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That N10bn Solar Energy Proposal

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Solar energy - Investors King
  • That N10bn Solar Energy Proposal

The Federal Government’s N10bn proposal for the electrification of 37 federal universities and seven university teaching hospitals across the country came under intense criticism at the meeting of the Senate Committee on Power, Steel Development and Metallurgy on Thursday, December 14, 2017. And rightly so.

At the budget hearing, the Managing Director, Rural Electrification Agency, stated that N10bn had been earmarked for the project, “Rural Electrification Access Programme in Federal Universities.” While the news media indicated that the Senator Enyinnaya Abaribe-led committee was deeply concerned at the insensitive preference of streetlight for universities, amidst several other priority needs begging for government’s attention, the Ministry of Power, Works and Housing has since come out with a clarification stating that the budgeted N10bn is for a “Rural Electrification Access Programme in Federal Universities” that is expected to “rejuvenate the education system.”

I will suggest that the concern by the Chairman of the Senate Committee on Power and his colleagues holds great validity, for the following reasons –

First, A review of “Part IX – Rural Electrification” of the Electric Power Sector Reform Act, 2005 leaves no ambiguity as to its focus on providing electricity to rural dwellers. Indeed, a review of any definition of the word, “rural”, would indicate a consistency of such areas as being located outside of towns and cities. Thus, the question arises, since when did universities and hospitals, typically located in the heart of cosmopolitan and urban centres, qualify to be considered under the Rural Electrification Agency’s mandate?

Second, with an estimated 55 per cent of urban areas currently electrified versus 35 per cent electrification of rural areas, should the N10bn not be put into the Rural Electrification Fund that is specified under Section 88.12 of the EPSRA to facilitate investment in the electrification of these areas that are typically not commercially viable, due to demographic sparseness and lack of affordability? If we are to address the issues that typically bedevil our rural areas – lack of job creation, poor quality of life, fire, health and environmental challenges from the use of wood burning and kerosene lighting up rural homes, etc., surely, funding the electrification of rural Nigeria holds greater value for the use of this money. The use of the N10bn will go a long way to meeting the following objectives of the Rural Electrification Fund – a) Achieving equitable regional access to electricity; b) Expanding the grid and developing off-grid electrification; c) Providing subsidies for consumption that will stimulate innovative approaches to rural electrification, etc.

Third, implementation of the delivery of solar-powered energy to the universities and hospitals, comparatively, is not cheap. On the average, wholesale price of solar energy is N39.9/kWh versus N16.9/kWh for on-grid electricity. This fact is even more important when we take into consideration the fact that some of these institutions receive close to 24 hours of electricity supply, as premium customers, in most of the electricity distribution franchise areas where they are located. In plain terms, why should the Nigerian taxpayers be saddled with purchasing a product for over two times the cost of what is readily available to these institutions?

If anything, this N10bn solar power proposal by the power ministry seems to be another in the increasingly inexorable march by the Federal Government back into state-ownership of generation assets (on the back of the General Electric fast power project that is being funded by the Federal Government), contrary to the privatisation objectives of the National Electric Power Policy, 2001 and EPSRA. The policy and the law resulted from a recognition that the government, due to decades of inefficiency, wastage of taxpayer funds and corruption, in operating the state-owned electric utility company, Nigerian Electricity Power Authority, has no business operating in a sector that should be private sector-driven. Unfortunately, here we go again.

Fourth, one is not sure how the expenditure of the proposed N10bn equates to the rejuvenation of the educational system, as stated by the MPWH. I agree that such rejuvenation is critically needed in a nation that has seen a dramatic decline in the quality of the education that its citizens used to enjoy. I would suggest, however, that greater impact for such rejuvenation could be best achieved by investing in paying teachers better salaries, providing academic supplies, re-establishing higher standards of academic excellence, rehabilitating physical infrastructure, etc. – these are the mandate of the Ministry of Education. Additionally, if the objective of the N10bn initiative is to “rejuvenate the education system,” does the MPWH also plan to subsidise private institutions, for equity and for the achievement of comprehensive results?

Unfortunately, this proposal comes at a time when the power sector is facing critical and strangulating financial challenges to building the capacity for the sustainable electricity supply that will drive the growth of our economy. The liquidity constraint means that the electricity value chain continues to be deprived of the funding needed to inject the efficiency that is desperately needed in the sector. As a matter of fact, the Nigerian Electricity Supply Industry is burdened with a market shortfall that may eventually collapse the sector, without reasonable government intervention.

In view of this, I suggest that the N10bn can be better and efficiently utilised by the government in expanding the national grid, by building up the capacity of the Transmission Company of Nigeria, a wholly government-owned company, to wheel energy sustainably and reliably, given its history of being consistently underfunded and its critical role in the value chain. Alternatively, the money could be applied to subsidising the consumption of the lifeline electricity consumers, who struggle with electricity affordability issues, as seed money for the Consumer Power Assistance Fund, which still has not been set up, as a fundamental requirement of the EPSRA. The REA, going outside of its mandate, endangers the hopes of rural dwellers for electricity that will improve their lives and creates opportunity for wastage of funds that are desperately needed for priority projects in the sector. In this era of “Change” as a mantra or common refrain, we must move away from politicised and ill-thought-out policies to that which holds the greatest good for greatest number of our citizens.

Thus, it is easy to understand why the Senate Committee on Power, like many Nigerians and major stakeholders in the sector, cannot understand why the REA wants to spend a huge amount of money to provide solar power in universities and hospitals when rural communities that require electrification, for which the agency was created, are left in darkness – whether its proposed N10bn initiative is for street lighting or rejuvenating the educational system.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness - Investors King

Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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Private employers

As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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