Posted on Friday, 03 October 2014 14:48

Banking and Energy: Nigeria's power progress is sustainable

By Vincent Nwanmah in Lagos

John Obi, Executive Director of corporate banking, Fidelity BankNigeria's Fidelity Bank (#34 in our rankings) dedicates more than 26% of its loans to the power, oil and gas sectors combined. As Shell[Petroleum Development Company of Nigeria] divest some of their assets in the Niger Delta, John obi, Executive Director of corporate banking at Fidelity Bank says the bank is supporting Nigerians to be able to acquire assets and their work on those assets.

Having taken part in the privatisation of electricity distribution and generating companies, Obi is confident Nigerian power is on the road to recovery

I believe that in the medium term we will be able to see a remarkable improvement in the power situation

The Africa Report: How is Fidelity Bank involved in the power and gas industry?

John Obi: At the national level, we have participated in the privatisation of the assets of the Power Holding Company of Nigeria (PHCN), the distribution and generating companies. We have funded some of the DisCos [distribution companies], such as Kano DisCo, Ikeja DisCo and Benin DisCo. For the generating companies, we are supporting the Egbin power plant in Lagos State, and of course the Transcorp power station at Ughelli in Delta State. 13% of our loan portfolio is dedicated to the power sector.

How does that compare with the industry?

Fidelity is one of the leading banks in terms of power projects. All the three projects we did with the Lagos State government, Fidelity did alone; there were no other banks involved. For the generating and distributing companies, we participated with other banks through syndication. Our belief and the stake we have in the power projects rank among the highest in the banking industry. We should be among the top three banks in terms of power project financing.

So, should Nigerians look forward to the power problem being fixed soon?

Fixing the power sector will take some time to happen, but we have started in the right direction. The fact that those assets have now been put in private hands is a very bold step by the current administration. The next step is for the private sector to make sure that all those agreements, all the covenants they reached with the government, that they are able to keep them. And the government also has the responsibility to ensure that whatever commitment and obligation they have towards ensuring the success of the process, that they abide by them.

Most of the DisCos that acquired the assets, for example, I know they are also working towards getting metering in place, for them to be able to support the project. And whatever else they need in order to succeed, they are all working towards that. The generating companies are also trying to raise generation, but that does not mean they don't have challenges. Their problems include vandalism of gas pipelines for the supply of gas to these projects. This is a responsibility that the government has to shoulder to ensure that things work well.

We are also beginning to have improvements in revenue. So I think it is a progress that is sustainable, and with the support of banks and the society at large, I believe that in the medium term we will be able to see a remarkable improvement in the power situation in this country.

We are also involved in the oil and gas sector. Our involvement is both in the upstream and the downstream. Our exposure to the oil and gas sector is just about 13.5% of our loan portfolio. We are quite happy with what we are doing. Of course we know that oil and gas is the bedrock of this economy.

What aspects of the oil and gas sector do you finance?

We are involved in both the exploration and production in the upstream. I can give you an example of what we are doing in this area. Shell [Petroleum Development Company of Nigeria] has been involved in divestment of some of their assets in the Niger Delta, maybe because of community problems, and they are now moving offshore to work in the deep waters. So those assets are being sold, mostly to Nigerians. We are supporting them to be able to acquire those assets and their work on those assets.●

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