Nigeria Wealth Fund Gets $550 Million to Support Power Market

Nigeria provided $550 million to its Sovereign Wealth Fund to help guarantee power trading and spur investments to build the country’s electricity market, Finance Minister Ngozi Okonjo-Iweala said.

Out of the fund, $350 million will be used as “liquidity facility” for the state-owned electricity trader, which guarantees power sales by producers to distribution companies, Okonjo-Iweala told reporters today in the capital, Abuja. The remaining $200 million “will be for the infrastructure fund for gas-to-power investments.”

President Goodluck Jonathan in September handed control of 15 power generation and distribution companies spun out of the former state-owned power utility to new owners to boost output and end blackouts in the country, where demand is almost double the 4-gigawatt capacity. They include Transnational Corp. of Nigeria Plc and Siemens AG. (SIE) Nigeria still needs $14.2 billion annually to bridge its infrastructure gap, Okonjo-Iweala said.

Africa’s most populous nation with about 170 million people loses at least 2 percent of gross domestic product growth annually due to a deficit infrastructure, mainly in electricity and transportation, according to the finance minister. Nigeria’s economy is estimated to expand at 6.75 percent this year, she said.

While the government continues to try and increase its current infrastructure spending of $4.9 billion annually, it is also looking to private investors to help provide support.

‘Deals Soon’

“We continue to look at opportunities, both generation and distribution, and discussions are further advanced in some of those areas and hopefully we should be able to announce a couple of deals soon,” said Uche Orji, chief executive of the Nigerian Sovereign Wealth Investment Authority.

The fund, which started operations with a seed capital of $1 billion, is divided into funds for the future generation, budget stabilization and infrastructure.

Goldman Sachs (GS), UBS AG (UBSN) and Credit Suisse Group AG were among four managers named in August to help run a $200 million fixed-income fund. Eight more managers will be appointed before the end of June, with two expected to be announced next month, Orji said.

To contact the reporter on this story: Elisha Bala-Gbogbo in Abuja at ebalagbogbo@bloomberg.net

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net

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