Vanguard (Lagos)

7 June 2008

Nigeria: Multi-Billion Naira Tinapa Business Resort to Come On Stream in 2008 - Imoke

interview

Lagos — SENATOR Liyel Imoke, a one time senator, Special Adviser to the President on Public Utilities, Chairman, Technical Board of the defunct NEPA, Minister of Solid Minerals in the last administration is today, governor of Cross River State.

In this exclusive interview, Governor Imoke speaks with Saturday Vanguard on his state's business climate and economy in general, including his plans to boost the state's internally generated revenue, the Tinapa Business Resort , the Obudu Cattle Ranch, as well as its massive pineapple farming programme. Enjoy it.

What is the position of the multi-million dollars Tinapa Business Resort, especially as all seems so quiet about that highly applauded initiative of Cross River state?

As far as Tinapa is concerned, the state has done all that it is expected to do. What remains for Tinapa is the regulatory regime and this could only be approved by the federal government. And as you may know Free Trade Zones (FTZ) are under the Federal Ministry of Commerce, and as such on the Exclusive List. So state governments cannot legislate with relations to free trade zones.

And I believe also that a lot of other factors that affect Tinapa's operations include Customs operations, Nigeria Ports Authority operations, as well as the airport operations are all exclusively federal. So for Tinapa to work, not only do we need federal support, but with regards to regulation, we need the federal government to approve the regulatory regime specific to Tinapa.

And this has not been done as I speak to you. But I believe that it is in the final stage and the federal government has shown support, the Ministers of Commerce and Finance have been very supportive . So, we expect that within the next couple of weeks, we will get approval for the regulatory regime, and it is pertinent to note that it is only when the regulatory regime has been clearly defined and understood that investors and tenants will put in their resources.

Is the much awaited regulatory regime to be legislated or is at a core executive function?

The executive arm of the federal government is responsible for the regulatory regime, as it is the duty of federal government agencies to publish regulations on the operation of the free trade zones.

Tinapa will be operating under the 1992 Export Processing Zones law which needs to be amended by the legislative arm of the federal government. But this also depends on the executive sending amendments or a new bill to the legislature at the federal level. So it's at the federal level. We on our part have been working consistently on it. The Managing Director of Tinapa spends considerable time in Abuja.

We've been in all the committees. I also have been shuttling Abuja almost once a week, talking to all the necessary authorities. And that is why we have progressed it to where it is now. But we still need support to conclude it. The Federal Executive Council has to approve it and thereafter it will be gazetted and circulated to all prospective tenants and investors. Then they have an idea of the type of regime that will be applicable in Tinapa, and of course that forms the basis for investment decision making.

So, we can rightly say the Tinapa Business Resort will come on stream later this year.

Most definitely! Of course it will, by the grace of God.(laughter) .There was an agricultural project of the previous administration that was specifically focused on pineapples. It was quite laudable then but it appears all the applause has gone down as no one seems to be hearing anything about it. Can you tell us the state of that project now?

Agriculture is one of the key pillars of our economy and a part of our own programmes. The pineapple programme that you referred to, I think, is initiated by government with a view to get private farmers to go into pineapples on a large scale. In fact, the previous administration invested in a pineapple processing facility in the Free Trade Zone. That facility has actually been privatized, and of course the owners of that facility have also acquired another 5000 hectares of land for pineapple farming. And you will agree with me that it is a considerable amount of land which they are going to develop for pineapple.

What we've done in this administration is that we are focusing largely on providing a conducive atmosphere for commercial agriculture. We have a natural advantage in Cross River State in terms of not just land, but also the quality of our soil, and as such you'll find out that we have significant plantations and we have investments that is coming into agriculture, particularly oil palm, rubber and cocoa. We've continued to expand our holdings in that regard, and what we've continued to do in this administration is that we have been creating an environment for the private sector to come in and make those investments, not planting cocoa or oil palm as government, anymore.

I know that those who are expanding their holdings considerably over the next few years will expect that the oil palm holdings in Cross Rivers State would have more than doubled.

The pineapple programme, we'll continue to support, and at the same time, encourage those who may have invested in pineapples on our own part. We are investing more on the provision of extension services for small scale farmers as well as some form of support for land clearing and farming equipments. The policy for us as an administration is that all of us who are in government must own farms mandatorily, a minimum of 10 hectares of cash crop farm. So in Cross River State, everyone is a farmer.(general laughter).

...And what does this translate to for the state in terms of income?

In terms of income, the first thing we are hoping on generating is employment. And talking specifically on income, you don't generate a lot of revenue from taxation of agricultural products, from the cash exportable products like cocoa and the rest of them. Yes, especially from the government plantations, it generates considerable revenue and we have also set some target for ourselves. But for us, we think that the objective is processing. It is not enough to plant more and more cocoa and keep on planting while the cocoa processing plant is in Ondo, Lagos.(laughs).

So, we're looking at insisting that those who want to exploit the resource should also invest in the processing. The same goes on the rubber estate. We're insisting that people cannot continue to exploit rubber here without processing. So those who have bought into the private plantations have done so with an understanding that they will ultimately process. Now that will also have its share of a considerable multiplier effect on our economy, if we cannot only grow but also process. So that is what we want to encourage and we're creating the incentives for that to happen.

Now let's come to the issue of power. Being a former minister in this highly controversial sector, what plans does your government have towards improved power generation and subsequent distribution to the state?

We have been looking at improving supply to Cross River State. And I think the quickest solution will be to complete the on-going project, which is the National Integrated Power Projects (NIPP) in Odupani as well as the various transmission projects. Be that as it may, the fortunate thing that we have is that a private company is bringing in a gas pipeline.

And if that is achieved, the possibility of generating power in Calabar becomes a reality. We have been talking with that company and looking at partnering with them to put a gas turbine plant here, and once that line is completed, it will feed a captive market in Calabar at the distribution level. So looking at the captive plants that will inject power at the distribution level in Calabar, it will be an interesting model.

These captive plants being talked about are generating plants, I suppose. Now, how do they get fired?

Yes, that's what I am saying. Once you get gas, then you can generate electricity. Once the gas pipeline can come into Calabar and then you can generate electricity, so it will be a captive generation plant. You know it is one thing to generate electricity and it's another thing to distribute it. So even if I generate it, when I'm distributing it , I have to feed into the national grid, the PHCN network.

But isn't this the crux of the whole matter? Do we really need to generate and channel through the national grid? Is there no other way to get the generated power distributed, other than through the obsolete grid?

The only way is to build your own grid, and quite frankly building a grid is a significant cost. So if you ask me I would say that government should concession some of these distribution areas to private sector and then the private sector will be encouraged to.

But I thought that was the whole idea with the unbundling of the PHCN into 18 different companies?

That's the whole idea. But let's just hope that somebody sees it through...(laughter)

Now these captives captive plants you talked about, do you have a targeted megawatts you are hoping to generate?

It's not about megawatts.

I always tell people not to talk about megawatts, rather it's good to talk about demands.

You see, if you have a captive plant that treats Calabar, then what you have to do is access the demands for your potential consumer or customers as the case may be.

If you know what the demands, for instance, of a free trade zone is, in Tinapa, in the ports, in the industrial areas, you now say okay, am going to take over that area. That's what makes it a captive area. So the utility cedes that area to you, so you can deliver electricity to that area. So the number of megawatts will be determined by the demand. The demand that is existing and planned.

So in your own project planning, you use turbines that are small and you build up in modules so you can always add additional capacity as the demand grows.

If you generate all the power and you can feed it into the system or get to the consumer, then it remains a challenge.

There must be some concession reached as no one will built a power plant, not even Cross River State government and would not have a customer to deliver the power to.

If I build a power plant and all the customers belong to PHCN, then PHCN either has to cede the customers to me or I have to build an independent network and now struggle with PHCN , even the most advanced countries don't have multiple distribution lines feeding people. So that is a big challenge for us but if PHCN cedes aspects of the distribution network, then I would have clients and also a viable projects. It means that I have people who would take the electricity and pay for it.

The alternative, however, is to put in my plant, give the electricity to PHCN and if PHCN decides to pay me, all well and good. And the day they say they don't have money, I don't get paid. So that amounts to a bad investment decision under that type of arrangement. That's why people don't understand that there are no IPP's nobody is building.

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