Energy sector investor, Mr. Gbenga Olawepo-Hashim has called for the lowering of interest rate in the nation’s banking sector from its current double digit figure to a single one to enable investors access finance at reasonable lending rate towards the much needed development in infrastructures.
Olawepo-Hashim, who was guest speaker at the 4th Imperial College, London, Nigerian Student Society Summit held at the weekend, regretted that the Nigerian manufacturer can hardly be competitive in the international market with the unacceptable high interest rate.
He argued that the prevailing interest rate for accessing finance in Nigeria which stands at 22%, lowers the competitive chances of the Nigeria manufacturer in relation to what obtains in other countries, like in “South Africa, where it is 8.5%, in Egypt 7.8%, in China 3.4% and in the US 2.33%”.
The Chairman of Bresson AS Energy dismissed excuses around insecurity for the high interest rate. “Egypt has its fair share of crisis like Nigeria, so insecurity cannot be a reason”, he noted, adding, “There has to be changes in lending policy to lighten the heavy burden on the manufacturer, who is already burdened by poor electricity infrastructure”
He continued: “Most manufacturers, particularly small scale producers in Nigeria have had to bear huge cost through self-generation of electricity using diesel and petrol as fuel. The self-generating energy supplier mode has a price tag of N90/kw compared to N22/kw grid price of electricity”
Olawepo-Hashim stressed that the 2005 Electricity Sector Reform Act was right in addressing the challenges facing the sector through the active involvement of the private sector in the transformation of the electricity industry.
“Unfortunately” he regretted, “No new IPP has been commissioned in Nigeria in the past five years. In fact, no single turbine was imported to Nigeria last year, and none has been imported this year, compared to 15GE turbines that were shipped to Egypt this year alone”
He went on: “Ten years running, this reform has been hampered by the difficulties associated with the private sector participation in infrastructure. These issues now demands a sense of urgency. They must be addressed right now! Policy formulators only lament and sing inadequacy of power, while failing to take the practical executive actions that does not need legislation to achieve”
From a personal investor experience, he said some immediate steps need be taken if the sector is to be “recalibrated”. These steps include dismantling the delay in licensing of IPPs and the signing of Power Purchase Agreement (PPA), through an executive guideline for the industry that defines Standard Operating Procedures for agencies and institutions.
Besides, Sovereign Guarantee would have to be made available to all PPAs that the Nigeria Bulk Electricity Trading Company (NBET) concludes and with the requisite 90-120 days LC to ensure bankability of such agreements.
Government should also ensure that licensed Distribution companies are able to sign PPA with the Generating Companies (GENCOs) and IPPs for the supply of Power without the undue meddlesomeness of the Nigeria Electricity Regulation Commission (NERC), amongst others.
He added that Nigeria is a good destination for investment as it has a strong middle class, posts a relatively high return on investment, regretting that its infrastructure gap is still a challenge to the business opportunity. However, the challenges are surmountable, which could make the country surpass the prediction of Price Water House Cooper to become the 9th Economy by 2050, if the right things are begun.
At the London event were former Managing Director and Chief Executive of Access Bank, Mr. Aigboje Aig-Imoukhuede, Managing Director of Sahara Energy, Mr. Tonye Patrick-Cole, Former Minister of Communication, Dr. Omobola Johnson, and Executive Director of Bresson AS Energy, Dr. Funmi Olawepo-Hashim, Educationist, Prof. Chris Imafidon, and Baze University Lecturer, Dr. Abiodun Adeniyi, amongst others.