Power Supply Needs $8bn/year

FBN Capital
Limited has
declared that Nigerian banks cannot fund the $8 billion yearly power
needs alone and thus called for the support of institutional and foreign
investors to fund the huge resources needed to drive various ongoing
infrastructure projects, for the next 10 years.
Speaking at the 1st FBN Capital Project and Infrastructure Finance
Conference which held in Lagos, Director and Head, Project and Structured
Finance, FBN Capital Limited Patrick Mgbenwelu noted that specifically
considering the nation’s power projects alone, about $8- $12 billion would
be needed yearly for the next 10 years, to meet up with the large deficit of
power demand and supply in the nation, which the banks alone would not
be able to fund.
“This funding cannot come from the banks alone” he said. “There is the
need for institutional investors and foreign investment to bridge the
funding gap” he noted, adding that Greenfield IPPs will emerge to bridge
the energy gap, while Government’s Private Public Partnership, PPP
commitment will fuel various infrastructure projects such as rails, roads,
bridges, and airports among others.
Participants at the event were unanimous in the position that although
Nigeria’s vast natural resources and growing power and infrastructure
demands has rightly garnered substantial interest from lenders and
developers from across the globe, there remain challenges in ensuring the
country’s huge potential is realised.
Mgbenwelu said multi-billion dollar government projects will require
private sector involvement, therefore creating the need for Special Purpose
Vehicles (SPVs) as obligator financial vehicles.
Highlighting the importance of infrastructure finance, he said investors can
choose to approach finance institutions and seek funds either as a
corporate entity or directly through the projects, (Corporate Finance route
or Project Finance).
According to him, project finance as an option for accessing funds is an
avenue for managing risk, instead of bearing them directly as a corporate
organisation.
“Additional expansion funding can be raised with ease, subject to the
project achieving steady state,” he said.