Yemisi Izuora
Expert in Nigeria’s financial sector, Mr. Bismarck Rewane has made case for the ailing electricity sector, arguing that what the industry needs is financial bailout.
Rewane who is the Chief Executive Officer, Financial Derivatives Company Limited, while reacting to reports that government was considering granting investors in the sector further tax holidays said that the sector needs a financial bailout,and not a tax holiday.
Rewane said the intended stimulation of investment in the sector via tax holidays to current investors may not resolve the current industry challenges, as he stressed that tax holiday only incentivises those making profit.
These are loss-making entities right now, because they borrowed monies and borrowed in dollars as well, he noted adding that government should consider bailing them out rather than give them further tax holidays.
“Tax holidays are good for people who initially were profitable and all of a sudden became unprofitable, that is like Google, Facebook or MTN. Tax holidays helped them in investing more.
Tax holiday is useful after the fundamentals of that industry have shown that the companies are going to be profitable. Right now, that is not the case. What these companies need is a financial bailout and interest moratorium to enable them cover their cost and invest additional capital in transforming the industry,” Rewane explained.
Although CBN had created a special intervention fund for the power sector, but Rewane said it is always “too little and it is never enough. So, they (government) need to do something really bold.”