4 February 2013

Nigeria: Banks Mull Funding Strategy for Power Projects

Nigerian banks have started a collaborative effort to develop an agreeable financing framework for lending and funding of the Nigerian power sector by the industry.

The strategic funding plan is being developed under the auspices of the Bankers' Committee, the Central Bank of Nigeria (CBN) and other key stakeholders, a statement said at the weekend.

The funding strategy is expected to be a linchpin 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 executive officer, the CBN top officials and several experts had brainstormed extensively on the power sector at the last annual retreat of the Bankers' Committee.

It added: "The funding strategy would provide the banking industry with a kind of master agreement or template that would foster best practices, remove inconsistency, ease access to funding and encourage regulator-operator understanding as banks move into the still-evolving power sector.

"While individual bank may adapt the funding strategy to suit its internal structure and terms, the template would provide overall guidelines, structures, terms and concepts among others for the entire industry.

"The CBN 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."

It further explained that the funding strategy would enable banks to provide well-structured finances to support investments in gas transmission pipelines, upstream gas developments, Liquefied Natural Gas (LNG) and Liquefied 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.

"Beside, banks are required to reinforce their energy desk to build capacity for power project financing while the Bankers' Committee would continuously provide supports for advocacy and programmes that centre on the power sector transformation," it added.

Chairman, Economic Development and Sustainability of the Bankers' Committee and Managing Director, Access Bank Plc, Mr Aigboje Aig-Imoukhuede, had said banks were aware that the growth, prosperity and national security of Nigeria depends on the success of the power sector transformation.

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