Following discussions between investors and Pension Fund Administrators, on investment in infrastructure, a huge chunk of pension funds may soon be injected into some power plants projects being conceived by some Nigerian investors.
Longe Eguarekhide, the President, Pension Fund Operators Association of Nigeria (PenOp),, who confirmed this developments in Lagos recently said the operators are awaiting proposals and the project development.
“We have started to chart the way forward. There was a suggestion that we do small projects. The only problem is that those projects do not impact broadly to the general community. The power project spoken about which is in Lekki, Lagos, is to serve the proposed private refinery.
“The project that the former governor of Cross River State, Donald Duke, is involved in would also require a power project. These projects we would consider. I would like to see those projects developed, so that it can attract pension money. We are already talking,” he said.
The government and private sector have been eyeing pension funds for investment in infrastructure, but their inability to meet the stipulated laws have remained a clog to accessing the funds.
The National Pension Commission (PenCom) has maintained that out of N1.06 trillion available for infrastructure financing, only N1.36 billion has been taken as at December 31, 2015, leaving N1.059 trillion untapped.
PenCom stated that the government and private sector operators were unable to access the funds due to non-availability of investment instruments that qualify for pension fund investment as stipulated in the Investment Regulations.
It noted that for government to access the pension funds for infrastructural development, there should be determination of key infrastructure segments to focus on – roads, rails, power and ports, and need to identify potential projects and create Private Public Partnership (PPP) vehicles for these projects.
It also urged the government to put in place appropriate government guarantees that will improve ratings of infrastructure projects and thereby increase their attractiveness to institutional investors.
“Provide other government support, such as long-term policy planning and tax incentives to encourage investors invest in less liquid, long term infrastructure investments.
“Create a public/private intermediary that provides instruments, such as takeout financing, co-financing in the form of long-term or subordinated debt, and a variety of guarantees.
“The intermediary would need to have a credible governance and management structure in place that provides oversight as well as checks and balances to maximally insulate its operations and decision-making from political influence.
“The intermediary should provide the credit assessment and arranger functions,” it said
PenCom canvassed improved coordination between key stakeholders such as the Central Bank of Nigeria, the Ministry of Finance, the Infrastructure Concession Regulatory Commission, Securities and Exchange Commission, and various line Ministries, Departments and Agencies to ensure that the right projects are initiated, financed and successfully completed.
Source: Nigeria Today