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Tariff reform will promote power sector investment – FBN Capital

By on October 20, 2015

FBN Capital, the investment banking subsidiary of the FBN Holdings Plc, says investment in the power sector can be encouraged through sustainable and consistent cost-reflective tariffs.

A Vice-President at the firm, Mrs. Abiola Baruwa, stated this at a stakeholders’ forum entitled ‘Managing the risk of releasing private sector capital for investment in the power Sector.’

The forum was part of the 2015 Powering Africa conference held in Abuja recently.

At the forum, discussions were held against the backdrop of the need to encourage foreign investments in the power sector given that local banks were instrumental in providing acquisition financing during the privatisation of the power sector.

A statement by FBN Capital quoted Baruwa as saying, “The major factors foreign investors are looking at before investing in the power sector are consistent and sustainable cost reflective tariffs and a substantial de-risk of the power sector.

“The power sector can be de-risked by allowing competitive gas prices, the power sector regulator ensuring consistent and stable regulation, clear direction of government’s policy on transmission (including government’s clear funding plan for transmission which needs to be executed immediately).”

She added that “until these factors are properly addressed, international investors will continue to be skeptical about investing into the sector.”

According to the vice-president, a cost reflective tariff is a critical requirement for prospective local and international investors in the nation’s power sector.

She urged the Federal Government to provide requisite legislation to unlock the largest pool of local funding available, which is the over N5tn pension fund deposited with pension fund administrators.

 

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