Mr. Akinwole Omoboriowo
-Felix Douglas
Akinwole Omoboriowo, Chairman, Board of Directors of Genesis Energy Holdings spoke with journalists at the Nigeria Leadership Energy Summit in Lagos.
Omoboriowo had a brief interview with energy correspondents on the plans of Genesis Power and why the company is investing in Nigeria’s electricity after decentralization of the power sector due to the Electricity Act reforms 2023 of President Bola Tinubu.
Excerpts
At this junction in the country, I believe that finally the Nigerian energy sector is where it should be. There are three key points I talked about today. First is the Federal Government fixing the regulatory framework that creates enabling environment for the industry participants to be able to aggregate power.
When you’re able to aggregate power, you’re able to have economies of scale that will reduce the cost of investment, which ultimately leads to more competitive and energy generation sources with value.
We’re very excited that the Electricity Act 2023 has fixed a lot of these functionalities within the regulatory environment in the power sector. Number two, the Act also enabled sub nationals to be able to invest in their own states.
Presently, they can invest in generation, distribution and getting power directly to their citizens.
The President once said that he is at the federal level. Nigeria is made up of thirty-six states including the FCT.
The bottom line is that with this Act, power can be generated by state governments. They know where they need electricity for the people. They’re more committed and are investing to make sure that their states are connected.
For example in Kano state where a whole general hospital complex including the school of Midwifery are powered with solar panels and batteries saving over $3 billion for the state from combination of huge complex and the state house.
Imagine what the state government can do with the savings.
Number one is that the Electricity Act has given power to the sub-national to light up the states. The second thing that the Act spoke to, which is exciting is to allow private sector to participate in business of transmission. My sense is that investment in the power sector across the entire value chain of the power sector should be for every right thinking Nigeria, where the ability to make any investments either small or big.
There are micro, mini and off grids. Also, we have local and regional grids. Grid can be generated through solar with other means. Many people are now participating in the energy sector; it is no longer the exclusive preserve of few elites.
It doesn’t make sense in a country about two hundred and thirty million people, why should just a few companies be involved in the country’s power sector.
The Act has enabled democratization of investment which is the most important thing. Ultimately to see the dividend of any democratic institution or government, everyone has to be free to make investment either big or small.
The democratization of investment in the power sector, the federal government should be commended. Let’s invest in our country and take part in rural electricity.
Another point outside the Act is market driven tariffs.
Previously in 2022, it was not the right time to invest in the country because if you invest in the power sector, you cannot recover your investment. Unless it’s money laundering, how would you invest money that you cannot recover? It was impossible and I still don’t understand why it took so long. Again, with this current government, it took the bull by the horn. If you don’t put in market driven tariff that enabled investment is like wasting time.
We thank this present FG for what it has done. In Nigeria, if something is right, those involved should be appreciated.
I’m really personally grateful about the market. The power sector should be market driven.
The third aspect is fixing the multiplicity of foreign exchange platforms. If I bring in $3 million today to the Nigerian market, I couldn’t tell what is going to be the basis for which I’m going to price my investment?
Is it going to be at the black market window or official rate? Although the government has unified it to hit the bullet points.
At present, there is an enabling environment, the consuming public should hold all the parties across the value chain responsible, not just Transmission Company of Nigeria (TCN), the Distribution Companies (DisCos) or gas suppliers.
I believe it’s going to take two to three years before you can see the benefit. Don’t forget, this is infrastructure. Let me give you an example. If I want to build a 10 megawatt mini grid, I need to first sign the investing contract that will enable you to make investments. This is the first aspect; secondly, raise the capital because the tariff is there. It is a unified foreign exchange. The law is there. Everything is there now, but you still need to raise the money. That will take some time. When you raise the money, you need to procure the capital equipment. You may import some from China, US, Europe or anywhere.
Buy locally where it is available.
The Electricity Act enables you to aggregate. When you aggregate, there is economies of scale. Economies of Scale leads to reduced investment cost. Reduction in investment cost will ultimately drive down the price. Everything takes time in terms of infrastructure.
It’s going to take about 18 months to build infrastructure after you raise the money. The fact that these policies in the power sector has been made, doesn’t mean that the next day you’re going to see the result investment.
In the process of time in the next two to three years, Nigerians will see benefit being invested. We’re about to issue a 500 billionaire naira bond and it is for the power sector.
We’ve issued 13 billion locally in 2019 it is one of the best performing bond in the country and everything went into the power sector.
Part of what we want to achieve with the bond is to expand clean energy access in multiple states in Nigeria. We are location specific.
In Port Harcourt, we already have 84 megawatts in partnership with NNPC. It will be scale up by additional 120 megawatts because of availability of gas.
It will be scaled up in Katsina to 100 megawatts solar peak because the state has one of the highest solar irradiation in Nigeria. The location will be electrified with the best resources made available.
For us, we’re going to different locations; use various energy sources that is optimal. There are some places where multiple hydros will be used, while others will be combined with wind and solar. Where there is availability of gas, it will be used.
Everything will be done locally and as a private company, 500 billion is not small. It represents over $300 million.
This is not just about Genesis. We want more players in the sector. If there are 1000 of Genesis multiply it and it will be much.
On the aspect of challenges or defects, I haven’t seen any in the Act because it came to fix the defect in the electricity power sector reform in 2006.
There is always going to be need for improvement, that’s why you have addendums to Act.
The Act has helped people that have invested in buying the distribution companies to go ahead and strengthen their business.
It has enabled to build investors to own parallel distribution network. The more competitive the market, the lower the cost of electricity with better services.
Reasons why we are so passionate about Nigeria is that energy is life and life is energy. Without energy, there can be no life. That’s my passion. Let’s give life to Nigerians.
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