Nigeria's power minister offers assurances on security
Nigeria's minister of power, works and housing, Babatunde Raji Fashola, tells Natasha Turak that the country is widening its energy portfolio, confronting security challenges, and generally working to reassure nervous investors.
Q: There has been a 74% drop in foreign investment into Nigeria over the first two quarters of 2016. In terms of investment into the energy and power space, what kind of measures is your ministry taking to restore confidence in the country?
A: I don’t think there is [a lack of] confidence in Nigeria, in the way that the most contextualised power investors are behaving. We had an unduly lengthy electoral cycle in 2014, which went right into 2015. When elections are close, investors hedge and review their positions, and when that process goes on for a time, like it did in Nigeria, you see uncertainty. In terms of market opportunities and potential, we need to do more of what the president has started: [a better] rule of law, accountability, strengthening the judicial process and reforming government to become more responsive, and [we need to be] more clear on [the country's] position regarding budget policies and so on. The excitement that I have seen regarding Nigeria’s energy, housing and public works sector inspires me, [and shows] that we’re on the right path.
Q: With incidents of pipeline vandalism, gas not being pumped and other such problems, what sources of energy is the current administration pursuing to alleviate the suffering of Nigerians in the power sector?
A: I think the point really is to recognise that we are able to generate energy from many sources. We have focused on gas, but we are focusing more now on all the other sources – small hydro, medium-sized hydro, big hydro such as the Mambilla power plant, which will take some time to build. We are also focusing on coal and on solar. We have just signed an agreement with about 14 companies to pursue that. We’re really dipping our feet into the renewable energy landscape now, and we intend to be very active [in this field] as we go forward.
Q: How are you getting this message across to investors who have concerns about Nigeria’s energy security?
A: We released a document on the energy mix and it started out as an investment guide for showing investors where to put their money – for solar, rig, hydro, gas, coal and others, and it ended up also being a security document to put us in a place where we will no longer be vulnerable to any single feedstock of power going forward. Most importantly, it gives us the opportunity to send a message that we’re addressing, long term, the temporary setbacks we are seeing in the gas-prolific regions as a result of vandalism. We’re providing a document that provides energy security for the country, for the future, so that no feedstock region would be able to hold the country ransom again.
Q: Certainty is a big issue facing investors in Nigeria right now. How are you assuring investors that they are going to be paid, in particular the contractors in the power sector?
A: I think the issue that has characterised the public debate is the problem of exchange rate access, and that is a market issue. I think the policies that the government has brought in have brought some confidence back into the sectors. Our government has shown that we play by the rules and that is the biggest assurance that anyone can bring – that we are subject to the rules of engagement. That’s why there is arbitration [in Nigeria], there is a judicial system, and we will subject ourselves, as we have demonstrated, to due process. But we hope that with investment, we are even more responsible to the local investor. The confidence that the local investor gives us is what encourages the external investor to come.
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