Banks invest N116bn in 36 power projects

By MICHAEL EBOHBanks in Nigeria have invested about N115.73 billion in the funding of 36 power projects across the country in the last four years, under the Power and Airline Intervention Fund, PAIF.According to the report of activities of the Development Finance Department of the Central Bank of Nigeria, CBN, out of the total sum of N300 billion approved for the financing of power and airline projects, N233.16 billion was released to the Bank of Industry, BoI, and disbursed through banks with the 36 power projects getting N115.73 billion.The report compiled by the Board and Publication office of the Development Finance Department, explained that PAIF was designed as part of the quantitative easing measure to address the paucity of long-term credit and acute power shortage in the country.Giving a breakdown of the amount, the report noted that total net amount released stood at N233.161 billion; total amount disbursed to banks stood at N233.161 billion; amount approved for release to the BoI — N237.23 billion, while the balance of unutilised PAIF fund stood at N62.77 billion.The report further disclosed that total repayment stood at N32.363 billion, noting, however, that no repayment was remitted by the BoI to CBN under the PAIF in the month of May, 2014.For the first quarter of 2014, the CBN said a total of N508.00 million was disbursed under PAIF from January to March, 2014.The CBN stated that total repayments from 10 power projects stood at N3.199 billion as at the first quarter of 2014.In the revised guidelines for the N300 billion Intervention Fund, the CBN said the objective of the fund is to fast-track the development of electric power projects, especially in the identified industrial clusters in the country.It further stated that the fund is aimed at serving as a credit enhancement instrument to improve the financial position of the Deposit Money Banks (DMBs).Continuing, it said, “Other objectives are to improve power supply, generate employment, and enhance the living standard of the citizens through consistent power supply and also provide leverage for additional private sector investments in the power and aviation sectors.” The Bank of Industry is the managing agent of the fund and is responsible for the day to day administration of the fund, while the Africa Finance Corporation, AFC is the Technical Adviser to the fund.For power projects to qualify, the CBN said the fund is for “any 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.“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.“The project company may also offer appropriate credit enhancement options to support its financial obligations.“The project could be already existing and in operation, in design/development, under construction, or existing but operationally inactive.“The refinancing of existing loans for captive power projects for corporate entities that are not power companies will only be eligible if the investments are not older than two years from the date of the application. “For the avoidance of doubt, this restriction will not be applicable to captive power projects implemented and managed by power companies“Gas-to-Power promoters must tender verifiable evidence of off-taker purchase agreements for their projects to be eligible.