FG seeks $3.4billion foreign loan for power projects

Federal Government is looking beyond Nigerian banks to raise $3.4bn needed to fund power projects in the country because of high interest rates being charged on loans by local banks.

The Chairman, Presidential Task Force on Power, Beks Dagogo-Jack, said Nigerian banks had not done enough in terms of understanding how the ongoing reforms in the power sector worked.

He spoke with journalists on the sidelines of the Presidential Power Reform Transaction signing ceremony in Abuja on Monday.

According to him, the international financial institutions that will fund the Transmission Company of Nigeria’s projects are willing to provide the capital at competitive interest rates.

Dagogo-Jack’s opinion was prompted by the Chairman, TCN, Tony Elumelu, who called on the Federal Government to start considering Nigerian banks as sources of financing power projects.

Elumelu, a former managing director of United Bank for Africa Plc, while speaking on behalf of the successful bidders for the power generating companies carved out of the Power Holding Company of Nigeria, said, “The Power minister made mention of banks that would fund the transmission grid project but did not mention any Nigerian bank.

The Minister of Power, Chinedu Nebo, had earlier said a total capital outlay of $3.4bn was required up to 2016 to bring the country’s transmission grid to evacuate all generated power.

Nebo observed that the massive increase in generation underpinned the need for a robust transmission grid, stressing that currently, the grid remained a weak link with a wheeling capacity of 4,800 megawatts.

The minister said installed available generation capacity had risen to 6,000MW, while generation capability had increased to 5,228MW with peak generation at slightly above 4,500MW.

Bidders who successfully paid the 25 per cent of their bid prices for five generating companies and 10 distribution companies were given payment certificate for the respective amounts they paid.

The execution of the World Bank Partial-Risk Guarantee Support Agreement for gas supply to the Egbin Power Plant was also signed between the firm and Chevron Nigeria Limited.

Stakeholders had observed that the absence of transaction agreements had affected the supply of gas to power plants, leading to power cuts.