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Published On: Tue, Apr 30th, 2013

Elumelu wants Nigerian Banks to Co-Finance $3.4bn Transmission Networks

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Tony Elumelu


Chairman of Transcorp Ughelli Power Plant and former Managing Director of United Bank for Africa (UBA), Mr. Tony Elumelu, has urged the federal government to grant Nigerian banks consideration to participate in funding scheduled long-term projects aimed at boosting Nigeria’s electricity transmission network.
The government had disclosed at the recent signing of transaction documents between it and operators in Nigeria’s power supply industry that it needed about $3.4 billion to fund the expansion and upgrade plans of the Transmission Company of Nigeria (TCN) between now and 2016.

It also noted that it was considering several financing options amongst which are funding from the transmission development fund, international development banks and multilateral agencies. The government had also indicated that such funding mix will have to come with considerate lending terms.
Specifically, the Minister of Power, Prof. Chinedu Nebo, said: “A total capital outlay of $3.4 billion is required up to 2016 to bring our transmission grid to evacuate all the generated power. Government is working out the funding of TCN long term expansion plan from a mix which will include the transmission development fund, international development banks and multilateral agencies,”
But in a swift response to the funding proposal, Elumelu whose firm alongside General Electric (GE) target to improve the generating capacity of the Ughelli Thermal Power Station to about 650 megawatts (MW) within two years, told the government that local banks in the country could raise the needed finance if given the opportunity.
Eleumelu said: “History is upon us today, we know the circumstances of power in the country and we are in firm belief that the most sustainable form of development is the public-private partnership (PPP) anchored on transparency and two cardinal pillars; the public sector providing an enabling environment and the private sector taking advantage of such.
Mr. Minister, I heard you talk about seeking for funds from the offshore to finance projects in the transmission network; I want to tell you that the Nigerians banks have come a long way and can provide funding for this. The Nigerian banks have come of age to embark on such ventures and I think you should include them in the funding mix for TCN expansion plans, they can fund it.”
It is however not clear how Nigerian banks could tie into the funding mix considering the terms of agreement usually involved in such long term loans.
For instance, THISDAY gathered that the government was keen on securing long term funding means with very low interest rates quite unlike the average percentages charged by Nigerian banks.
Accordingly, the government is also considering a contractor-type financing for the expansion project where contractors would undertake projects and paid through long term government bonds.
Technically, TCN has been adjudged as the weakest link in Nigeria’s power supply chain with a current overall wheeling capacity of about 4800MW; the government however plans to boost power generation by 10000MW in 2014 and 20000M in 2016.

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