In August 2020, the Central Bank of Nigeria (“CBN”), whose mandates includes the performance of major developmental functions that are focused on the key sectors of the Nigerian economy (i.e. financial, agricultural and industrial sectors) released the Framework for the Implementation of Intervention Facility for the National Gas Expansion Programme (the “Programme”).
The objectives of the Programme are stated to include:
- Improved access to finance for private sector investments in the domestic gas value chain;
- Stimulate investments in the development of infrastructure to optimise domestic gas resources for economic development;
- Fast-track the adoption of Compressed Natural Gas (CNG) as the fuel of choice for transportation and power generation, as well as Liquefied Petroleum Gas (LPG) as the fuel of choice for domestic cooking, transportation and captive power;
- Fast track the development of gas-based industries particularly petrochemical (fertiliser, methanol, etc.) to support large industries;
- Provide leverage for additional private sector investments in the domestic gas market, etc.
The published framework also sets out a detailed list of eligible activities in the midstream and downstream gas sectors that will benefit from the intervention funding, which includes the establishment and development of various modular/small scale gas plants ranging from gas cylinder manufacturing, Liquefied & CNG regasification modular systems, auto gas conversion kits, compression stations, LPG retail skid tanks, auto gas transportation systems, amongst others.
This intervention fund will be accessed via deposit money banks (“DMBs”) and NIRSAL Microfinance Bank (“NMFB”). These participating banks will be responsible for credit appraisals and for assisting their customers to access the CBN intervention funding. The participating banks will also be responsible for the day-to-day administration of the disbursed loans under the supervision of the CBN. Periodic monitoring of projects financed under the scheme will be conducted jointly by the participating banks, the Ministry of Petroleum Resources and the CBN.
There are different administrative streams for providing the intervention funding to the aggregators, manufacturers, processors, wholesale distributors, etc on the one hand, and for funding the smaller SMEs, on the other hand. Whereas the former will be funded through DMBs under the aegis of the existing Power and Airline Intervention Fund (“PAIF”), the SMEs and retail distributors will be funded by NMFB under the existing Agribusiness/ Small And Medium Enterprises Investment Scheme (“AgSMEIS”).
The total size of the Programme facility made available by the CBN is N250 billion. The aggregators, manufacturers, processors, wholesale distributors, etc to be funded under PAIF will have access to term loan facilities of up to N10 billion per obligor, and working capital facilities of up to N500 million per obligor. The facility size for the SMEs (to be funded via AgSMEIS) will be up to N50 million per obligor for term loans and up to N5 million per obligor for working capital. The interest rates on these facilities are concessionary (ranging from 5% to 9% per annum) and the maximum term loan tenors range from 5 years to 10 years, depending on facility type. Facilities disbursed pursuant to the Programme are to be repaid by December 31 2030.
The Programme is to be implemented in collaboration with the Ministry of Petroleum Resources (which licenses and regulates activities in the Nigerian gas sector). The framework published by the CBN is available here.
