FBN Capital, the Investment Banking subsidiary of the FBN Holdings Group has highlighted that investment in the power sector can be encouraged through sustainable and consistent cost reflective tariffs. Abiola Baruwa, a Vice President of the firm made this known as part of a stakeholder forum focused on ‘Managing the Risk of Releasing Private Sector Capital for Investment in the Power Sector’ during the 2015 Powering Africa conference that recently held in Abuja.
The discussions were held against the backdrop of the need to encourage foreign investments in the power sector given that local banks were instrumental in providing acquisition financing during the privatization phase of the Nigerian power sector and have therefore substantially invested in the sector.
Speaking at the event, Mrs. Baruwa stated, “The major factors foreign investors are looking at before investing in the power sector are consistent and sustainable cost reflective tariffs and a substantial de-risk of the power sector. The power sector can be de-risked by allowing competitive gas prices, the power sector regulator (NERC) ensuring consistent and stable regulation, clear direction of government’s policy on transmission (including government’s clear funding plan for transmission which needs to be executed immediately). Until these factors are properly addressed, international investors will continue to be skeptical about investing into the sector.”
A cost reflective tariff is a critical requirement for local and international investors in the Nigerian power sector. She also urged the government to provide requisite legislation to unlock the largest pool of local funding available which is the pension fund deposited with pension fund administrators.
FBN Capital was recognized as the Best Investment Bank in Nigeria 2015 for the fourth consecutive year by Global Finance Magazine. The firm also received the World Finance Banking Awards as the Best Investment Bank in Nigeria 2014, and the EMEA Finance African Banking Awards as the Best Local Investment Bank in 2013.