CBN issues guidelines on N300bn aviation, power intervention fund


WEDNESDAY, 25 AUGUST 2010 01:19       


The Central Bank of Nigeria (CBN) on Tuesday issued guidelines on how to access the N300 billion power and aviation intervention fund to support President Goodluck Jonathan’s current initiatives in the two sectors.The amount is part of the initial N500 billion intervention fund announced in April 2010 in a bid to catalyze financing of the real sector of the Nigerian economy. The purpose of the fund is to help sustain private sector investment in the two sectors. The guidelines for the disbursement of the fund have also been released.


Accordingly, the Bank of Industry (BoI) has been appointed as the managing agent vested with the responsibility for the day-to-day administration of the fund, while the African Finance Corporation (AFC) will serve as the technical adviser. Also, all Deposit Money Banks (DMBs) and Development Finance Institutions (excluding BoI) have been enlisted to participate in the scheme.


In a statement signed by Mohammed Abdullahi, head, corporate communications of the CBN, companies wishing to participate in the scheme must be duly registered and must have been involved in the electricity power supply value chain, which includes power generation, transmission, distribution and associated services.


Also, eligible projects can be promoted by private or public initiative, or a combination of both, which must be structured either as a profit oriented business concern, or a public service, on the condition that contracted cash flows or financing support exists to ensure repayment of principal and interest, in addition to long term viability.


On aviation projects, the CBN said any airline duly incorporated under the Company and Allied Matters Act (CAMA) 1990, and operating in Nigeria is eligible to apply for the facility. The funds will be administered at an all inclusive interest rate and charges of 7.0 percent (BoI 1.0 percent as management fee and participating banks, 6.0 percent payable on quarterly basis).Specifically, the fund is meant for refinancing existing loans and leases, and as working capital for both power and aviation sectors, while the long term segment of the fund is exclusively applicable to new power projects only.


The security to be offered by the participating banks to BoI will be in the form of a bank guarantee backed by a payment order for the participating bank’s accounts to be debited by the CBN by any amount due, in case of default based on the on-lending agreement signed by BoI and each participating bank for approved projects.Experts have tasked the apex bank to ensure proper monitoring and implementation of the fund.Meanwhile, the National Union of Electricity Employees (NUEEE) is to embark on a strike today because of unpaid monetization arrears which are long overdue.





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