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India offers $100 mn to Nigeria

India is offering a helping hand to Nigeria in the country's bid to generate enough electricity to meet the ever-growing demand in Africa's most populous nation.

business Updated: Jun 24, 2012 13:16 IST

India is offering a helping hand to Nigeria in the country's bid to generate enough electricity to meet the ever-growing demand in Africa's most populous nation.

Of an estimated $500 billion that the sector needs to improve, India has committed a $100 million line of credit under a memorandum of understanding to be signed soon. Though this contribution might be seen as a drop in the ocean considering the fact that Nigeria needs so much in order to satisfy the growing demand of its 160 million population, experts say the contribution of private Indian companies is helping to improve the sector.

National Electricity Regulatory Commission (NERC) Commissioner Eyo Epko says the power sector will need an average of $20 billion per annum to achieve 7,500 MW generation, excluding domestic gas investments. In addition, the country would need $500 billion investment to guarantee constant supply. The country would also require the right calibre of professionals and this is being provided by India.

Speaking at a ceremony to inaugurate a plant for the manufacture and repair of power transmission equipment, Indian High Commissioner Mahesh Sachdev said: "We have also been engaged in supporting the Nigerian power sector through professional capacity building in India under our ITEC training programme."

The training of these professionals is very important, Epko said, because more investment would be recorded by 2017. He was optimistic that the state governments would develop the capacity to regulate market operations within their boundaries.

More investments means more business for foreign companies keen on developing the sector. Sachdev said 12 Indian companies have expressed keen interest in the ongoing power privatisation programme. India, which is Nigeria's second largest trading partner, "has both the capacity and expertise to support Nigeria's ambitious development plans in the power sector", Sachdev added.

He commended the Skipper Group, an Indian company that has a long association with Nigeria. "Unlike many other foreign concerns which are content to execute projects on tactical basis, India's Skipper Group has over the past decade invested in this country to create manufacturing and repair capacity, transfer of technology and generate employment."

"The Group has shown its faith in Nigeria's power sector and is planning to expand its operations here from transmission to power generation and other areas of economic activity in Nigeria," Sachdev added.

Participation in the sector by such foreign companies is a welcome news to Nigerians. Ekpo said there is the need to attract private investors to the sector to remove key challenges such as corruption and poor management. In addition there are some bottlenecks that are yet to be removed.

Ekpo identified the absence of a cost-reflective tariff as a key reason "why the power sector has failed to serve Nigerians in the past three decades", adding: "Without a cost-reflective tariff, no utility provider will enter the market."

Power Minister Bart Nnaji admitted that there was a "gross" deficit in the country's electricity tariff but hoped that reforms in the sector would help correct this. "We know there are gross deficits but just give us a chance and you will see power grow in the country," he added.

Nnaji said the government was preparing to inaugurate power plants in some designated locations that would boost electricity output in the country. Some people have doubts on the government's proposal because of past experiences.

Trade Union Congress President Peter Esele said the government last December promised to increase power generation by 4,000 MW but there was no explanation as to why this target was not met. "We have not also been told what happened to the huge expenditure on that sector so that we understand their challenges and why it was not met.

First Published: Jun 24, 2012 13:13 IST