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FG to Review Power Sector Privatisation

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  • FG to Review Power Sector Privatisation

The federal government disclosed Thursday that it is considering a review of the power sector privatisation, commencing with the 11 electricity distribution companies (Discos) in the country.

The Minister of State for Budget and National Planning, Mrs. Zainab Ahmed, unveiled government’s new thinking in Abuja at the question and answer session with journalists, which drew the curtains on the 23rd Nigeria Economic Summit (NES) organised by the Nigeria Economic Summit Group (NESG) in collaboration with the Ministry of Budget and National Planning.

Ahmed stated that the government and other stakeholders had come to the realisation that something critical needed to be done quickly in the power sector.

The review of the power sector privatisation, she stated, would commence with the Discos.

Ahmed said: “The power sector has been privatised but I’m sure every Nigerian can attest to the fact that the privatisation has not worked well, in the sense of what we sought to achieve in terms of power efficiency.

“It has not yet happened. We have now come to the point where government which is a stakeholder in the power sector and other stakeholders must come together and decide and cede some of their holdings to new investors that will inject new funding; investors that have the expertise to grow the power sector that will serve Nigerians.”

She continued: “It’s a process that is on-going, it involves negotiating with the existing owners and also with the government in deciding the right level of holdings that will go up for another round of sale.

“The privatisation has not worked out. We discovered that many of the companies are indebted to the banks, making it difficult for them to make fresh investments in their infrastructure.

“All stakeholders must come together to grow the sector, especially in discussing with the existing owners.”

The minister explained that before any new investment is made in the sector, the contentious issue of tariffs must also be discussed and agreed by all stakeholders in order to attract new investors.

Explaining the government’s thinking to attract fresh investments in the power sector, given the tariff quagmire, she said: “We said the power sector would be opened up to new investors. But it’s very clear that many won’t be convinced with the level of tariff.

“That’s a discussion that has to be held with the new investors. It’s very clear to us that the level of tariffs that we have now is not sustainable but where the tariffs will go will be the subject of negotiations between the government, the existing investors, the new investors and consumers.

“We will try to attain some optimal level that will make an impact on the tariff structure. The starting point will be the Discos.”

On the 2018 budget proposals, the minister said her ministry was ready to meet the October deadline it announced earlier for its submission to the National Assembly.

“The 2018 budget will be presented to the National Assembly in October and we are still on course. The budget is ready, it will be going to the Federal Executive Council (FEC) first of all for approval before Mr. President now conveys it to the National Assembly.

“We are on course to deliver the 2018 budget in October. We hope that working together with the National Assembly, the 2018 budget will be passed on time in December so that in January, we can start with a fresh budget going forward,” the minister said.

On the federal government’s domestic borrowings which is crowding out the private sector, the minister said government had reviewed its loan strategies.

“Government does not go to borrow at 20 per cent. The market actually determines the borrowing, but the point we are making is that because government is borrowing heavily, the financial sector is now concentrating on lending to the government and the private sector gets little or no attention at all.

“Why would the financial sector want to lend when they can buy Treasury Bills at 22 per cent? So we have come to the conclusion that government must reduce its domestic borrowing to free the space so that the financial sector is enabled to borrow to the private sector,” she explained.

On the NES as a platform for the exchange of ideas on the economy between the private and public sectors, she said recommendations arising from the summit would continue to form the nucleus of government’s policies.

“The NES has become a tradition; an institution, if you like, and every year we look forward to it. This is a summit that is undertaken in partnership with the NESG, the Ministry of Budget and National Planning, and indeed the government,” she said.

This year’s summit with the theme: “Opportunities, Productivity & Employment – Actualising the Economic Recovery and Growth Plan,” the minister noted had intense deliberations for three days.

“We had discussions that centred around strengthening skills and competency, access to finance; we also had discussions around the legislation required to unlock opportunities to grow the economy,” she said.

She added that at the end of it, “we have a summit report, a draft of which has been handed over to us today to government”.

“We will begin to work again in partnership with the NESG and its organised committees on how to address all of the various recommendations that have come out of this session,” she explained.

Responding to a question on the chaotic traffic situation in Apapa, Lagos, the minister said the reconstruction of very critical roads in the port city had been approved.

She stated that the level of degeneration of the roads in Apapa had led to recommendations for total reconstruction, noting that the federal government was determined to do so.

On what the government was doing to ensure optimal performance of the ministers, she said a monthly performance chart with set targets had been prepared by her ministry.

She said there would be consequences for failure to meet set targets.

Also speaking at the event, Mr. Nnanna Ude of the National Assembly Business Environment Roundtable (NASSBER) described the consensus reached at NES 2017 as fruitful, calling for quick legislative actions on them.

He said: “There are pending bills and we always try to carry out the economic impact on them. For instance, the Competition Bill has the capacity to create 381,000 jobs annually, generate revenue of N148.3 billion yearly.

“It will also lead to a 10 per cent reduction in the prices of goods. For the National Transportation Commission Bill, it will also boost job creation and government revenue.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Nigerians to Pay N417.09bn in 4 Months for Electricity Consumption

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Electricity Consumers to Pay N419.09bn in 4 Months

Following the recent increase in electricity tariffs, the 11 distribution companies in the country are allowed to collect a total of N417.09bn from their customers from September to December.

The Discos had early this month announced what they called ‘new service reflective tariff’, which took effect from September 1, with the tariffs being charged residential consumers receiving a minimum of 12 hours of power supply rising by over 70 per cent.

The amounts recoverable by the Discos through the allowed end-user tariffs range from 61 per cent to 90 per cent of the total revenue required, according to the Nigerian Electricity Regulatory Commission.

The tariff shortfall, which is the difference between the Discos’ revenue requirement and the amounts they are allowed to recover from their customers by the regulator, will be funded by the Federal Government.

The media had reported that the Federal Government would fund a tariff shortfall of N104.5bn that will be recorded by the Discos in the four-month period, according to the Nigerian Electricity Regulatory Commission.

Ikeja Disco is allowed to recover N66.52bn (90 per cent of its total revenue requirement) from September to December, a NERC document showed.

Eko Disco is allowed to recover N48.46bn (86 per cent); Kano Disco, N34.13bn (84 per cent); Abuja Disco, N49.16bn (83 per cent); and Enugu Disco, N38.81bn (82 per cent).

The amounts recoverable by Kaduna Disco is N35.22bn (82 per cent: Ibadan Disco, N54.61bn (78 per cent); Benin Disco, N34.94bn (74 per cent); and Yola Disco, N13.34bn (71 per cent).

Port Harcourt and Jos Discos are allowed to recover N23.63bn (68 per cent) and N18.27bn (61 per cent) respectively.

NERC said the Power Sector Recovery Plan provided for a gradual transition to cost-reflective tariffs with safeguards for the less privileged in the society, adding that full cost-reflective tariffs would be charged by July 2021.

“The Federal Government, under the PSRP Financing Plan, has committed to fund the revenue gap arising from the difference between cost-reflective tariffs determined by the commission and the actual end-user tariffs during the transition to cost-reflective tariffs,” it added.

According to the commission, all the Discos are obligated to settle their market invoices in full as adjusted and netted off by applicable tariff shortfall approved by the commission.

It said the Discos would be liable to relevant penalties/sanctions for failure to meet the minimum remittance requirement in any payment cycle in accordance with the terms of its respective contracts with the Nigerian Bulk Electricity Trading and the Market Operator, an arm of the Transmission Company of Nigeria.

The Discos only collect an estimated 24 per cent of the tariff revenue, while the balance goes to the TCN, generation companies and other industry stakeholders, according to the Association of Nigerian Electricity Distributors.

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Economy

Nigeria Emerges 13th Rice Producer Globally, 1st in Africa

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Nigeria is the 13th Rice Producer Globally and 1st in Africa

Following the series of adjustments made by the federal government to stimulate local production of rice and curb the large inflow of foreign-produced rice, Nigeria has emerged 13th largest rice producer in the world and number one in Africa just two years after President Buhari moved against the importation of rice.

The Minister of Agriculture and Rural Development, Muhammed Sabo Nanono, disclosed this at the commissioning of the Agribusiness Incubation Centre of Federal University Dutse, Jigawa State.

In a statement issued by Ahmed Aminu, the Technical Assistant to Nanono, the minister said the nation has managed to transition from a net importer of the commodity to a sizeable producer that is gradually moving towards self-sufficiency in rice production.

Nanono said president Buhari has consistently pursued agricultural revolution to ensure that Nigeria attains food security and wealth creation from within.

The Minister said “the rice production drive as championed by President Muhammadu Buhari administration has triggered off massive industrialisation with the springing up of countless rice milling facilities across the country generating tremendous job opportunities down the rice value chain as well as creating sizeable wealth for many.

Sabo Nanono further stated that Kano State alone has 14 integrated rice mills with the capacity to produce between 180 and 400 metric tonnes per day. He added that another 32 integrated mills also abound in Kano with a combined production capacity of another 100 to 120 metric tonnes per day.

Thousands of rice milling clusters can also be found all over the federation, especially in the northern part, which adds up towards the attainment of tangible self-sufficiency in the staple food item as would enable Nigeria to sell rice to our neighbours in the not too distant future.

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Economy

FG Establishes New Crime Agency, Proceeds of Crime Recovery and Management Agency

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President Muhammadu Buhari

Proceeds of Crime Recovery and Management Agency Established by Government

The Federal Government has approved the creation of a new crime agency called “The Proceeds of Crime Recovery and Management Agency” to better manage the loots recovered from financial criminals by the growing list of anti-graft agencies established by the government.

The new agency was approved on Wednesday at the Federal Executive Council (FEC) meeting presided over by President Muhammadu Buhari.

The president said the new agency seeks to move the fight against corruption to the next level as there is no agency of government that “can give you off-head the number of landed assets, number of immovable assets, the amount in cash that are recovered by the federal government by way of interim forfeiture overweigh of a final forfeigture.”

“So, it is indeed overtime a kind of arrangement that is not uniform and consistent.”

He added: “Next level of transparency, next level of accountability in essence, will have in place an agency of government that is exclusively responsible for anything proceeds of crime.

“A one-stop shop arrangement by which all the assests that are recovered arising from crimes that are indeed vested in the federal government, you have a one-stop arrangenet where you can have an information. As it is for example, the Federal Ministry of Justice is only in a position to account and giving comprehensive account of what
recoveries were made by the ministry.

“But any recovery made by the police, DSS, the Ministry of Justice is not in a position to know. So, for the purpose of decision making and policy, the federal government is not in a position to have a wholistic appreciation.

“So, by the bill that is now presented for the consideration of the council, we’ll have a law that establishes an agency, and secondly, an agency.

“And as you rightly know, Mr President has sanctioned ever since he came on board, that there should be a budget line, a budget item for recovered assets.

“So, if you have a budget item for recovered assets, this agency will now be in a position to provide information to the Federal Ministry of Finance, Budget and National Planning on demand as to what amount is available for budget purposes, thereby establishing the desired transparency, the desired accountability which has not been available before now.

“So, it is about a memo that seeks to establish a legal framework, that seeks to establish institutional framework, that seeks to further take the fight against corruption to the next level by way of establishing transparency, accountability and making the possibility of forfeiture a proceeds of crime easy through the sanctioning of non-conviction based forfeiture among others.”

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