N213bn bailout: More banks ready to join power sector financing
The anticipated increase in the appetite of local banks in the power sector was coming at a period when market watchers feared that the burden of funding in the sector was weighing heavily on the participating banks. They therefore stressed the need to attract offshore banks into the Nigerian power sector.
Reports showed that the latest intervention of the Federal Government is making some banks which had hitherto developed cold feet in power sector financing to go back to their drawing boards on how to strike funding deals with the various power sector firms.
Confirming this development, Executive Director Commercial Banking, Access Bank Plc, Mr. Roosevelt Ogbonna, said although Access Bank did not participate in the power sector funding at the initial stage, it makes business sense to participate in the sector financing now.
He explained that the bank did not join the league of banks that funded power sector in the past because it did not really understand the arrangement in place then.
However, there are other bank chiefs who felt it is still too early for more banks to join the financing of power sector in view of the poor performance of power sector loans in banks.
One of such bank chiefs is the Managing Director of Guaranty Trust Bank, Mr. Segun Agbaje, who said that he didn’t think time is ripe to expect a rising appetite of banks in power sector.
Total banking loans to the power sector in 2013 was about $1.3billion for Discos and $1.7billion for Gencos. Additionally, it is expected that $5.8billion would be the loan figure for full year 2014 to the power sector.
For instance, United Bank for Africa Plc granted $700 million in loans to several investors, including Transnational, which got $215 million to buy Ughelli Power, the country’s second-biggest gas-fuelled plant with capacity for 900 megawatts.
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