Omotola: Fashola Should Resign If Power
Remains Epileptic for Two Years

Says tariff hike is not solution to epileptic
power supply. Gboyega Akinsanmi
The Group Managing Director of CFL Group
of Companies, Mr. Lai Omotola, at the
weekend asked the Minister of Power, Works
and Housing, Mr. Babatunde Fashola “to sign
an indemnity to Nigerians that he would
resign his appointment if electricity remains
erratic for another two years.”

Omotola, also Publisher of InfraWatch
Nigeria Limited, rejected the recent 45 per
cent increase in electricity tariff, noting that
from all indications, tariff hike “is not a
solution to the country’s epileptic power
supply.”

He thus challenged the minister to resign
from his current appointment if the
country’s electricity remained epileptic for
two years during an interactive section with
some journalists in Lagos.

At the session, Omotola said the federal
government used public funds to provide
subventions for private companies that
bought power assets under the
administration of former President Goodluck
Jonathan.

“That subvention from the Central Bank of
Nigeria (CBN) has come. It is just a drop in
the ocean. The CBN provided subvention for
the companies to pay for gas. It has not
worked. Even though it has not worked,
another subvention is coming.

“If the minister is indeed sure of himself, let
him sign an indemnity to or guarantee
Nigerians that if the power is not stable in
two years, he would resign his appointment.
We have started counting again. Our stake in
this matter is that of transparency and logic.”
Omotola said nothing would change
tremendously in two years, even with
electricity tariff hike, citing the technical
capacity of the indigenous companies that
bought the power assets and their financial
capacities to bring together necessary
infrastructure that could guarantee steady
power supply.

He lamented that the federal government
only looked at the kind of partnership the
technical partner “has with the indigenous
investor without much emphasis on financial
wherewithal. It is not enough for indigenous
companies to just bring technical partners.
“It will have been better for indigenous
companies to bring the technical partners
that will also bring equity into that
partnership. But that is lacking today. If the
technical partners bring equities, the
difference is that they are no longer
contractors to the indigenous companies.

“They are also investors. The indigenous
companies will now be able to leverage on
their financial and technical competence.
That was missing in the bidding process. As
far as the power sector is today, we do not
have a dominant foreign equity player,” he
explained

Omotola said the federal government
“understands that there is a financial
problem. The federal government also
understands that the problem was actually
created by the inability of these indigenous
investors to generate adequate funding that
the electricity industry really requires.

“To come clean that there is a financial
problem, the federal government decided to
use another strategy. What is this strategy?
The strategy is help the indigenous
companies through the increase of electricity
tariff. What is the tariff going to do? It will
only achieve one objective.

“It will only help the indigenous companies
service the loans at the expense of the
consumers. When the loans are serviced,
there could be a little of an opportunity for
the banks to now raise adequate capital for
expansion.”

He said of $2.6 billion realised from the sale
of power assets, the Nigerian banks
“provided about 80 per cent of the fund. It
should not be that way because foreign
investors are primarily supposed to bring
majority of their own equities in terms of the
capital mix, where you find investors bring
at least 60 per cent equity.”

He said the Nigerian banks “can only finance
projects for two or three years. Between two
and three years, our banks want to see their
funds coming back. So, our banks are not
suited to fund the electricity industry. The
minister said no bank would want to fund
the industry because the price is not
bankable.

“Can Fashola tell us, which of the bank he is
referring to? If Fashola is referring to
Nigerian banks, the business model of the
indigenous companies will not work? The
interest rate and fund tenure will not make it
work. What we are suggesting is that the
federal government should set up a finance
development bank that is strictly towards
development projects such as this should be
quickly put together.

“If our local banks will play any role, it will
be in the area of providing working capital.
We are just supporting these projects by
working capital. This is a complete shift from
what we have today because for those
companies to survive, they need very low
interest rate with very long-term loan,”
Omotola said.

http://www.thisdaylive.com/articles/omotola-fashola-should-resign-if-power-remains-epileptic-for-two-years/232047/

She has a point, they nonchalantly increase tariff & make so much noise but after 4yrs we are still on 5,000megawatts. It's well sha

Fash once said its not magic so i expect him to perform quickly.

All he knows how to do is to hike electricity tariffs

If the minister is indeed sure of himself, let
him sign an indemnity to or guarantee
Nigerians that if the power is not stable in
two years, he would resign his appointment.
We have started counting again. Our stake in
this matter is that of transparency and logic.”
Omotola said nothing would change
tremendously in two years, even with
electricity tariff hike, [b]citing the technical
capacity of the indigenous companies that
bought the power assets and their financial
capacities to bring together necessary
infrastructure that could guarantee steady
power supply.
What we are suggesting is that the
federal government should set up a finance
development bank that is strictly towards
development projects such as this should be
quickly put together

He made a lot of valid points. If Fashola is truly sure of this policy, he should sign an indemnity with us.

This article made me realised that the increase in tariff is Nigerians paying for in efficency. It's Nigerians paying privately owned companies to run their business. So why the need for privatization?

There was hike in tariff yet not steady power supply. Are power companies meant to run the cost of their inefficiencies at the expense of Nigerians? If indeed they are truly sincere with their billing and tariff why have they not been making serious plans to give their customers a prepaid meter so that even in their deficiency people will still pay for what they consume just like the airtime on our phone when you don't make calls it remains there with you? Will it not be cheating when people are forced to pay for what is obvious that didn't use? How do you feel when you subscribe to an Internet plan and there was no network for you to access the Internet and after one month the network provider ask you to renew your plan? They electricity situation in Nigeria is like paying for it whether you use it or not. The hike is not the solution at least not with the current situation