CBN disburses N233bn to power, airline companies

Central Bank of Nigeria

The Central Bank of Nigeria has disbursed N233.16bn out of the N300bn Power and Airline Intervention Fund to 34 power and airline companies as of May, 2014.
According to a new report by the Development Finance Department of the CBN, a total of N117.4bn has been released for 15 airline projects, while N115.7bn has been disbursed for 36 power projects.
The CBN's Monetary Policy Committee had in 2010 approved the sum of N500bn for investments in debentures issued by the Bank of Industry out of which the sum of N300bn was for the finance of power and airline projects.
The PAIF was designed as part of the quantitative easing measures to address the paucity of long-term credit and acute power shortage in the country.
The 19-page report, dated June 2, stated that no funds were disbursed under the PAIF in May 2014, but the sum of N233.161bn had been released to the BoI and disbursed through banks to 51 projects.
The report noted that no repayment was remitted by the BoI to the CBN under the PAIF in the month of May. However, the total repayments stood at N32.363bn till date.
The CBN, in the report, said the total amount approved for release to the BoI as of May stood at N237.23, while the balance of un-utilised funds from the PAIF was N62.77bn.
However, the CBN in another publication dated June 5, stated that as of December 31, 2013, the central bank had disbursed N232.65bn to 51 projects. This consisted of 15 airline projects totalling 116.92bn and 36 power projects totalling 115.73bn.
Meanwhile, the CBN monthly report noted that N200bn was meant for Small and Medium Scale Enterprises Restructuring and Refinancing Fund.
The N200bn SME (RRF) was established by the CBN in March, 2010 to refinance and restructure banks' existing loan portfolios to manufacturers to achieve double-digit growth in line with the Financial Services Strategy 2020 SME financing target of 20 per cent of total credit to the economy.
According to the CBN, no funds were released in the month of May, 2014. However, a total sum of N288.975bn had been released to the BoI, and disbursed to 573 projects from inception to date.
In May 2014, the total repayment received into the repayment account stood at N8.23bn. The total disbursement for projects from repayments proceeds under the SMERRF stood at N71.725bn from inception to date.
The CBN had in February released fresh guidelines for the disbursement of the N300bn PAIF.
The eight-part guidelines stated that any power or airline company that defaulted in the payment of the loan would 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 failed to disburse the fund within 14 days of receipt to the power or airline firm would be charged the maximum lending rate of the bank as a penalty for the period that the fund was not disbursed.