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CBN disburses N109.3 billion towards improved power supply

By News Express on 27/09/2013

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The Central Bank of Nigeria (CBN) has disbursed N109.3 billion out of the N300 billion Power and Airline Intervention Fund (PAIF) established in March 2010 to fast-track the development of electric power projects through the provision of the much needed long tenured, fixed interest funds to catalyse private sector investments in the power sector.

CBN Governor, Mallam Sanusi Lamido Sanusi, disclosed this while speaking at the Bankers’ Committee Special Forum on Financing Power Sector Reforms for Economic Development held today at Transcorp Hilton Hotel, Abuja.

Restating the CB’s support for the current efforts by the President Goodluck Jonathan administration to reform the power sector and stabilise power supply, Sanusi said: “As at 20th September, 2013, the sum of N109.3 billion was disbursed to twenty (20) companies, mostly manufacturing giants, by eleven (11) banks (Access, Diamond, Ecobank, FBN, FCMB, Fidelity, GTB, Stanbic IBTC, UBA and Zenith).”

This, he said, is in addition to a grant of N1.6 billion made to the Bureau of Public Enterprises (BPE) by the CBN in 2011 to support the electric power privatisation as follows: to engage HR and Actuarial Valuation Advisers for Successor Companies of PHCN; and to fund the activities of the FGN negotiations team that will negotiate severance liabilities with the unions of PHCN.”

Sanusi said that the apex bank has in addition financed captive power projects by manufacturing companies principally to guarantee stable and reliable power supply and to free the national grid to other users.

“To ensure sustainable framework for leveraging Private sector finance into Infrastructure development, the CBN has produced an Infrastructure Finance Policy. The Policy which is now an input into the financing strategy for the National Integrated Infrastructure Master plan if implemented will ensure the tailored finance to the project development chain in Nigeria,” he said.

He identified other steps taken by the CBN to include a “a review of Prudential Guidelines recognizing longer time lines for measuring asset quality, based on the gestational periods for projects in the target sectors,” introduction of specialized banks, and review of the performance of the Development Finance Institutions (DFIs) “in collaboration of other stakeholders . . . with a view to restructuring them to effectively contribute to nation building.”

Sanusi said that the ambition of the FGN to meet the vision 20: 2020 target of 20,000MW requires an investment in power generating capacity alone of at least US $3. 5 billion per annum, for the next 10 years (BPE, 2013). “The total investment required to reinvigorate the distribution system over the next 5 years is also put at $1.8 billion (N288 billion) which translates to annual investments of N57.2 billion in the Discos,” he stated.

On the next steps that should be taken, Sanusi said: “The economy needs to leverage pension and insurance funds to provide financing for power and other critical infrastructure projects.” He also highlighted the need for “perfect modalities for the floating of development bonds as a means of low cost and long term funding” and to “facilitate the intervention of international financing particularly from the emerging markets (China, Brazil, India) to augment local funding options.”

The CBN Governor made it clear that “the banking community regards electric power supply as the prime development catalyst that deserves special attention due to its multiplier effect in the economy.”

He declared that “the power sector privatization that kick-started in December 2010 has reached an enviable milestone,” adding: “Indeed, the Bankers’ Committee wishes to identify with the Federal Government in its desire and zeal to fast-track the full implementation of the initiatives outlined in the EPSR Act.

“The Bankers Committee will continue to collaborate with government to create an enabling environment to attract private sector funding that will increase the national power generation capacity, ensure availability of gas for power generation, and reduce losses resulting from inefficient transmission/distribution network.”

•Photo shows CBN Governor Sanusi at the event, flanked on the left by Vice President Namandi Sambo.

Source News Express

Posted 27/09/2013 8:20:14 PM





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