CBN Releases New Procedures for N300bn Power Fund

The Central Bank of Nigeria has released new procedures that will shape the payout of the N300bn Power and Airline Intervention Fund.

According to the eight-part procedure, any power or airline company that defaults in the payment of the loan shall be charged the commercial interest rate (over 20%) on the amount of default, instead of the 7% stipulated in the Fund. Also, any Deposit Money Bank (DMB) or Development Financial Institution (DFI) that fails to payout the fund within 14 days of receipt to the power or airline firm shall be charged the maximum lending rate of the bank as a penalty for the period that the fund was not paid out.

Under the power sector, the CBN stated that any corporate entity involved in electricity power supply value chain that includes power generation, transmission, distribution, gas-to-power projects and associated services, is eligible for the loan.

The document listed the types of loans available under the PAIF as: long term loans (for new power projects); refinancing of existing loans (power and airline projects); refinancing of existing leases (power and airline projects); working capital (for existing power and airline projects only); and refinancing of aircraft hangar projects. It also stated that the Asset Management Corporation of Nigeria may, by the special approval of the CBN management, be allowed to participate with respect to acquired projects of national economic importance.

According to the CBN, all DMBs and DFIs, excluding the Bank of Industry are eligible to participate in the PAIF. The Bank of Industry remains the managing agent and shall see to the day-to-day management of the fund, the African Finance Corporation will act as the technical adviser, according to the procedure. The CBN, however, noted that the Bank of Industry would send out notices to all DMBs and DFIs for submission of refinancing and restructuring requests on behalf of eligible airlines and power companies.