Banks Mull Funding Strategy on Power Projects
The Story is from The Nation
Nigerian banks have started a collaboration to develop amenable financing framework that would serve as financial industry’s master template for lending and funding of the power sector.
The strategic funding plan is being developed under the auspices of the Bankers’ Committee with active participation of top management of banks, the Central Bank of Nigeria (CBN) and other key stakeholders.
The funding strategy is a linchpin in the Bankers’ Committee’s programme for the year, 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 in the know said the development of an industry-wide funding strategy was part of the outcomes of the discussions at the retreat.
It was gathered that the funding strategy will provide the banking industry with a 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.
A bank may adapt the funding strategy to suit its internal structure and terms, but the template would provide guidelines, structures, terms and concepts, among others for the 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 input 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 will enable banks to 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.
Besides, 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.
Chairman, Economic Development and Sustainability of the Bankers’ Committee/Managing Director, Access Bank Plc, Mr Aigboje Aig-Imoukhuede, said banks are aware that the growth, prosperity and national security of Nigeria depend on the success of the power sector transformation.
According to him, the Bankers’ Committee would continue to collaborate with the government and other stakeholders to create and sustain enabling environment for private sector funding of the required investments in the power sector.
He noted the potential impact of stable and adequate power supply on the national economy pointing out inadequate power supply has been the bane of the underdevelopment and non-competitiveness of the manufacturing sector.
He reiterated the commitments of banks to continuously explore ways of providing adequate and suitable finances to the three key sectors of power, agriculture and transportation adding that the Bankers’ Committee’s focus on these sectors was borne out of the deep appreciation of the critical importance of the sectors as catalysts for the growth and development of the economy.
