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Dimmed Opportunities in Nigeria's Power Sector:: Will Foreign Players See the Light?

In: Business and Management

Submitted By ifemena
Words 5035
Pages 21
Given the World Bank’s declaration that Nigeria needs an estimated $16 billion to cover its energy needs, foreign participation as lenders or project sponsors of the newly reformed electric power sector is crucial for its development. Few local companies can claim to have technological knowledge and competence in any of the facets within the power sector. With clear advantages in the labour force and green field projects as part of the Federal Governments initiative, a closer inspection is needed to fully determine the setbacks and the efforts to attract willing international players in the local electric power market.

Companies that commit to long term investments in Nigeria’s power sector may very well benefit from laws, regulations and policies implemented to drive the sector forward. Notwithstanding the practical and legal challenges that are symptomatic of pioneer privatization mechanisms in developing countries, proponents of Nigeria’s reform in the electricity sector have been able to identify clear advantages for long-term investors. The advantages for investors are mapped out in numerous provisions in the Electric Power Sector Reform Act Cap (“The Act”) while other benefits can be found in various tax, environment, finance and customs laws in Nigeria. Committed parties would generally fall into two categories: the direct participants (foreign power companies, their suppliers and other companies that would provide services to the main players) and the international financiers to the project. An analysis of the setbacks and advantages of both groups is imperative for a broader viewpoint.

The passing of the Electric Power Sector Reform Act (“The Act”) is the biggest mark in the development of the industry. The aim of the Act is to unbundle the former…...

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