JACOBS: Diversification Must Include Review Of Power Sector’s Privatisation

Frank Udemba Jacobs is the president of Manufacturers Association of Nigeria (MAN). In this interview with DAVID OGAH, he called on government to review the privatisation of power sector so as to ensure that only competent organisations are operating.

With plummeting revenue, what are other choices is available to the country?
OTHER choices will definitely be to diversify the economy, encourage non-oil exports, especially, that of manufactured products, which had started flourishing before the suspension of the Export Expansion Grant, by the Federal Government and expansion of agriculture and solid mineral sectors, which have high potentials. Government should encourage manufacturing, especially, resource-based manufacturing.

One noticeable challenge will be the power sector, how can the government solve this?
Of course, power is the bedrock of any economy. Without power, how will production machinery work, even at the very rudimentary stages of production? Industrialised countries have sufficient power supply, which also costs below 15 per cent of their cost of production. Power is essential.

The purchase or privatisation agreement should be reviewed and the entire power arrangement revisited, as the current operators do not seem to have the capacity to achieve it effectively. With less than 4000 megawatts of light at the peak, in a country with a population of over 170 million people, you can see that there is a huge challenge.

Government should look at the process of privatisation and see how it was carried out to ensure that there were transparency, equity and fair play, and also, that qualified individuals and organisations are actually running the place.
Also, to improve supply, there might be need to introduce micro grid or community grid system, as well as embedded generation. They are both recommended, because they will increase power generation.

Perhaps, more players with requisite capacity should be brought in. Again, the country has a problem with gas-to-power. The issue appears to be hydra-headed. Pipeline security is a challenge, while the issue of distruption of the production process of oil companies is there. Non-implementation of the Gas Master Plan fully is also there. Unless these are addressed, gas to power may be difficult to achieve and consequently, power generation cannot be fully realised. However, transmission must be overhauled and improved upon, as it is apparent that current transmission facilities are inadequate.

Manufacturers expect that government would concentrate on improving infrastructure and the manufacturing environment, generally, provide adequate industrial incentives to investors in the critical sectors of raw materials research and development, basic iron and steel as well as petrochemicals. These are catalysts that will drive local resource based manufacturing. The President is taking action on corruption already and we need not stress this any more. However, serious action should be taken to reduce the cost of governance. This is a serious issue and should be addressed urgently so that money can be freed to service other important things like infrastructure.

What are the multiplier effects of power solution?
When power problem is solved or reduced to the barest minimum, there will be sufficient electricity to power production in almost all aspects of the economy, be it manufacturing, agriculture, solid minerals and even services like banks and telecommunications. The cost of production of good and services will go down, as a result of optimal operations, more employment would be generated. It goes on and on like that.
Expand production in agriculture, manufacturing, solid minerals etc, by encouraging operators in these sectors and giving appropriate incentives. More particularly, encourage non-oil exports.

Manufacturing, as you are aware, has the highest potential for employment generation, wealth creation and technology acquisition. This sector is a preferred sector. Other sectors are also important, but non-oil exports should be given priority.
The manufacturing sector should work with the government to grow the economy, provide employment for the teeming population of Nigeria, create wealth, and through linkages with other sectors like agriculture and solid minerals, develop the economy. All these will generate money for the Government directly and indirectly. MAN is actively engaged in training of potential entrepreneurs, through its Manufacturers Resource Centre and MAN Centre for Entrepreneurial Development.

Manufacturers expect that government would concentrate on improving infrastructure and the manufacturing environment, generally, provide adequate industrial incentives to investors in the critical sectors of raw materials research and development, basic iron and steel as well as petrochemicals. These are catalysts that will drive local resource based manufacturing. The President is taking action on corruption already and we need not stress this any more. However, serious action should be taken to reduce the cost of governance. This is a serious issue and should be addressed urgently so that money can be freed to service other important things like infrastructure.