Banks develop framework to support power projects

Deposit Money Banks in the country have started a collaborative effort to develop amenable financing framework that will serve as the financial industry’s master template for the funding of the power sector.

A statement made available to our correspondent on Friday said the strategic funding plan was being developed under the auspices of the Bankers’ Committee with active participation of top management of all banks, the Central Bank of Nigeria and other key stakeholders.

The funding strategy, which largely focuses on aligning the Nigerian banking system to provide adequate financing to meet the peculiarities of the power sector, is top on the Bankers’ Committee’s programme for 2013.

The statement said the development of an industry-wide funding strategy was part of the outcome of discussions at the fourth annual retreat of the committee

While individual banks may adapt the funding strategy to suit their internal structure and terms, the template will provide overall guidelines, structures, terms and concepts, among others, for the entire industry.

The CBN, according to the statement, will sign on the banking industry funding strategy for power sector, which will give the template a quasi-regulatory status.

Banks are also expected to consider inputs of key non-bank stakeholders such as the Bureau of Public Enterprises, Nigerian National Petroleum Corporation, Ministry of Power and Energy Commission of Nigeria, among others, in the overall draft of the funding strategy.

This is to give the plan a higher level of general acceptance beyond the banking industry.

The funding strategy, the statement said, would enable banks to provide well-structured finances to support investments in gas transmission pipelines, upstream gas developments, Liquified Natural Gas and Liquified Petroleum Gas plants, gas processing facilities, key infrastructure, port, real estate, pipe milling and fabrication yards and gas supply and gas transportation infrastructure, among others.

Besides, banks are required to reinforce their energy desk to build capacity for power project financing, while the Bankers’ Committee will continuously provide supports for advocacy and programmes that centre on power sector transformation.