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The Executive Vice Chairman of Alpha Africa Advisory, Mr. Mustafa Chike-Obi, has called on the Federal Government to liberalise the power sector for profitability and attract over $30 billion investments in three years.
Chike-Obi stated this Monday in Lagos at the monthly capacity building forum of the Finance Correspondents Association of Nigeria (FICAN).
According to him, if the power business is made profitable, whereby tariff on electricity is removed and power companies allowed to sell at market determined price, it would attract $30 billion worth of power sector investments in three years. He explained that in some places, residents get about 90 per cent of power supply and they are paying roughly N50 or N60 per kilowatt hour, for instance. He said a power generating set costs about N160 per kilowatt hour with its attendant inconveniences.
He added: “Most people who have generating set will be happier to pay N160 per kilowatt hour of electricity, but government said no. We can only charge Nigerians N60 per kilowatt hour, yet nobody has it. Nobody is looking for it and nobody is interested in more investment to create more power.
“But if you allow these power companies to sell at N160 per kilowatt hour, they will make so much money from the rich people at the beginning, that they will start creating more power. Look at what happened with the telephone. At the beginning, SIM card was N70, 000 and only a few rich people could afford it and the companies made so much money. Today, almost everyone has two phones because SIM cards are free” .
To Chike-Obi, when every area of the power sector is losing money because government which owns them wants power to be supplied at N60 per kilowatt hour, it is not a good business.
According to him, all of the companies involved in power supply, owe money and will remain insolvent, even as power supply re- mains below expectation.
“So, you won’t get power until you realise that power is a capital good and should be priced accordingly,” the global investment expert said.
The former AMCON boss suggested that the major problem Nigeria has is the three subsidy regimes that are killing the economy. They are foreign exchange subsidy, fuel subsidy and electricity subsidy.
He explained that those who believed that “the fuel subsidy is for the benefit of the poor are wrong because the poor man who pays transport to work gets little or no subsidy.
The average rich person in Ikoyi is getting approximately a hundred times more fuel subsidy than the poor man in Somolu for instance, should subject citizens’ earnings to income test.
