THE Central Bank of Nigeria (CBN) plans to increase the N300 billion Power and Airline Fund (PAIF) with a view to increasing available funds for power sector projects and further create amenable structures directly suitable to the peculiarities of the power sector.
The extension is one of the major planks of the apex bank and banking sector’s economic development programme for this year. The objectives include the size, tenors, structures, projects, collaterals and other terms in a holistic approach to further align the financial system to the critical funding requirements of the power sector.
The power sector transformation is a major thrust of Federal Government’s Transformation Agenda with a major target of generating 40,000MW by 2020. However, it has been estimated that the power generation segment would require investments of at least $3.5 billion yearly over the next 10 years to meet the target.
The CBN launched the power sector fund in August 2010 with the objectives of addressing the critical finance needs and peculiarities and stimulate lending to the power sector. Managed by the Bank of Industry (BoI) under the technical assistance of the Africa Finance Corporation (AFC), the power fund prioritises key power projects and provides funds at an interest rate of 7.0 per cent payable on a quarterly basis. The fund covers refinancing of existing loans and leases as well as working capital for the sector.
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