ByÂ Babajide Komolafe
Leveraging on strategic partnerships with key stakeholders in the power sector, including state governments, banks have committed about $700 million to power projects across the country,Â with theÂ aim ofÂ facilitating theÂ federal government effort to provideÂ stable power supply in the country.
Vanguard investigation revealed that while Skye Bank recently has committed about $400 millionÂ Â to independentÂ power projects in three states, FCMB and other banks have committed $280 million to the reactivation of the Egbin Power plant. Skye Bank signed an agreement with the Kaduna State government and M_Tec Limited, on an independent power project to be sited in Kaduna to arrest the dwindling industrial fortunes of the state.Â Under the agreement signed few weeks ago at the Government House, Kaduna, Skye Bank will provide theÂ $150 millionÂ needed for the execution of the power project, while the Kaduna State government will make available the land and other supporting facilities. M_Tec Limited is the technical partners that will buildÂ the power plant.
Speaking at the signing ceremony of the agreement, Kaduna State Governor, Alhaji Namadi Sambo, noted that the project became necessary as about 90 per cent of the industries and textile companies in the state had closed shop and laid off their workers following the absence of stable electricity supply.
Sambo said the projectÂ would upon completion , bring back to life the closed industries as well as provide employment opportunities for the people living in the state. The Kaduna State governor said the project was also a way of complementing the 7_point agendaÂ of the administration of President Umaru Yaraâ€™AduaÂ which promises stable power supply. He said the project would be completed in nine months.
Skye Bank has also guaranteed Ekiti Stateâ€™s $150 million power project which is intended to transform the outlook of the state by ensuring that very community in the state enjoys electricity. At the moment, work has reached an advanced stage on the project with the bank ensuring that the scheme does not derail.
Similarly, the bank is partnering with the Oyo State government to build a power plant in the state to put an end to the perennial power problem in the state. The objective of the scheme is to ensure that the entire state is electrified in line the state governmentâ€™s objective of transforming the state.
Other banks are also involved in financing power projects in the country. For example,Â FCMB is taking a lead role in syndicating facilities for the financing of powerÂ projects, especially in the light of the unbundling of the Power Holding Company of Nigeria (PHCN).
It is gathered that the purpose is to reactivate the power sector, especially where the bank has committed about $280 million. On the Egbin power plant, which is generating about 1.3mega watts, Managing Director/Chief Executive,Â FCMB boss was quoted as saying , â€œWe have committed about $280million to this project, and some other Nigerian banks are also part of this projectâ€.
He said: â€œFCMB and other banks are interested in the power sector because of the pivotal role it plays in the economy; the key issue is that the establishment of the transmitting company should be accelerated and the pricing regime namely the Power Purchase Agreement should be made clearer.â€
It would be recalled that stable power supply is one of the critical aspect of the Seven _Point Agenda of the President Umaru Yarâ€™Aduaâ€™s administration. By focusing on providing stable power and electricity, the regime hopes to provide the enabling atmosphere for manufacturing companies, individuals and others to be at their creative best.
This is because inadequate power supply has been identified asÂ major hindrance the nationâ€™s aspiration to be one of the twenty largest economy by 2020.
In a recent survey carried out by the Manufacturersâ€™ Association of Nigeria, MAN, which measured the effect of power outage in the country, beginning from the Olusegun Obasanjo era, it was discovered that â€œ30 percent of industries have closed shops while 60 percent are ailing, leaving only 10 percent of companies operating in sustainable capacity.â€
MAN also said that the survey showed that â€œin 2005, only 10 percent of industries operated at medium level capacity, whereas 60 percent of the companies were in comatose with 30 percent completely closed down.â€ The MAN survey further revealed that in the first quarter of 2006, most of the industrial areas in the country suffered an average of 14.5 percent power outage a day, as against 9.5 hours of supply.
More figures released by the survey also show that the cost of generating power supply accounted for 35 percent of the production cost of companies. The report noted that 1,500 companies representing 60 percent of the associationâ€™s 2,500 members were stifled by additional operating cost of having to rely on alternative power supply.
Again, a total of 750 companies representing 30 percent also closed shops in 2006 due to power problems. Because of the poor power supply in addition to other related factors, the industrial sectorâ€™s contribution to Gross Domestic Product has continued to drop since 1990 from 8.2 percent to 4.2 in 2005. This figure is adjudged the lowest since the country gained independence in 1960.
Other findings showed that Nigeria currently tops the list of generator_importing countries for four successive years having surpassed other countries since 2002. Similarly, the country accounted for 35 percent representing $152 million of the total sum of $432.2 million spent by other African countries on generator importation in 2005. The figure has increased by another 20 percent in the past two years due to the worsening power situation in the country.