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FG Urged To Adjust Electricity Tariffs



By Bukola Idowu and Kayode Tokede, Lagos –

The Africa Finance Corporation (AFC) a pan-African multilateral development finance institution saddled to bridge Africa’s infrastructure investment gap through the provision of debt and equity finance has urged federal government to ensure be an adjustments in electricity tariffs to attract investments into the power sector.

The managing director AFC, Mr. Andrew Alli, speaking at the 2017 annual conference of the Finance Correspondents Association of Nigeria (FICAN) in Lagos at the weekend cited the importance of power and the need for it to attract more investments into the sector especially as government is unable to fund all its infrastructure deficit an adjustment would attract investors.

Alli who was represented by the Head of Advisory, Mr. Fola Fagbule,  said the government needs to invest N100 million a year the government in infrastructure yearly sourcing for funding from both the private or public and to invest.

He however noted that despite the investment opportunities and attractive returns on investments in the country, many constraints have been a hindrance to infrastructure funding in the country. “In spite of the privatization that has happened in electricity, there are issues in every part of the value chain and when you talk of transportation, there are a lot of question marks.

“There are three things we see in AFC that must be in place in order for private sector funding to be sustainable. Something that is not spoken often is that of a set power tariff. This is a very touchy and political issue.

“The reality is that if we do not have an economic cost reflective tariffs that is tariffs that would incline investors who would want to come and build on this infrastructure the desired funding cannot be achieved. There is need for a political will to ensure that appropriate tariffs are set.”

Alli also  said the government is getting to its limit of infrastructure financing  which requires N3 trillion investment in 30 years or N100 billion every year, it  requires establishing adequate  environment for the funds to  come into the country.

According to him, “Government is getting to its limit on its ability to spend as it is increasingly borrowing. At N64 billion, we are significantly constrained, which is where private sector comes in”

He said that infrastructures are tied to revenue generation, of which adequate tariff, government commitment to ensure 100 per cent compliance none with contractual terms, and  proper sanction regime for both any breach of contract terms either by government or the investor.

Also, the Director General of the Infrastructure Concession Regulatory Commission (ICRC) ,Chidi Izuwah, stated that while Nigeria is open to several financing options, the constrains facing the infrastructure sector make it hard to get the desired funding.