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Power sector to be financed by syndication, financial clubs

By Ottoabasi Abasiekong on January 14, 2013

Knowing how enormous and capital intensive the power sector projects have become in the country, it has been revealed that syndication or club deals will create vital avenues for local banks to meet the huge financial demands of power generation, distribution and supply in the country.

Power has been one of the key sectors in the list of the President Goodluck Jonathan administration, identified as the key areas that will unlock Nigeria’s Industrialization, Agricultural revolution, Innovation and National Transformation.

Currently, Technical Partners mainly Private Companies have been going through the scrutinization of banks on their capacity and viability of their assets, to get necessary loans to finance their projects.

The Power sector had moved from the control of the state the era of the National Electric Power Authority to a Private Holding Firm Power Holding Company of Nigeria (PHCN) but is still faced with diverse challenges at the moment.

Incidentally the Enugu Electricity Distribution Company has relieved Indian Company Spanco of its franchise and position as its technical partner. It also loses its right as the reserve bidder for the Enugu Disco.

Understanding how key Generation and Distribution is to the Power sector in the country, the Nigerian banks in several discussions amongst themselves are strategizing ways to pool relevant funds, that can fund the power sector reforms.

Foreign Banks who could without stress release funds for the project are closely watching and monitoring the trends, considering the antecedents of corruption and mismanagement in past power projects in the country.

Speaking on the issue of Managing Director of Skye Bank Mr Kehinde Durosinmi Etti said “The post reform banks have enough capacity to fund multi million dollar deals, either through syndication or in partnership with foreign banks”.

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