4 February 2013

Nigeria: Banks Consider Funding Strategy for Power Projects

Nigerian banks have started a collaborative effort to develop financing framework that would serve as financial industry's master template for lending and funding of the Nigerian power sector.

The strategic funding plan is being developed under the auspices of the Bankers' Committee with active participation of top management of all banks, the Central Bank of Nigeria (CBN) and other key stakeholders.

The funding strategy is strategic in the Bankers' Committee's programme for 2013, which largely focused on aligning the Nigerian banking system to provide adequate financing to meet the peculiarities of the power sector.

Banks' chief executives, governor and top officials of the CBN and several experts had brainstormed extensively on the power sector at the recently concluded 4th annual retreat of the Bankers' Committee.

Sources said the development of an industry-wide funding strategy was part of the outcome of the discussions at the retreat.

The Central bank would sign on the banking industry funding strategy for power sector, which would give the template a quasi-regulatory status.

Banks are also expected to consider inputs of key non-bank stakeholders such as the Bureau of Public Enterprises (BPE), Nigerian National Petroleum Corporation (NNPC), Ministry of Power, Energy Commission of Nigeria (Encon) and NBET among others in the overall draft of the funding strategy, to give the plan a higher level of general acceptance beyond the banking industry.

The funding strategy would enable banks provide well-structured finances to support investments in gas transmission pipelines, upstream gas developments, Liquified Natural Gas (LNG) and Liquified Petroleum Gas (LPG) plants, gas processing facilities, key infrastructure, port, real estate, pipe milling and fabrication yards and gas supply and gas transportation infrastructure among other.

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