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CBN disburses N39.6bn intervention fund for five projects

By BusinessNews Staff on January 19, 2014

The Central Bank of Nigeria has released N39.61bn for five projects under the Power and Airline Intervention Fund.

While four power sector projects received N13.61bn of the money, only one airline got N26bn, the CBN stated in its latest Financial Sector Stability report.

The report said the funds, which were provided through the banks in the first half of 2013, offered a window to finance power sector projects as well as restructure and refinance outstanding facilities in the aviation sector on a long-term basis.

This, it said, was for a period spanning 10 to 15 years at a concessionary interest rate of seven per cent.

The central bank said the PAIF helped in relieving the banks of the burden of non-performing loans on their balance sheets and improved the credit rating of the beneficiary institutions.

The N300bn PAIF had helped the CBN to provide long tenure, fixed and single-digit interest rate funds for power investments in March 2010.

As of September 30, 2013, the sum of N109.3bn was disbursed to 21 companies through 11 banks.

The funds were, among others, used to finance the construction of 125-kilometre gas to power pipeline and the generation of about 800 megawatts of power mostly by manufacturing companies to guarantee stable power supply and free the national grid to other users.

Under the PAIF project, the CBN made available the sum of N300bn to stimulate credit to the domestic power sector and the troubled airline industry.

The amount was part of the initial N500bn intervention fund to catalyse the financing of the real sector of the economy.

The main objective of the initiative was to help finance the power projects and allow banks to refinance loans to the heavily-indebted airline industry.

The CBN Governor, Malam Lamido Sanusi, while commenting on the latest financial stability report, said the efforts of the regulatory and fiscal authorities in addressing the challenges of the global economic crises were evident in the first half of 2013.

He said the projected weaker global demand, slower growth in key emerging markets and slow recovery of the Eurozone would require the monetary authorities to sustain the implementation of monetary and macro-prudential policies to achieve financial system stability.

According to him, the economy recorded some impressive macroeconomic achievements in the first half of last year despite the challenges.

Specifically, the country recorded strong Gross Domestic Product growth, single-digit inflation, exchange rate stability, capital market recovery and growth in external reserves.

[Punch]

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