Saturday, Jul 13, 2024
Update At 14:00    USD/EUR 0,92  ↑+0.0002        USD/JPY 151,69  ↑+0.174        USD/KRW 1.347,35  ↑+6.1        EUR/JPY 164,16  ↑+0.143        Crude Oil 85,49  ↓-0.76        Asia Dow 3.838,83  ↑+1.8        TSE 1.833,50  ↑+4.5        Japan: Nikkei 225 40.846,59  ↑+448.56        S. Korea: KOSPI 2.756,23  ↓-0.86        China: Shanghai Composite 3.015,74  ↓-15.745        Hong Kong: Hang Seng 16.512,92  ↓-105.4        Singapore: Straits Times 3,27  ↑+0.018        DJIA 22,58  ↓-0.23        Nasdaq Composite 16.315,70  ↓-68.769        S&P 500 5.203,58  ↓-14.61        Russell 2000 2.070,16  ↓-4.0003        Stoxx Euro 50 5.064,18  ↑+19.99        Stoxx Europe 600 511,09  ↑+1.23        Germany: DAX 18.384,35  ↑+123.04        UK: FTSE 100 7.930,96  ↑+13.39        Spain: IBEX 35 10.991,50  ↑+39.3        France: CAC 40 8.184,75  ↑+33.15        

Engineer O. C. Akamnonu, CEO of the Ikeja Electricity Distribution Company

Interview - November 25, 2011
Ikeja Electricity Distribution Company is one of the eleven distribution companies created from the Power Holding Company of Nigeria Plc

Nigeria has 9000 megawatts of installed generating capacity. However, the country is only able to generate around 4000 megawatts. Most facilities are poorly maintained. Infrastructure development is one of the main focuses of the current administration and it is estimated that by 2012 90% of the country will be covered. What are the strategies and policies the Ministry of Power is actually implementing right now? What are the current challenges in the sector?

What I know is that the Ministry of Power is pursuing to encourage private entrepreneurs to invest in this sector as a way of bridging the gap  between what is required and what is available. The strategic objective of the Ministry is to encourage private investment, especially in upstream and downstream sectors, where there are deficits.

Before starting on the expansion of the facilities and the network it has been noted that it would be more adequate to invest in the existing plants in order to modernise them. How do you see the current infrastructure network? What is your insight?

There is merit to this approach. Before building new ones it is imperative to improve existing plants. For obvious economic reasons if you can restore old plants to standard through rehabilitation, the investment needed may not be as much as building new ones. Also you need to bridge the gap while new generation capacity development is in progress. I agree entirely with this approach.

First there was banking privatisation and now there is the privatisation of the energy sector. What stage is it at and what are the challenges you are seeing in this process?

The electricity sector is in dire need of reform. I have been around for around three decades and have spent my entire career in this sector. Infrastructure has been decaying due to poor maintenance and low investment. We are now at the stage where the gap between demand and availability is so huge that the entire economy is in trouble.

You mentioned a need for investment. How do you see Foreign Direct Investment (FDI) entering the country and what is the government doing in order to attract such investment in the power sector?

We are aware that the Government wants to encourage private investment in the entire economy. We are keen for foreign investment for obvious reasons.  Our infrastructure demands attention and government cannot provide the huge capital required to get the power sector to the desired form. We need to invite private investors, including foreign investors with good and honest intentions.

It is not just a matter of financial investment but also knowledge based investment. What is your opinion on this?

As we welcome foreign investment, we expect investors to come with new technology.  They will also come with relevant expertise for effective application of the new technology.

The U.K. Prime Minister David Cameron mentioned the importance of Nigeria, and Africa as a whole during his visit to the country a few weeks ago.  How do you see Nigeria in comparison to its neighbouring countries?

Nigeria has a large population and besides, it is endowed with people who are highly enterprising. They have continued to improve their skills. It remains the largest country in Africa and in terms of population it is about the population of the rest of West Africa put together. It has great human potential and abundant natural resources. These can be used for the benefit of the local population and the region in general. The resources need to be tapped and it can be for the good of the entire world economy.  We are living in a global village and social economic activities here affect other countries far away. We have oil, which the rest of the world needs.

How is Ikeja Electricity doing and where is it heading?

Ikeja Electricity Distribution Company is one of the eleven distribution companies created from the Power Holding Company of Nigeria Plc (PHCN). We buy electricity from the grid and retail it to customers; this is purely business. We try to keep costs as low as possible while developing strategies for reducing costs progressively. The company is the largest in the industry. We consume around 15% of energy produced nationwide and contribute around 25% of the industry’s revenue. The demand for electricity here is very high and our per capita consumption is the highest in the country. Our infrastructure is not developed enough to meet demand.  There is still a very huge gap between what we need and what we have. We know that we could do better. The industry is looking forward to infrastructure and human capacity improvement.  We have already done a lot of work here in setting up structures to ensure that service delivery keeps on improving as a way of securing customers’ loyalty; and we are working on reducing corruption. I am happy to say that we have reduced this to an absolute minimum.

We are hoping to achieve a level of capability, where we can effectively evacuate power as generation improves; where availability of power can be taken for granted.  We hope that we will once again regain the confidence of customers.

We are currently installing around 4000 meters and hope to raise this to 6000 meters by the end of October. We hope that by the third quarter of next year we will have achieved 80% effective customer metering and this will mean better relationship with customers as willingness to pay bills will be higher.

The potential in this sector is enormous. How can we make investors understand the opportunities?

There is the Bureau of Public Enterprise (BPE) in charge of an important program which includes promoting investors interests.  The opportunity is open to every investor. We need to attract investors to buy into the program of privatisation.  The issue of information to potential investors is being well addressed. We have had well over 300 expressions of interest from all over the world, mainly in distribution companies. I am confident that there will be level playing field and with that, companies with the best credentials will emerge.

What are your dreams for this sector in years to come? What is your motivation and your goal?

I want to see government bring in or attract the needed capital to bridge the infrastructural gaps in the sector.  With this, efficient power supply and desired level of customer service delivery will be achieved. Electricity should be available always; this availability should be taken for granted.  The cost of this service will continue to go down as efficiency improves.

What is your final message to the readers of this report?

Nigeria is a nation that has abundant human and material resources, a nation with great potential and a friendly socio economic climate. The Nigerian economy is relatively stable.  Our currency has been stable and well managed in the past 2 years. The market has been very resilient in the face of a lot of volatility in the global market. It is a country where any investor can put down his money and hope to get reasonable returns. The President has a strong and powerful economic team and this makes us believe the transformation agenda of the government is going to be realised. These are signs that the world should use to make the right judgement of coming to invest in Nigeria.