Acting President Yemi Osinbajo said on Tuesday that the federal government is investing some hundreds of billions of naira in an assurance scheme that would provide the much needed liquidity in the power sector and attract additional investments.
Speaking in Abuja at the opening session of the second edition of the Africa Finance Corporation AFC conference tagged AFC LIVE 2017 and titled, ‘The Infrastructure Revolution-Connect, Engage, Innovate.,’ Osinbajo said the guarantee became critical following funding challenges being experienced in the entire power sector value chain.
“The government has therefore devised a payment assurance guarantee and putting in some 700 billion of money into some kind of an assurance scheme that ensures that the entire value chain comes back to some form of liquidity that investments can come back into the sector,” the Vice President said,
“We are also looking at finding additional investments, especially in distribution so that the system can be refurbished, revamped and bring in new technology, there is a need to invest heavily in distribution,” the president added.
Speaking at the event which had about 650 participants made up of investors, captains of industry. Policy makers across Africa, the Acting President said government has identified some crucial sectors and projects, especially in power that would drive its newly launched Economic Recovery and Growth Plan.
He said though the power sector had been widely applauded, there are still some lingering issues, particularly liquidity still impeding development in that crucial sector.
He said the illiquidity in the sector is heightened by the inability of the Distribution companies to effectively collect payments from their customers as well as the high resistance to a cost effective tariff.
He said government has recognised the problems, saying though there are still issues with the transmission, distribution and collection, the value chain is illiquid.
“Naturally, most people will not want to pay more for power, but that it is s chicken and egg situation,” he stated.
Commending the AFC for investments so far in Africa, the Acting President said the next ten years seem even ‘rockier’ for the continent considering the dwindling sources of global funding, as he urged the need to restrategise.
“AFC and other development institutions must find new ways of engaging with government,” he stated, calling for private sector investments into infrastructure development.
The finance minister Kemi Adeosun who also featured as one of the panelists told the audience that President Buhari’s administration os committed to infrastructure building and has been able to raise capital expenditure to 30 percent of total budget from about 10 percent which she said was challenging infrastructure building.
“The first thing we had to do was to ensure that government spends at least 30 percent of its budget on infrastructure and that we have achieved. We have released N1.2 trillion in the last twelve months on capital,” she stated.
She said government has dimensioned the size of the problem and found it needs to first, bring in the private sector. “Second, we need to crown in additional money in the federal structure, so we need to have partnerships between the federal, State governments
“We also need to bring on the private sector, Public Private Partnerships have to work, there is no alternative.
“We have to look at the legacy projects, we have to understand where they went wrong. Fix the ones that are fixable. We have to create frameworks that encourage investors to come in
“We believe that under the PPP, is where the AFC and other development partners should come, to show case these opportunities to the private investing community.”
Adeosun told the audience that there were no challenges to creating the needed infrastructure investments in tej country, saying that “Nigeria is in a hurry. We have gone through a very difficult period, so Nigeria is in a hurry to develop, if anything, it is really just developing and packaging the projects.
“The opportunities are here, we have all the ingredients to be successful. What we need to do now is to package our products and begin to showcase the to the world and investing community,” she told the audience.
Onyinye Nwachukwu, Abuja