Nigeria’s Power intervention fund: Gencos, Discos owing banks N107bn – CBN


Electricity firms have repaid N50.289 billion as at June 2017, from the total loans accessed by the power industry in the N300 billion Power and Aviation Intervention Fund, PAIF.

According to data obtained from the Central Bank of Nigeria, CBN, N156.639 billion had been disbursed to power firms for 43 power projects across the country.

Of the total fund accessed by the power firms as June 2017, N50.289 billion had been repaid, representing 32.1 per cent of the total amount obtained by the sector in the period under review.

With the development, the electricity companies are owing N107 billion of the funds made available to them.

Giving further breakdown of the disbursements on a quarterly basis, the CBN disclosed that as at September 2016, power firms’ cumulative loans from the fund stood at N141.44 billion for 41 projects, representing 53.94 per cent of a total of N262.2 billion disbursed in the period, while the industry repaid N39.43 billion from their borrowings from the fund.

In recognition of this, the CBN established an Infrastructure Finance Office in March 2010, thereafter, the N300 billion Power and Aviation Fund, PAIF, was launched in 2011.

According to documents obtained from the CBN, the Fund is administered by the Bank of Industry, BOI, for onward lending to Deposit Money Banks at a maximum interest rate of 1.0 per cent, and disbursement at concessionary interest rates of no more than 7.0 per cent to client/projects of a 10 to 15 year tenor.

The CBN data als indicated that as at December 2016, power firms cumulative repayments stood at N42.578 billion from a cumulative of N151.852 billion borrowed from the PAIF out of cumulative disbursements of N272.615 billion. The projects for which the funds were assessed still stood at 43.

As at March 2017, cumulative repayments of N46.6 billion had been recorded from the power firms, the CBN indicated, adding that cumulative disbursements to the power industry stood at N152.58 billion for 43 projects.

The setting up of the fund was heralded by the CBN’s realisation that without adequate infrastructure, the Nigerian economy cannot overcome its structural challenges and achieve sustainable growth and development.

The CBN also disclosed that the African Finance Corporation serves as Technical Adviser to the Fund, while it expressed optimism that the Fund would act as a much-needed catalyst to bridge the country’s infrastructural gap through lending at concessionary rates to the private sector.

The PAIF was set up through the CBN’s approval for the investment of the sum of N500 billion Debenture Stock, to be issued by the BOI. Of the total sum, N200 billion was set aside for the refinancing/restructuring of SME/ Manufacturing portfolios while the sum of N300 billion was earmarked for power and airline projects.

The objectives of the Fund, according to the CBN, include to fast-track the development of electric power projects, especially in the identified industrial clusters in the country; serve as a credit enhancement instrument to improve the financial position of the Deposit Money Banks (DMBs); improve power supply, generate employment, and enhance the living standard of the

citizens through consistent power supply; and provide leverage for additional private sector investments in the power and aviation sectors.

To be eligible for the fund, the CBN said power firms must be a corporate entity, duly registered in Nigeria, involved in electricity power supply value chain that includes power generation, transmission, distribution, gas-to-power projects and associated services.

It also stated that the eligible projects can be promoted by private or public sector sponsors, or a combination of both, but must be structured either as profit-oriented business or a public service, provided that contracted cash-flows or financing support exist to ensure repayment of principal and interest, as well as long term viability.

It added that the project company may also offer appropriate credit enhancement options to support its financial obligations, while the project could be already existing and in operation, in design/development, under construction, or existing but operationally inactive.

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