Foreign investors interested in Nigerian power sector

Darkness beholds the land. Who will light us up?

Foreign investors stand ready to pump billions of dollars into Nigeria’s dilapidated power sector if the government can sort out the regulatory framework, a leading African infrastructure financier told Reuters.

Nigeria is home to Africa’s biggest oil and gas industry yet is plagued by chronic power shortages, leaving its 140 million people without reliable mains electricity, and businesses and wealthy individuals reliant on expensive diesel generators.

The power crisis is a major brake on growth in sub-Saharan Africa’s second-biggest economy. Solving it could unlock the potential of a country dubbed “Africa’s sleeping giant” and yield huge returns for investors.

“There is a lot of interest, we’re certainly seeing that from a number of foreign investors,” Andrew Alli, chief executive of the Africa Finance Corporation (AFC), said in an interview in his office in the commercial hub Lagos.

“First of all there are large companies who specialise in the power space who have several billion dollars available to invest and we’ve seen a number of those companies pass through Nigeria and express some interest in coming in,” he said.

“We believe that if the environment is right they will come in and invest.”

President Goodluck Jonathan, who took office in May after the death of President Umaru Yar’Adua, has made improving domestic power supply one of his top priorities.

But Nigerians have heard such promises before and his administration has little time left to act before presidential elections due by next April.

Jonathan last month appointed Barth Nnaji, an engineering professor and former science minister, to head a taskforce on boosting power supply.

Nnaji, who runs Nigeria’s first indigenously owned private sector power company and knows the challenges first hand, last week promised faster reforms to encourage foreign investors to take part in a planned privatisation programme.

Jonathan has said Nigeria will privatise generation and distribution next year.

“From a debt financing point of view, we definitely see a lot of interest from the development finance institutions like members of the World Bank group, the African Development Bank, who also would be very willing to provide financing for these projects,” Alli said.

“The financing is there, provided the regulatory environment allows for well-structured, properly bankable projects.”

The AFC, which has a capital base of more than $1 billion and is backed by Nigeria’s central bank and leading commercial banks, was set up in early 2007 to spearhead infrastructure funding around the continent.

via Reuters