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Friday, 25 January 2019

Babatunde Fashola: Nigerian electricity sector vulnerable to exchange rates

Mr Babatunde Fashola, the Minister of Power, Works and Housing, on Thursday lamented the vulnerability of Nigeria’ electricity sector declaring that it is heavily dependent on imported human resources, materials, equipment and services.

 Babatunde Fashola: Nigerian electricity sector vulnerable to exchange rates

Fashola spoke on Thursday at a workshop on the ‘Regulation on National Content Development for the Power Sector 2014’ in Abuja.

He said the situation made the sector vulnerable to foreign exchange rates.

“The Nigerian Electricity Supply Industry (NESI) is heavily dependent on imported human resources, material, equipment and services.

Fashola who was represented by the Director of Procurement, Federal Ministry of Power, Works and Housing, Engr. Ahmed Abdul added: “It is consequently vulnerable to foreign exchange availability and rates, to the extent that contracts for gas and generation are denominated in foreign currency”.

The Minister explained that the present administration was committed to developing local content and as such, President Muhammadu Buhari in February 2018 signed Executive Order 5 to promote local content in public procurement processes.

Urging operators in the power sector to embrace the regulation issued by the Nigerian Electricity Regulatory Commission (NERC), the minister said: “It is time to systematically develop Nigerian capacity and content in the industry for its long term growth and stability.”

The NERC local content policy targets raising local manufacturing by at least 10 per cent this year for electrical cables, bolts, boilers and pumps. It stipulates 100 per cent local content for all civil works at power plants and transmission points.

While permitting 40 per cent for meter manufacturing this year, the targets could rise to over 50 per cent for various categories from the next three years.

Chairman of NERC, Prof. James Momoh said NESI had in the past experienced an influx of expatriates due to lack of local content regulation.

Speaking further on the enforcement of the regulation, the Minister said: “They are being enforced and since this something new, we will ensure that there is certification.

He added: “We have to approve the processes to ensure that the minimum requirement is met”.

Mr Ahmed Mansur, President, Manufacturers Association of Nigeria (MAN), charged government agencies and stakeholders in the private sector to work as a team towards enforcing the policy to promote local content in the power sector.

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