Apart from the effort from the Federal Government to ensure that electricity generation is boosted in the country, some financial institutions have also pledged their support to finance some of the projects that will increase electricity generation in the country. For instance, the African Development Bank (AfDB) recently approved 184.2 million dollars loan (N29.4billion) to encourage private investments into the Nigerian power sector. The approval, which was made in Addis Ababa before the end of last year, is under the bank’s Partial Risk Guarantee (PRG). The bank said it also approved 3.1 million dollars loan to enhance capacity building in power generation and distribution to meet the country’s 40,000 MW target by 2020. “The Board of Directors of the AfDB group approved an African Development Fund (ADF) Partial Risk Guarantee (PRG) programme of 184.2 million dollars and an ADF loan of 3.1 million dollars for capacity building, to support the Nigerian power sector privatisation programme. The board’s decision will allow the AfDB to support the Nigerian government’s efforts to reform the power sector and position the country for sustainable and inclusive growth,” the bank said. According to the bank, the PRG programme in Nigeria aims to increase the country’s electricity generation by catalysing private sector investment and commercial financing in the power sector. “The PRGs will mitigate the risk of the Nigeria Bulk Electricity Trading Plc (NBET), a Federal Government of Nigeria entity established to purchase electricity from independent power producers (IPPs). It will also prevent the risk of not fulfilling NBET’s contractual obligations under its power purchase agreements with eligible IPPs. “This in turn will increase the comfort level of private sector financiers and commercial lenders investing in the Nigerian power sector privatisation programme,” the bank added. According to the bank, available data from the Nigerian government shows that power outages cost the country about three per cent of its GDP annually. “It is anticipated that the IPPs eligible for coverage under the programme could generate additional 1,380 MW of power by 2016. “This will in turn increase Nigerians’ access to more reliable and affordable electricity from 41 per cent currently to 50 per cent by 2016,” the statement said, explaining that the potential impact of the programme would ensure effective and steady power supply, which is critical to the sustainability of Nigeria’s development path. The bank’s Director for Energy, Environment and Climate Change, Alex Rugamba, noted that the Nigerian PRG programme was expected to improve productivity, economic activity and growth that would reduce poverty. “In the short to medium term, the project will yield an increase in the maximum electricity supply and consumption per capita,” he stated. Rugamba noted that Nigeria would need more private investment in the power sector to meet its development objective of ranking amongst the top 20 economies of the world by the year 2020. The director said that private sector investment was required in the supply chain for the country to meet the generation targets. Nigeria’s current maximum electricity generation capacity of approximately 5,500 MW is inadequate to meet demand estimated at 10,000 MW. Also, Ecobank Nigeria, one of the leading financial institutions in the country also expressed its determination of playing a significant role in Nigeria’s power sector, with the pledge of investing over 25.184 billion to support private participation in the development of Nigeria power sector. Under the initiative, Ecobank pledged $5billion on annual basis for five years to support the development of the power sector .in a in a statement made public recently that it played a major role on the buy-side of the recent power sector privatisation by providing financial advisory services, lead arranger role, acquisitioning financing and guarantees to Distribution Companies (DISCOS), Generating Companies (GENCOS) and National Integrated Power Plants (NIPP). According to the bank, the projection is in line with its policy to support the growth and development of the Nigerian power sector. Ecobank Country Head, Power and Energy, Olufunke Jones, was quoted in the statement as saying that the bank’s objective was focused on playing actively at all levels of the sector’s privatization which includes distribution, transmission and generation. In her view, Nigeria has one of the largest gaps between demand and supply for electricity and therefore requires a combination of favourable government policies, private sector participation and foreign direct investment (FDI), as well as transparency and persistent monitoring that will guarantee an improved business environment to bridge the gap. Jones said that the current power reform has given the opportunities for capital expenditure and operating expenditure funding. “There is the urgent need to rehabilitate the distribution networks in order to make them robust and flexible enough to accommodate the nation’s demand for power,” she added. The Local Account Manager, Corporate Banking Group, Ecobank Nigeria, Mrs. Funmilola Ogunmekan, was also quoted as saying that unlike the telecoms industry where new investors were able to take advantage of new technologies to redefine industry norms, the power sector is faced with the challenges of upgrading mostly obsolete equipment and processing under a traditional technology framework. Ogunmekan reiterated that Ecobank would leverage its position as a bank with the third largest branch network to provide effective utility collections and cash management services while providing the required additional capital and operating expenditure funding requirement for at least five of the distribution companies across the country.
(Visited 93 times, 1 visits today)