CBN to boost gas production by N10 bln facilities at 5% interest ~New guidelines
By Samuel Bankole
The Central Bank of Nigeria (CBN) has set conditions for its intervention in the country’s gas development projects through both manufacturing, distributions and retailing enterprises.
In the guidelines released this week, the regulatory bank said it will lend a maximum of N10 billion at 10-year tenor credit to Manufacturers, Processors, Wholesale Distributors and other promoters of gas-related businesses under it intervention fund.
According to the bank, the loans shall attract interest rate under the intervention of 5 percent in the first instance until February 2021 and thereafter interest payment will be calculated based on 9 percent from March 2021.
Gas production and distribution companies, the CBN said shall also have access to obtain up to a maximum of N500 million for working capital under the intervention fund.
The regulatory bank said Small & Medium Enterprises (SMEs) and Retail Distributors of gas could also have access to the term loans, “based on the activity and shall not exceed N50 million per obligor.”
Under the SMEs and retailers, they can also have access to working capital to the maximum of N5 million per obligor, according to the CBN new guidelines.
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“Term loans shall have a maximum tenor of 10 years (not exceeding 31st December 2030) depending on the complexity of the project. Each project tenor shall be determined in relation to its cash flow and life of the underlying collateral.
“Term loans shall be allowed maximum of two years moratorium on principal repayment only,” the bank stated.
As part of its efforts at stimulating finance to critical sectors of the economy, the CBN introduces the N250 billion intervention facility to help stimulate investment in the gas value chain.
It said large-scale projects under the intervention will be financed under the Power and Airlines Intervention Fund (PAIF), in line with existing guidelines regulating the PAIF, while small-scale operators and retail distributors will be financed by the NIRSAL Microfinance Bank (NMFB) and / or any other Participating Financial Institution (PFI) under the Agribusiness/Small and Medium and Medium Enterprises Investment Scheme (AgSMEIS).