Governor of the Central
Bank of Nigeria (CBN), Mr. Lamido Sanusi, has said that 11 deposit money banks have so far disbursed the sum of N109.3bn to 20 companies from the N300bn Power and Airlines Intervention Fund provided by the CBN in 2010.
Sanusi, who stated this in a keynote address at the second biennial regional conference of the West African Institute for Financial and Economic Management in Lagos on Monday, said the disbursement was meant to fast-track the development of electric power projects in the country.
The two-day conference entitled, ‘Financing infrastructure for sustainable development in West Africa’, was attended by governors and top officials of central banks in the region.
Sanusi said the provision of the much needed long tenor, fixed interest fund through the N300bn PAIF was essential in catalysing private sector investments in the power sector.
The CBN governor said, “The CBN has provided the much needed long-tenor, fixed and single-digit interest rate funds for power investments through the N300bn Power and Airlines Intervention Fund in March 2010.
“This is to fast-track the development of electric power projects through the provision of the much needed long-tenor, fixed interest funds to catalyse private sector investments in the power sector. As of September 30, 2013, the sum of N109.3bn has been disbursed to 20 companies by 11 deposit money banks.
“The fund has, among other things, financed the construction of 125-kilometre gas-to-power pipeline and the generation of about 800MW of power, mostly by manufacturing companies principally to guarantee stable and reliable power supply, and to free the national grid to other users.”
The CBN governor said the power sector privatisation was a critical component of the present administration’s Transformation Agenda and, as such, the central bank was playing a prominent role to ensure its success.
As a result, he said the CBN in 2011 also approved the grant of $10m to the Bureau of Public Enterprises to support the engagement of human resource and actuarial valuation advisers for the successor companies of the Power Holding Company of Nigeria.
The CBN boss said the $10m grant was also meant to fund the activities of the Federal Government’s team that was negotiating the severance liabilities of the PHCN workers with the unions.
The Central Bank, Sanusi recalled, also financed the drafting of the National Infrastructure Financing Policy in 2012, noting that the thrust of the policy was to provide a framework for leveraging private finance for infrastructure development.
He said the infrastructure policy was meant to promote the involvement of specialised funds and multilateral agencies in the financing of development projects; diversify and develop non-bank sources of long-term finance for infrastructure financing; and recommend incentives that would spur local and international project developers and financiers to invest in infrastructure in the country.
A number of initiatives were recommended by the infrastructure policy, according to the CBN governor, who listed them to include the implementation of an infrastructure project development facility meant to finance the development of a pipeline of bankable Public-Private Partnership projects; and the establishment of a government resource fund as an independent source of funds for providing direct government support to infrastructure projects.
Others are the establishment of long-term refinancing mechanisms for infrastructure assets; the provision of fiscal incentives to designated infrastructure projects; and the the establishment of a clear legal and regulatory framework; and development of standardised procurement process for private financing of infrastructure.