CBN Governor, Mr. Godwin Emefiele
Deposit Money Banks in the country are gearing up to invest over $3.623bn (about N598bn) in the power sector, the Federal Ministry of Power has said.
Figures contained in the latest Power Enabling Nigeria publication for the second quarter of 2014 showed that the banks had adopted different models in a bid to raise funds that would enable them to finance the sector.
Among the models adopted by the banks are the sale of dollar-denominated bonds, issuance of Eurobonds and raising funds from the equities market to invest in the privatised power industry. The over $3.623bn investment is in addition to the $1.3bn total banking loans to the sector in 2013 for the electricity distribution companies and $1.7bn for the power generation firms.
According to the report, the interests of the DMBs were heightened by the fact that private sector investors had taken over Nigeria’s power sector. This, it stated, had led to a boom in the demand for generation, distribution and transmission facilities such as aluminium conductors, meters, transformers, cables, transmission towers and other accessories.
It outlined the banks with interests in the power sector to include Zenith Bank Plc, Diamond Bank Plc, Union Bank of Nigeria Plc, Access Bank Plc, Sterling Bank Plc, Skye Bank Plc, Fidelity Bank Plc, Guaranty Trust Bank Plc and First Bank of Nigeria Limited.
Detailing the magnitude of financial investments by the banks in the sector, the power ministry said, “Zenith Bank Plc sold its $500m dollar-denominated bond. The bank had explained that the proceeds would enable it to finance the power sector. Similarly, Diamond Bank Plc issued its debut $200m five-year Eurobond. The bank also plans to tap into the equities market to raise about $300m.
“Diamond Bank is seeking to raise $500m additional capital also for the growth of the Nigerian power sector; while Union Bank Plc is seeking approval to raise $750m, Access Bank Plc at its recently held Annual General Meeting got approval of its shareholders to raise $1bn.
“Sterling Bank recently disclosed plans to issue a $200m Eurobond early next year, while Skye Bank, which raised N50bn last year, is also eyeing the Eurobond market.”
It was further gathered that other banks that had also tapped into the Eurobond market to raise funds for the power sector were Fidelity Bank, Guaranty Trust Bank and First Bank.
The Federal Government, in the report, dismissed claims that the power sector was bankrupt. It stated that as the funding from the banks was rolling in, other internationally recognised power firms as well as some governments had expressed interests in the industry, stressing that “the Nigerian power sector is not broke as some persons would like the world to believe.”
Senior power ministry officials told our correspondent that the latest N213bn Central Bank of Nigeria intervention fund had made the banks, which hitherto had developed cold feet in power sector financing, to review their decisions in order to work out ways to strike funding deals in the industry.
The Federal Government recently announced new measures to address financing related issues in the power sector. Top among the measures was the provision of the N213bn intervention facility to settle legacy gas debts.
The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, stated that the facility, which would be provided by the CBN through the banks, would also be used to address revenue shortfall in the power sector. According to her, inadequate gas supply for power generation is one of the three major issues affecting the sector.