A former Managing Director of the Assets Management Corporation of Nigeria has said the liberalisation of the nation’s power sector will attract over $30bn of investment to the sector in the next three years.
Chike-Obi, who is the executive vice chairman, Alpha African Advisory, said this would also make electricity affordable for Nigerians in the long run.
He said since it is believed that everyone deserves electricity much as everyone deserves to have a telephone or nice car, the only way to lift the society to that point is to charge the people who need electricity the most, the market price.
The ex-AMCON boss spoke at a capacity building forum for financial journalists on Monday.
According to him, in some places in Ikoyi, Lagos, residents get about 90 per cent of power supply and they are paying roughly N50 or N60 per kilowatt-hour, for instance.
He said a generator costs about N160 per kilowatt-hour with its attendant inconveniences.
He said, “Most people who have generators will be happier to pay N160 per kilowatt-hour of electricity, but the government said no. We can only charge Nigerians N60 per kilowatt-hour…”
Noting that this had hampered investment in the sector, Chike-Obi said, “But if you allow these power companies to sell at N160 per kilowatt-hour, they will make so much money from the rich people at the beginning that they will start creating more power.
“Look at what happened with the telephone. At the beginning, SIM card was N70,000 and only a few rich people could afford it and the companies made so much money. Today, almost everyone has two phones because SIM cards are free.”
According to him, all the companies involved in power supply owe money and will remain insolvent, even as power supply remains below expectation.
“So, you won’t get power until you realise that power is a capital good and should be priced accordingly,” he added.
Chike-Obi said foreign exchange, fuel and electricity subsidies were killing the nation’s economy.
“Those who believe that the fuel subsidy is for the benefit of the poor are wrong because the poor man who pays transport to work gets little or no subsidy. The average rich person in Ikoyi is getting approximately a 100 times more fuel subsidy than the poor man in Shomolu, for instance,” he added.