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.