The Central Bank of Nigeria has released
fresh guidelines that will shape the disbursement of the N300bn Power
and Airline Intervention Fund.
According to the eight-part guidelines
obtained by our correspondent, any power or airline company that
defaults in the payment of the loan shall be charged the commercial
interest rate (over 20 per cent) on the amount of default, instead of
the seven per cent stipulated in the Fund.
Also, any Deposit Money Bank or
Development Financial Institution that fails to disburse 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 disbursed.
The CBN’s guidelines read, “Diversion of
funds by the participating banks shall attract a penalty at the banks
average lending rate at the time of infraction. In addition, such
participating banks shall be barred from further participation under the
fund.
“Non-rendition of returns or the
rendition of false returns shall attract the penalty stipulated by Banks
and Other Financial Institutions Act, Section 60.
“Any participating bank that fails to
disburse the fund within 14 days of receipt to the borrower shall be
charged the maximum lending rate of the PB as a penalty for the period
that the fund was not disbursed.
“In the event of a default in loan
repayment (principal and interest), the participating banks shall have
the right to charge commercial interest rates on the amount of default.”
Apart from airlines, the new guidelines
state that any company operating in Nigeria and is engaged in “aircraft
hangar projects capable of servicing existing commercial jets and next
generation aircraft series for ‘C’ and ‘D’ checks in Nigeria” shall be
eligible for the PAIF.
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 Deposit Money
Banks and Development Finance Institutions, excluding the Bank of
Industry are eligible to participate in the PAIF as participating banks.
While the BoI remains the managing agent
and shall see to the day-to-day administration of the fund, the African
Finance Corporation will act as the technical adviser, according to the
guidelines.
The CBN, however, noted that the BoI
would send out notices to all DMBs and DFIs for submission of
refinancing/restructuring requests on behalf of eligible airlines and
power companies.
The guidelines further read, “Eligible
projects can be promoted by private or public sector sponsors (or a
combination of both) but must be structured either as profit-oriented
businesses or a public service, provided that contract cash-flows or
financing support exist to ensure repayment of principal and interest,
as well as long-term viability.
“The refinancing of existing loans for
captive power projects for corporate entities that are not power
companies will only be eligible if the investments are not older than
two years from the date of the application. For the avoidance of doubt,
this restriction will not be applicable to captive power projects
implemented and managed by power companies. Gas-to-power promoters must
tender verifiable evidence of off-taker purchase agreements for their
projects to be eligible.”
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