Q&A NIGERIA
Nigeria but I’m not quite sure how that project has gone... the sense we get is that NERC is more concerned now about getting some stability into the system before focusing on renewables. Around 2000, the government engaged a Ger- man firm, Lahmeyer, to undertake wind mapping and preliminary studies across Nigeria to determine optimal locations for wind generation projects. But as we speak there is no special regime that has been put in place to ensure those projects get developed and right now everyone is focused on getting the system stabilised through conventional projects.
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Why is reform of the power sector so important to the Nigerian economy? Nigeria’s per capita consumption of electricity is one of the lowest in Africa. Industrialisation is impossible without power. We’re not quite sure how any significant economic activity can take place in an organised manner without proper supply of electricity. Most businesses run on petrol or diesel generators, which is not efficient for the economy. Between 1979, when the most recent
market in Africa. We are going to see this kind of explosion in power but it will be in a different way, because the fundamentals are different. We are al- ready beginning to see a lot of innovation. Now we are seeing innovation in terms of small decentralised plants that take gas and deliver power literally next door. So I think that without a doubt the sector could grow in a tremen- dous way and I think there is sufficient space for that growth.
[Chukwubuike]: And similar to what you had in telecoms, beyond the evolu-
tion that you see in the sector itself there will also be in the future some kind of spill-over effect, if you like, in professional services, even in all kinds of support businesses. The potential is great.
We have not seen a major move towards creating a space for renewables
power plants were built, and the year 2000, when the AES Barge Project in Lagos was started, there wasn’t any significant investment in power infrastructure in Nigeria. Our population has almost doubled in that period. Even the existing systems weren’t properly maintained.
An example I can give is in a different industry: telecommunications. In
the early 1980s through to the 1990s if you wanted a telephone line you ap- plied and queued up at the national monopoly provider, but in 1999-2000 we liberalised the system and now Nigeria is probably the largest telecoms
Sola Arifayan Partner
Ikeyi & Arifayan Lagos, Nigeria
Tel: +234 803 403 5548 Email:
sarifayan@ikeyiarifayan.com Web:
www.ikeyiarifayan.com
On your website you mention that you provide “innovative practical so- lutions”. Could you elaborate on what that means in the Nigerian context? There are two aspects to that – one is that we do more than just pick up the law and read it. Because of our knowledge of the industries in which we practice, we’re able to find solutions that fit within the law but also push the envelope to accommodate the peculiar circumstances of the client. We’re also able to hold the conversations that are needed to clarify legal and regulatory uncertainties in new areas. Because of our multidisciplinary backgrounds and practical knowledge of what regulators and other counterparts think, we are able to innovate and to help design new structures beyond traditional ways of thinking.
And what is the main piece of advice you would give to prospective in- vestor in the power sector or in any other sector? I think it is similar to what we would say to anyone looking to invest in Nigeria generally, you need to do a rigorous due diligence of the asset you are looking to invest in as well as of your partners. It goes without saying that you have to un- derstand the sector and the rules that guide it and more importantly understand the asset you are investing in and understand the people you are looking to partner with locally to make the investment. For a power generation project you need to be sure of the source and the reliability of gas supply and related to that issue, that you are sourcing gas in a manner that allows you to enjoy the optimal price for power generation. It also goes without saying that you need to look at your funding sources and confirm that with your technology and the pricing that the economics of your transaction works. So essentially, look before you leap and do as much due diligence as possible on your asset and on your partners.
About the author Sola is a partner at Ikeyi & Arifayan. His core practice areas are government and infrastructure (focusing on electricity), M&A, and foreign investment and divestment. His financing and M&A experience includes advice and support on electric power projects with a cumulative capacity exceeding 5,000MW. He is a leading authority on Nigerian electricity law, having advised and supported private project developers and investors, lenders, the Federal Government, a state government, the industry regulator and development aid organisations. He has advised on public-private partnerships (PPPs) for the development of public water supply and transportation infrastructure. Sola is a graduate of the University of Lagos, a member of the Chartered Institute of Taxation of Nigeria and the Institute of Chartered Accountants of Nigeria. Prior to Ikeyi & Arifayan, Sola worked in the tax and financial advisory services practices of KPMG, Lagos, and also at Banwo & Ighodalo.
Chukwbuike Onwuzurumba Associate
Ikeyi & Arifayan Abuja, Nigeria
Tel: +234 803 545 0670 Email:
conwuzurumba@ikeyiarifayan.com Web:
www.ikeyiarifayan.com
About the author
Chukwubuike is an Associate at Ikeyi & Arifayan. He is a member of the firm’s Energy & Utilities team and has advised the sector regulator and private operators in the Nigerian electricity supply industry. His experience includes power sector privatisation advice and support, and ongoing development of Greenfield IPPs (independent power producers) and related electric power projects. Chukwubuike’s experience spans all aspects of electricity projects, particularly the arrangements for offtake (sale and evacuation) of power generated, and for intake (purchase, transportation and delivery) of fuel for power generation.
Chukwubuike also provides general corporate/commercial advisory. ENERGY & INFRASTRUCTURE | SUB SAHARAN AFRICA 2013 37
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