The Federal Government on Monday said it had injected fresh $550m (N88bn) into the Sovereign Wealth Fund for investment in the power sector.
The fund is being managed by the Nigerian Sovereign Investment Authority
The Minister of Finance, Dr. Ngozi Okonjo-Iweala, stated this while briefing journalists at the headquarters of the Ministry of Finance in Abuja.
With this development, the amount in the SWF, which has three pots from which investments can be anchored, has risen from the initial $1bn to $1.55bn.
The pots are the Future Generation Fund, Infrastructure Fund and Fiscal Stabilisation Fund.
Before the injection of the $550m, 20 per cent of the balance had been allocated to the Stabilisation Fund; 40 per cent to the Infrastructure Fund; and 40 to the Future Generation Fund.
Of the Future Generation Fund, 55 per cent had been invested in the equity market and other areas.
The minister said the $550m was taken out of the $1bn Eurobond, which the Federal Government issued few months ago.
The proceeds of that bond were set aside for the financing of power infrastructure and it was oversubscribed by 400 per cent.
Okonjo-Iweala said, “What we have decided to do is to infuse another $550m into the resources of the SWF for the Sovereign Wealth Fund to manage.
“You will recall that we took $1bn Eurobond seven months ago. We took that facility and at the time we took it, we told you it was meant for infrastructure development for the power sector.
“This money is still being invested in the power sector; all that we have done is that we have shifted the money to the SWF because we realised that it can generate additional resources from other partners if we hand the money over to them.”
She said $200m out of the $550m given to the NSIA would go into the Infrastructural Fund of the SWF to finance gas-to-power projects with the private sector.
The objective of this, she added, was to generate catalytic funding for gas-to-power infrastructure, which would leverage on available funds to boost the development of the power sector and improvement of electricity supply.
Specifically, Okonjo-Iweala noted that an agreement had been reached with private sector partners that would enable them contribute additional $2 for every $1 invested by the NSIA.
The implication of this is that the $200m will generate at least $400m more in additional investment capital.
The balance of $350m, according to the minister, will go into a liquidity facility to be managed by the Nigerian Bulk Electricity Trading Company on behalf of the Federal Government to boost investors’ confidence in the power sector reforms.
Also speaking, the Managing Director/Chief Executive Officer, NSIA, Mr. Uche Orji, said the company would focus on five sub-sectors this year.
They are power, health, toll roads, real estate and agriculture.
Orji said, “In power, we have a commitment from a private equity fund in the United States, which will commit $2 for every $1 that we invest.
“On top of that, we have many other people who are interested in co-investing with us. So, essentially, this will provide funding in the gas to power area for now, and we expect to drive more investment from other investors.”
He said more commitment would be made in infrastructure investment in the first quarter of the year to improve on the existing investment made last year.
The NSIA boss also said that the SWF would assist in the Federal Government’s mortgage financing and mass housing projects, adding that more investments would be made in agriculture, especially in the area of agro processing.