Investors Wary of Power Sector Investment

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Aside from gas shortage, private investors are scared of firming up their relationship with operators in the  power sector, it was gathered at the weekend.

It was learnt that many private investors expressed reservation about getting Returns On Investments   due to the poor operating environment.As a result, they are not ready to solidify their partnerships with the operators.

It was further gathered that some investors, especially foreign ones, are planning to review their involvement in the sector, if the situation is not improved.

Abuja Power Station, Chief Executive Officer,  MrJameel Jammal, said the investment climate in the sector and the economy is bad.

He said the operating environment was not conducive for operators, due to gas shortage, funding, and inability of the sector to attract enough investments from abroad.

Also, First Exploration and Petroleum Development Company Limited Chief Operating Officer, Dr Saka Matemilola, said local and foreign investors are not comfortable with the prevailing situations in the sector.

He said difficulties in accessing facility from banks by power generation companies(GenCos) and power distribution companies(DisCos), failure of private investors, who put money in the sector to get RoI that is proportionate to their investments, were some of the conditions that were driving investors away.

He said the Federal Government does not have money to invest in the sector, adding the development has opened the door for private investors to come into the industry.

He said: ‘’When private investors go to any country, they go there to create investments and further make money. In a situation the investors cannot make enough money, they would be forced to leave that country. This is applicable to the country’s electricity industry, where investors hope to make money, but they are not.‘’

According to him, banks are out to make money, stressing that banks provide loans to business owners with the intention of making money.

Matemilola said banks were not ready to give loans to operator in the sector, due to defaults.

He said: ‘’Why would banks want to give more money to operators in the energy sector, when they have failed to pay back the ones they burrowed? Banks are not charity organisations. We need to ask ourselves these questions: How come these power plants are unable to pay back their loans? Will investors give them when they know that the environment is not right. The investors would rather take their money to where they would get more yields.”

Source: TheNation
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