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As
the financial industry awaits modalities for the Central Bank’s
decision to help banks in power generation, the move has been described
as unnecessary and off the track of functions of the regulator.

Toyin
Dawodu, managing partner, Capital Investment Group, a United States of
America based investment company, said the Central Bank should instead
focus on its primary function of managing the monetary policies of the
country.

Lamido
Sanusi, the CBN governor said recently that it was working at reducing
the overhead cost of banks by 30 per cent by working towards
establishing an independent power project for power supply to all banks
operating in Lagos as a pilot cluster. All these initiatives, Mr Sanusi
said,

would lead to drastic reduction of overhead costs and ultimately reflect positively on the cost of funds.

Not Central Bank’s responsibility

Mr
Dawodu, however, said it is not the responsibility of the CBN to make
sure commercial banks have power, nor its responsibility to reduce
commercial banks’ overhead.

“That
is between the banks and their shareholders. How does the Central Bank
intend to distribute the power it generates to these banks? The current
road map does not allow for direct private distribution to end users.”

He
added that the new power reform agenda which allows for private
participation in power generation and distribution means that each
company still has to sell to the proposed bulk purchase company and
distribute through one of the independent distributing companies.

“It is not part of the road map to pick out selected private companies by the government to supply them with power,” he said.

He
said sector specific power generation amounts to discrimination as
there are no criteria for determining which sector deserves more power
supply than others.

“We
should be planning to supply power to all Nigerians and all industries.
This is why the government should give incentives to attract private
investors, and if you look at the road map, there is no single
incentive in the roadmap besides tariff liberalization.”

Mr
Dawodu said instead, the Central Bank should be more concerned about
getting power for all of Lagos State, which will be of benefit to the
banks since most of them are located in the state.

Establish participatory system

The
Social and Economic Rights Action Center (SERAC), a non-governmental
organisation for the protection of social and economic rights in
Nigeria, believes that the foundation for sustainable power reform in
Nigeria rests on the establishment of adequate participatory system. In
a concept paper to its forthcoming roundtable, with the theme ‘The
Right to Access Stable Electricity’, scheduled to hold on October 27 in
Lagos, it said there was need to strengthen the accountability
structure in order to create an efficient system for power generation
and distribution.

SERAC
added the shortage of indigenous manpower to deal with the
sophistication involved in modern power production is a clear and
present danger.

“There
is no guarantee that local skills and resources will be available for
installing, managing and sustaining the services planned.”

The
body said growth in the power sector over the years has been stymied by
the absence of platforms that allow for broad-based participation of
the majority of the population in issues affecting electricity
generation. According to the organisation, this “puts a big question
mark on the reform programme’s promise to improve the delivery of
electricity supply, and bolster socio-economic services that advance
wellbeing and quality of life.”

‘Make or break’ factor

Razia
Khan, head of macroeconomic research, Standard Chartered Bank, United
Kingdom, said power supply was the single ‘make or break’ factor
driving growth in Nigeria. “Powerful vested interests have so far
resisted any meaningful change, and with elections on the way, many
observers will want to see evidence that ‘reforms’ go beyond the
near-term opportunity for increased political patronage.”