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5th January 2018

Supporting locally financed power in Nigeria

The GuarantCo-backed InfraCredit has issued its first guarantee, supporting new infrastructure and unlocking investment from the country's pension and insurance funds for the first time.

The guarantee supported an innovative investment bond issued by power developer Viathan, which is raising funds to construct a compressed natural gas plant, purchase new generators to add 7.5MW to its existing capacity, and secure long-term, local currency finance for some of its current project loans.

The project will provide cleaner fuel for industry and power local infrastructure, including hospitals, street lighting and water works, creating economic opportunity and an expected 100 jobs.

The NGN 10bn (US$32.68m*) bond is the first private sector issue of its kind issued by the private sector to attract investment from Nigerian pension and insurance funds, demonstrating InfraCredit’s innovative ability to mobilise new sources of investment and develop the country’s capital markets.

GuarantCo CEO Lasitha Perera said: “The success of InfraCredit’s maiden guarantee demonstrates that such innovative financial tools can make a real difference to infrastructure finance in low-income countries.

“Mobilising these new sources of private investment is a ground-breaking achievement. InfraCredit has created a blueprint for others to follow which will accelerate access to vital infrastructure for Nigeria’s growing population” he added.

Currently most Nigerian pension funds and insurance companies are reluctant to invest in infrastructure, feeling the risk is too high. The capacity of the domestic banking sector to provide long-term capital is also often constrained.

Nigeria needs an investment of US$127bn in infrastructure over the next five years. By mobilising new sources of private sector capital, InfraCredit helps close this gap.

InfraCredit’s support for this project will provide a much-needed boost to Nigeria’s power generating capacity, which is often fuelled by natural gas. Demand is currently estimated at 160,000 MW with an installed capacity of just 12,132 MW covering a maximum of 40% of the country.  

InfraCredit will continue to support vital power projects as well as those in the transport, water and ICT and telecoms sectors.

PIDG is also currently exploring how the successful InfraCredit model can be replicated in other low-income countries. 

 

InfraCredit inforgraphic Twitter 

*Exchange rate calculated using CBN Official Exchange Rate.