CBN mulls $50b biofuel equity fund

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• Kachikwu advises govt on fiscal federalism

Central Bank of Nigeria (CBN), Governor Godwin Emefiele  yesterday said the bank planned to raise a Biofuel Industry Equity Fund (BIEF) of $50 billion.

Government parastatals, development banks including Bank of Industry (BoI), Bank of Agriculture (BoA) and Development Bank of Nigeria (DBN)  will also finance biofuel production in the country.

Represented by Director of Research at the CBN, Mr. Lawrence Odeh,  during the National Capacity Building & Sensitisation Workshop on Biofuels, which the Petroleum Products Pricing Regulatory Agency (PPPRA) organised in Abuja, Emefiele said a document already outlined a range of funding arrangement.

He said: “On the domestic front, it is instructive to know that the Nigerian biofuel policy and incentive draft document had outlined a range of funding arrangements and incentive packages for firms involved in biofuel production.

“The document envisages that equity funding arrangement to be known as BIEF of $50billion and to be purely funded by parastatals and development banks,  including BoI, BoA and DBN.”

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The apex bank chief noted that the scope of funding sources have become irrelevant as development partners such as United Nations Development Programme (UNDP), United Nations Environmental Programme (UNEP)  and the UN habitat are now actively involved.

He said these multilateral agencies have been known to provide assistance to some African countries both technically and financially.

He added that both the private and the public sectors are partnering to have the required funding for the development of the biofuel sector, which  will ensure the efficient deployment of resources and best judgement in business and investment decisions.

For this model to be effective, he said there has to be a vibrant private and institutional equity investment outlets alongside relevant source of regulations guiding their operations.

Also speaking, the Minister of State, Petroleum Resources, Dr. Ibe Kachukwu, urged the Federal Government to respect fiscal federalism in biofuel policy.

Represented by Dr. Timothy Okon of the Nigerian National Petroleum Corporation (NNPC) the minister advised the government to be wary of the manner in which it assigns responsibilities to institutions without a clear cut funding direction.

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The minister doubted if the current policy on biofuel has comprehended the fiscal federalism issues in the country, and advised the Federal Government to consider funding, food insecurity, energy sustainability and fiscal instability in the proposed policy.

In order to avoid having recourse to the Federation Account, Kachikwu said there must be prioritisation that will not create an uneconomic basis.

“That is not the situation now. So that simply mean that a sort of prioritisation we need to place and must be put in the context is what is going to happen in future crisis.

Source: The Nation
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