• Fri. Sep 29th, 2023

Infrastructure deficit: Nigeria approves N1trn seed capital for INFRACo

To bridge the wide infrastructure gap in the country, the Federal Government on Friday approved an initial seed capital of N1 trillion for the establishment of a public-private partnership-styled Infrastructure finance company, INFRACo.
President Muhammadu Buhari has already given approval for the new company to be structured as a wholly-dedicated Nigeria’s infrastructure development firm and one of the premier infrastructure finance entities in Africa.
Developed with concept designs from the National Economic Council (NEC) and the Central Bank of Nigeria in partnership with the Nigerian Sovereign Investment .Authority (NSIA), the INFRACo is envisaged, over five year’s time, to grow into a N15trillion assets and capital entity.
The CBN and NSIA are expected to work with the Africa Finance Corporation (AFC) to provide the initial seed capital for the new entity.
Vice President Yemi Osinbajo, who is the chair of a Steering Committee tasked with setting up the company, said the board of INFRACo would be chaired by the CBN governor, Godwin Emefiele.
Other members of the Board of INFRACo would include the Managing Director of NSIA, Uche Orji; President of the AFC as well as representatives of the Nigerian Governors Forum, and the Ministry of Finance, Budget and National Planning.
The Board of the company would also have three independent directors from the private sector.
To address Nigeria’s infrastructure deficit, the VP said the Buhari administration would continue to explore innovative options, including financing initiatives such as the Presidential Infrastructure Development Fund (PIDF) to cater for the 2nd Niger Bridge, the Abuja-Kaduna-Zaria-Kano Expressway, and other key infrastructure projects.
The government is also undertaking the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme being used for the funding of the Bodo-Bonny Bridges and Road, in collaboration with the Nigeria Liquefied Natural Gas, NLNG, and the Apapa-Oshodi-Oworonshoki Expressway embarked upon in partnership with Dangote Group, among others.
INFRACo is expected to handle the finance of public asset development, rehabilitation and reconstruction as well as invest in cutting edge infrastructure projects for roads, rail, power and other key sectors.
In July 2020, the CBN announced plans by the government to facilitate the establishment of an Infrastructure development company that would leverage on local and international funds to rebuild critical infrastructure across the country.
The CBN governor, Godwin Emefiele said a special purpose company that would be wholly-focused on Nigeria and Nigerians alone was being established, with its management to be exclusively run by an Independent Infrastructure Fund Manager (IIFM).
He said the fund manager would be charged with the responsibility of mobilizing local and foreign capital to support the Federal Government effort to build the transport infrastructure required to move agriculture and other products to processors, raw materials to factories, and finished goods to markets.
Similarly, in January 2018, the NSIA announced the issuance of the first N10 billion infrastructure bond to connect infrastructure as an asset class to the country’s long-term local currency debt capital markets.
Facilitated by InfraCredit, the Managing Director of NSIA, Uche Orji said the infrastructure credit bond issue was in collaboration with GuarantCo, a private infrastructure development group.
Mr Orji said the bond, the first corporate facility to be successfully accessed from the Nigerian debt market for infrastructure development, has a 10-year tenor, extending the yield curve for corporate debt issuances.
Backed by the InfraCredit irrevocable and unconditional guarantee, he said the net proceeds of the bonds would be utilized to expand the country’s electricity generation capacity by 7.5MW; construct a 104,800 standard cubic metres per day Compressed Natural Gas (CNG) plant and refinance short term bank debts.

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