Nigeria to spend $ 5.7 bn on power plants and gas sector

Nov 23, 2006 01:00 AM

A total of $ 5.7 bn will be invested in the gas sector of the economy and construction of seven power plants in the Niger-Delta, Minister of Finance, Nenadi Usman, said in Enugu. Out of this, $ 2.3 bn is being invested in the seven gas turbine power plants; $ 1.6 bn being spent on "associated investments" for the downstream gas sector and $ 1.8 bn in the upstream gas sector.
The power plants are expected to, upon completion, boost the nation's power supply from current 3,000 MW to about 10,000 MW, while the investment in the gas sector is aimed at diversifying the nation's revenue base as the nation moves to end gas flare in 2008.

Speaking at the just concluded National Council of Finance and Economic Development held at Enugu, the minister said about 40 % of the country's $ 4.2 bn capital budget for 2007 is dedicated to three key infrastructure-power, roads, railways and water supply.
In the next 15 months, she said, there would be an additional expenditure on the $ 2 bn Mambila and Zungeru Hydro Projects. Other envisaged expenditure would be $ 3.5 to be expended on railway rehabilitation while $ 0.5 bn would be spent on rural telephone and the provision of a national information and communication technology infrastructure back-bone.

A statement signed by the Chief Press Secretary to the Minister, Mallam Abdu-lganiyu Aminu, reported the minister as saying that "fiscal and monetary policy measures have been carefully man-aged in the implementation of the NEEDS Economic Reform Programme to bring about a stable macro-economic stability which is critical for growth and economic development."
"A major component of the fiscal reform", she added, was "the decision to smoothen the expenditure pattern, and the pattern of GDP growth, by basing government expenditure on prudent oil price benchmark," the minister said.

By adopting this fiscal rule, she said, government's expenditure was disconnected from fluctuations in the oil price, adding that government's fiscal balance moved from the previous 3.5 % of GDP deficits to a consolidated fiscal surplus of about 10 % of GDP in 2004 and 11 % GDP in 2005.
She further said that the monetary policy focused on reducing in inflation and interest rates, and was aimed at achieving stability in the exchange rate with the result that inflation fell as low as 11.5 % in December 2005, a stable naira exchange rate, and a downward trend in interest rates.

"The GDP growth rate, she added, has averaged 7.6 % per annum over the past three years, a development she saw as representing significant improvement on the performance of the previous two decades when real GDP per annum grew by an aver-age of about 3 %. She said the non-oil sector has been the driving force behind the recorded growths, achieving 7.4 % in 2004 and 8.2 % in 2005," she said.
According to her, the federal government has been able to maintain fiscal prudence, enhance revenue earnings, reduce both domestic and external debts, reduce inflation, stabilise exchange and interest rates with macroeconomic stability. The National Tax Policy, she added, is focused on stimulating economic growth and creating incentives for positive social behaviour.

She said "we are simplifying customs procedures and have adopted ASY-CUDA international software platform. We have also been successful to bring down weighted average of our tariff regime from 27 % to 17 %."
The Commerce 44 Initiative which seeks to harness Nigeria's export potentials and diversify the economy, she added, would also be accorded top priority.

Source: Daily Trust
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