The Nigerian Bulk Electricity Trading Plc (NBET) and the Nigeria Sovereign Investment Authority (NSIA) on Thursday signed a funds management agreement over the $350 million (N56.7 billion) allocated to NBET for power generation projects in the country.
The fund, generated from the $1 billion Eurobond issued by the federal government in July 2013, which is to enable NBET enter power purchase agreements with generation companies and resell to power distribution companies will be managed by NSIA to earn interest for the Bulk Trader until such a time when NBET will require the funds.
Speaking at the signing ceremony, Mr. Uche Orji (pictured), the managing director and chief executive officer of NSIA, stated that the agency was delighted to support the power sector by using its expertise in asset management to bear in the agreement.
“NSIA is pleased to enter into this asset management arrangement with NBET. It is our aim to bring our proven capabilities in profitable asset management to bear for the benefit of NBET and the Nigerian power sector in general,” he said.
Also, the managing director and chief executive officer of NBET, Mr. Rumundaka Wonodi was excited with the arrangement which enables profit making on the funds and its availability when needed.
“NBET is happy with this arrangement that allows a competent fund manager like NSIA manage NBET’s Eurobond facility in a manner that yields the required returns, yet allows the funds to be readily available for any required Bulk Trader interventions,” he said.
He added that “with this arrangement, NBET can focus on developing the electricity market and catalyzing much needed investments in the power sector.”
The $1 billion Eurobond issued on Tuesday, July 02 2014 through the Debt Management Office (DMO) under the coordinating minister for the economy and honourable minister of finance, Dr. (Mrs) Ngozi Okonjo-Iweala, was issued specifically for financing power projects which are considered integral to unlocking the nation’s economic potential.
According to the minister, who is also Chairman of NBET’s Board “most of the Eurobond money was taken to support the power sector, now when you think about it, this liquidity facility has to be managed in such a way that we are also able to repay the loan.
“So you need to think about the best way to invest this money. You can’t just have it sitting in the Central Bank, which was what we were doing initially, because it will earn next to nothing. So the best opportunity was to give it to the premier investment corporation of the government to manage it so that we can get some decent returns that will enable us to defray the interest cost of the repayment of the facility, even if it’s not all, at least it will be more than it will get sitting elsewhere.”