in the true state they should be, all parties would then agree on each of their roles. Government should be committed to face the critical parameters involving monetary policies on interest rates on loans, exchange rate and inflation rate. These could be pegged at a certain levels to allow the power sector bring in the required infrastructure. But, we need to quickly dimension the issue of pricing for the sector to have stability in supply.
If you were to be government, what would you do to make the sector work
If government wants to industrialize Nigeria, it can say the cost of goods and services should not be high. A critical component of the analysis to achieve that agenda would be adequate electricity supply as a policy. I will say goods and services must be made to be competitive to allow export, or encourage industrial users of electricity to activate the country’s economy. With that, I would have aligned the country’s energy policy with industrial policy, by bringing down cost in order to unleash industrialization. Again, I would ensure that government helps to reduce the inefficiencies that make operators unable to provide cost-effective electricity. Government should not default in obligations.
If you were to adjust the regulatory environment, which area would you focus on
A regulator’s job is made easier under a climate of reasonable certainty. Where there is high degree of uncertainty, regulatory functions becomes almost impossible. Today, we have a seemingly better regulatory environment, despite challenges here and there. In the past we had significant policy summersault that did not allow for adequate planning. There shouldn’t be any disconnect between policy and regulation.
What about the issue of tariff structure for gas supply
There are three strategies here. Total energy driven market that allows costs to be fed in and priced, with the regulator’s role only to ensure that nobody makes excessive profit. But, free market is not practicable now. On the other hand, I will say: Let government provide these services. But, we know government alone cannot provide these services. This is where the public-private partnership comes in. Government can say the entire value chain of the energy sector is the only way Nigeria could become economically great. Then government could say: How do I help the players deliver electricity to consumers efficiently, effectively in a sustainable manner. The value chain starts with gas supply for the thermal plants. Without gas supply the entire value chain is useless. Government needs to sit down with everybody in the sector and dimension the requirements for the sector to succeed and accept the incremental stages the sector will go through and how to get there. After that, we can look at the financial and investment sides for the industry to have commercially viable price that would give the desired support and the expected result. Then, the realities of all the parties would be documented in a masterplan that would drive the entire energy sector value chain. Then, there must be that commitment to agreements. I always like to adopt an holistic and unified approach in looking at this issue. That is what is required to make the system work well. There must be regular gas to generation side of the value chain to deliver power optimally. Gas must not treated in isolation. Everything that would enable more electricity to be delivered to consumers must be resolved holistically. The more GENCOs are able to deliver power, the more money they make. This is why Egbin 2 expansion project is in the works to position the nation’s largest power plant for the growth we envision in the power sector in Nigeria and across the continent.
Privatization of the power sector was seen as the magic bullet that would change everything
Why did you say that
Because the Nigerian power sector is like the human body. When one has headache, it’s because of certain misalignment of one body organ against another, for which the headache is just a symptom. If one buys a pain reliever to treat the headache, one would be engaging in self-deceit. The proximate cause of the headache has not been dealt with. Providing half solution is worse, as is being done today. If one does not know the cause of the problem, chances are that one would be running around in circles, looking for scapegoats. Everybody in the power sector has been looking for who to blame for the problems. Nobody has taken time to know what the proximate cause of providing stable electricity in Nigeria is. The truth is simply that there is a serious misalignment in the system. This is where the problem is. The day there is an alignment of all the relevant players and elements in the power sector working together in synergy, electricity will become available on a regular basis.
But privatization seems not to have solved our problems
Yes, because of the misalignment I have talked about. Yet, in Egbin Power station where I am the Chairman, when it was privatized, it was generating about 400 MWs of electricity. Today, Egbin is generating 1,100 MW. In terms of contribution to the national grid, Egbin has increased its capacity significantly post-privatization. Without government putting in any money, the company has been able to get funding that has lifted the plant from what it was to what it is today. But, the mistake that was made by government after privatization was that the amount harvested from the exercise should have been reinvested in the system for the upgrade of the infrastructure. If government, with all the resources at its disposal, handled the system for over 53 years and could not provide all the infrastructure and meter all the customers, how would the same government expect the private sector to do all that in just five years of privatization, even with a growing population?
Why to Start a YouTube Channel for Yoga
YouTube is one of the most creatively driven platforms on the Internet right now. Thanks to YouTube, many artists, and unconventional professionals have found a place to share what they love, do something they enjoy and showcase their talents to the world, and do some pretty crazy stuff for people to see. And just by creating and sharing fun, they are able to earn money as well! Previously, it was difficult for people of their professions to leave a mark, and often, they did not make enough. However, with YouTube, creative pathways opened for everyone around the world.
Moreover, videos entered the commercial picture and changed the face of marketing. Prior to YouTube domination, people found it extremely difficult to watch or transfer videos due to their size. However, when YouTube came in, things changed drastically, and new avenues opened for all.
Starting a YouTube channel is a giant leap for anyone today. As a Yoga teacher, this must have been on your mind for some time. It is essential to know, however, the best possible way to start one so that you can do a better job at it.
How to start your YouTube channel for Yoga
There are a few things that you must keep in mind to run a successful Yoga channel on YouTube. To begin with, it is necessary to point out that creating a YouTube channel and making videos are relatively easier tasks as compared to marketing those videos and earning money out of them. However, the following tips will give you a head-up about where to start and how to get going to ensure you not only do what you love, but you also earn a profit out of it.
- Chalk out the plan for your video content: As a Yoga instructor, it is vital to base your content around Yoga and the general wellbeing of your viewers. You must be careful to present your content in a way that your audience will appreciate and be attracted towards. You can do this by researching and watching videos of established Yoga teachers on YouTube. The engagement on their posts will tell you what your audience is likely to enjoy, share, and engage with. Moreover, make sure you use great intros and outros. There are plenty of templates readily available to create impactful intros and inspire your YouTube end screen ideas. Additionally, there are intro makers and YouTube outro templates that you can use at your convenience.
- Pre-define your target audience: Before you delve into your channel, research about the kind of audience you are aiming to reach. They are your targets, and you should be as specific as you can get. Take inspiration from the active audience of some fellow predominant Yoga instructors on YouTube and tailor it to your needs.
- Make sure your videos are SEO friendly: SEO is a critical factor for your videos to get a better ranking and reach more people on YouTube. You can either learn all about it from tutorials and guides on the Internet, or you can even hire a freelancer to do it for you. Use video descriptions well to make your videos rich in keywords so that the YouTube algorithm can detect it and thereby recommend your videos to anyone who’s looking for related content.
- Follow a schedule to upload your videos: Creating a schedule is of utmost importance especially whenever you feel your motivation and energy levels declining. When you first create your channel, you will be enthusiastic and fired up. You will upload the videos according to the decided frequency, and things will be fine. However, once the enthusiasm subsides and you calm down, you will find yourself postponing and delaying the videos. Hence, to discipline yourself, you must create a schedule and make sure to follow it. Moreover, your audience will find it easier to follow your content if you have a routine, especially because Yoga is a lot about being punctual about the practice.
- Create your brand presence: Creating a brand presence is important to establish your credibility among your audience. Your brand, if it is famous and of repute, will ensure the trust of your clients and viewers. Your content will be viewed as authentic and your followers and subscribers are also likely to increase.
- Promote your content across social media: Your work as a creator does not end with uploading the video. After this, another part of the job starts- marketing. Use all the social media platforms available to promote your videos and reach many people as possible. Use SEO everywhere and make your content catchy and attractive. Concentrate on adding value, and people will automatically share your content with their friends and social groups. Use your social media to drive traffic to your YouTube account. This will also help you create a personal brand.
- Collaborate with brands and other YouTubers in your videos: Collaborations with different brands and companies, or other creators on YouTube will help you expand across many genres and reach a much larger chunk of the audience. If you want a diverse range of viewers, make sure to collaborate with influencers in those particular areas. This act will excite their audience and introduce your content to them. The exchange, if properly conducted, can bring you a ton of new subscribers within a short period. It will definitely widen your scope of success on YouTube.
As a YouTube creator, make sure to concentrate on your content. Think of all the ways you can add value to your viewers with Yoga and anything associated with it. Engage with your audience regularly and modify your upcoming videos to suit their needs. Ask for feedback and analyse your growth. Being a creator is easy, but being a creator who people want to watch, is a tough nut to crack.
Promoting Sustainable Nigerian Leather Products in the Global Market
The term “globalization” gained popularity in the early 1990s; with technological advancement, it has continued to shape modern everyday life, making it a global village whilst growing interdependence of the world’s economies, cultures, and populations. Countries have built economic partnerships to facilitate the continued surge in cross-border trade in goods and services, technology, and flows of investment, people, and information.
With a long history of producing high-quality leather products, Nigeria has a rich heritage of leather production, and to build a sustainable ‘Made-in-Nigeria’ brand, it is essential to promote Nigerian leather products in the global market.
Globalisation has made the global market indeed a global village through technology. To aid the balance of trade, countries must ensure it manufactures for local consumption and then produces with a mindset of exporting to foreign countries. To achieve this, its products must first meet global standards and receive acceptance from its local market. Nigeria is at a vantage point to promote African leather products in the global market, being one of the continent’s biggest producers and exporters of raw leather materials.
With advanced technology from developed economies to reduce the cost of production, coupled with their capacity to export, local consumers in developing economies have easy access to imported products which has adverse effects on the local economy, such as unemployment and a decrease in demand for locally produced goods. As the world continues to evolve, it is important to balance importing goods and supporting local businesses to improve GDP and the economy.
The benefits of manufacturing goods locally in a nation instead of importing should not be overlooked. It has a long-term value on a country’s economy than the latter. Any developing country seeking economic growth should endeavour to reduce importation to the bare minimum and utilize local resources, even if it does not have the required production capacity for export purposes. In the case where a country starts focusing on manufacturing its products locally, there will be an increase in the employment rate; the currency will be valuable and local culture will be strengthened. In Nigeria, for instance, products manufactured locally are referred to as “Made-in-Nigeria goods”.
The manufacturing sector in Nigeria has several sub-sectors, such as Petroleum and coal products, electrical equipment, appliances and components, printing and related support activities, textile apparel, leather and footwear, fabricated metal products, chemical and pharmaceutical products, food, beverage and tobacco products, paper products, furniture and related products, plastics and rubber products, and transportation equipment, among others continue to play a significant role in generating employment, increasing productivity, and driving economic growth for the nation. The sector has also contributed to the country’s quest to move away from oil dependency and lean towards the green economy.
One of the sub-sectors that has proven resourceful in contributing to the Made-in-Nigeria project and zero oil initiative is the Leather industry. With the total trade of leather products presently between $300 and $400 billion globally, experts believe that Nigeria could account for 15 to 20 per cent to hit $20 billion by 2025. According to recent statistics, the Nigerian leather industry is estimated to be worth over $1 billion and is expected to grow annually by 2.88% (Compound Annual Growth Range 2023-2028). As the third largest in Africa, after South Africa and Ethiopia, the Nigerian leather industry is also a vital source of employment and income for many Nigerians, especially those in rural areas. The industry provides employment to over 750,000 people, with many jobs in tanning, leather goods production, and especially the fashion industry.
Leather has continued to remain a versatile and essential material in the fashion industry, offering durability, luxury, and timeless style for both men and women. Due to its durability and luxurious appeal, it is widely used in various forms of fashionable items such as shoes, bags, jackets, belts, and other accessories.
In contributing to the growth of sustainable Made-In-Nigeria products, a game changer in the leather industry, Lagos Leather Fair, has consistently given leather designers the platform to showcase their expertise for six years now. Established and emerging designers now have the opportunity to showcase their designs and gain recognition in the Nigerian and African leather industries. The annual fair provides a much-needed and solution-based networking platform for leather designers and other players in Nigeria and other African countries to promote and showcase Made-in-Africa and local talent.
According to the founder of Lagos Leather Fair, Mr Femi Olayebi, “The annual celebration of the Lagos Leather Fair is a proof point of our unflinching commitment towards finding sustainable solutions to scale the African leather industry and ensure that the Made-in-Nigeria Project and Zero-Oil Initiative becomes a reality. For over five years, we have created an enabling environment for key players to maximise the potential of the leather industry. We are delighted about LLF2023 and look forward to its significant impact in Nigeria and across Africa.”
This year’s edition, themed Staying Ahead: Creativity, Collaboration, Commitment, is set to improve the narrative that encourages sustainable Made in Nigeria business. Through the proposed LLF Lab and Accelerator programme, leather designers will have access to mentorship and development programs from entrepreneurs who are already experts in the industry.
LLF 2023 will also feature a series of local and international speakers who will share insights on relevant conversations that affect the African leather industry and a well-curated series of workshops for up-and-coming designers willing to thrive as a manufacturer in Nigeria. The workshops for budding leather designers will feature branding workshops where the fundamentals of branding will be explored, a shoe-making workshop to provide a basic understanding of shoemaking techniques and a social media/marketing presentation using a case study review of different brands.
The Lagos Leather Fair is set to hold on June 17 and 18 at the Balmoral Convention Centre, Victoria Island, and just like the five editions done in the past, LLF 2023 is anticipated to continue from the previous years by strengthening the narrative that ensures the Made-in-Nigeria Project and Zero-Oil Initiative become a reality and fostering the nation’s talent and economic growth.
Sanwo-Olu Begs NLC to Shelve Nationwide Strike
By Adedapo Adesanya
Lagos State Governor, Mr Babajide Sanwo-Olu, on Sunday, appealed to the Nigeria Labour Congress (NLC) not to embark on its proposed nationwide strike on fuel subsidy removal slated for Wednesday.
The Governor, who implored labour leaders to exercise patience on its proposed planned strike, urged the labour leaders not to be political over the issue of the removal of fuel subsidy, saying President Bola Tinubu means well for the country’s economy.
He said the subsidy removal was in the interest of all Nigerians, urging them to support President Tinubu to run the affairs of the country creditably.
Governor Sanwo-Olu spoke yesterday with journalists after the post-inauguration Church Thanksgiving Service held at the Cathedral Church of Christ, Marina in Lagos.
He begged the labour leaders to join hands with the present administration at the federal level and be patient with the President in his commitment to turn the economy around and make Nigeria a better place for all.
“We are thankful that Mr President is a product of Lagos. We will pray for him and everything that he stands for. We believe he will replicate all the good things he has done in Lagos in our country, Nigeria.
“I want to wish and plead with our citizens even as NLC has said to us that they want to go on strike. It is not the time for a strike. During the campaign trail, every one of our presidential candidates did say that the first thing they were going to do is to remove the subsidy. So, what has changed? What has the current president said or what has he done that is different from what any of the other aspirants said they would do?
“We need to be very patient. He (President Tinubu) has not even done a week. So let us talk to ourselves and say that we shouldn’t turn it political. Let us wait and support this man. He had not done a week on the job. Let him go and reflect, and at the sub-national level, we are willing to support him.
“The point is no industrial strike will solve anything at this point, it will certainly not bring an end to the issue. The point will be how we are going to ensure that there is a turnaround in our economy. He has mentioned something about a better wage. We have started that in Lagos. We started it in January, so other parts of the country can also do the same. We don’t need to wait for the national government. We just need to reflect on what the challenges are in our country and let us solve the problem,” he said.
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