Govt to sell N75b bond to boost infrastructural capacity



07 September 2010

The Federal Government may have concluded plans to sell its first global bond of $500 million next month.


The bond, after sale, may be used by the government to revive infrastructure in the ailing power sector.


Federal Government was also believed to be planning a sovereign wealth fund that would be financed by oil revenue next month.

Already, government has earmarked about $1 billion as a take-off grant for the fund.


Stating this in an on-line interview with an international agency in London, at the weekend, Finance Minister, Olusegun Aganga, said government plans to sell its first global bond of $500 million in October, in furtherance to its strategy of achieving 10 per cent economic growth at the end of the year.


“Today we have a government that’s committed to encouraging investment,” he said adding “We have a government ready to deliver infrastructure.”


Power outages are a daily occurrence in the country, where demand for electricity almost double the current supply of 3,000 megawatts. Nigeria, Africa’s second-largest economy after South Africa, has a population of 140 million.

Increasing economic growth to a minimum of 10 per cent later this year is “achievable,” the minister said.


President Goodluck Jonathan said last month, that the government plans to dissolve the board of the Power Holding Company of Nigeria (PHCN) and expand electricity generation through private investment to ease shortages of power supply.


The economy expanded by 7.4 per cent in the first half of the year, compared with 5.9 per cent in the same period last year, driven by growth in the non-oil industries, he said.


The sovereign wealth fund will replace the Excess Crude Oil Account, which the government previously used to finance expenditure, Aganga said.


Part of the new fund, he said, will be dedicated to savings that the government can’t touch unless oil prices dropped, the bulk of the fund would be used to finance infrastructural projects, he said.


The Excess Crude Oil Account, he said would hit $1 billion by the end of the year, from between $500 million and $800 million.

According to Aganga, the excess would be transferred to the sovereign wealth fund to act “as a catalyst for both local and international investors,” he said.


He said the third part of the sovereign wealth fund would be a stability fund that will be similar to the current Excess Crude account, the fund will be difficult for the government to access, Aganga said.


Nigeria is also planning to attract investment its power industry, and has received interest from investors from China, Brazil and Germany, Aganga said in an interview with Maryam Nemazee on Bloomberg TV’s


“The Pulse” in London today.


“We’ve had calls from so many investors,” he said. Even before recent changes to the industry were announced, “I received at least two to three calls from major investors.”


Source: Guardian



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