The Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, said yesterday that about N400 billion from Pension Funds will be deployed in the power projects to encourage investment in that sector.
He also said some bids for the rescued banks may be rejected.
Sanusi was quoted by Bloomberg as saying at a conference in London that the role of the apex bank would be to “provide the comfort and the guarantees to allow the release of the money to viable and eligible power projects.”
President Goodluck Jonathan had last month announced a plan to end the Federal Government monopoly of the power sector and expand electricity generation through private investment.
The government proposed to sell 11 distribution units of Power Holding Company of Nigeria and allow private companies to build gas-fired, coal-fuelled and hydroelectric plants.
It also plans to increase output to 14,019 megawatts by 2013.
Sanusi told Bloomberg that out of about N2 trillion of pension funds in the country, the CBN is working with the Pensions Commission “to see how we can unlock about N400 billion of that into power infrastructure.”
The Finance Minister, Mr Olusegun Aganga, had said that the country could achieve an annual growth rate of 10 per cent if the government improves its power and transport capacity.
Nigeria achieved growth of 7.4 per cent in the first half of the year, compared with 5.9 per cent in the same period last year, the Bloomberg report quoted Sanusi to have said further.
The CBN Governor pointed out that the apex bank is targeting an inflation rate of less than 10 per cent.
The National Bureau of Statistics (NBS) changed the CPI basket last month, reducing the weighting of food to 50.7 per cent from 63.7 per cent.
Prior to the re-weighting, inflation was at 10.3 per cent.
“Last month’s reduction of the weighting of food in the inflation basket may help the bank achieve that goal by reducing the impact of rising costs on the overall inflation rate. For cosmetic reasons, it is extremely important to make sure that we attack inflation.
“Reducing the weight given to food actually improves the efficacy of monetary policy in checking inflation so we should be able to target single digit and basically address that through adjustments in monetary variables,” Sanusi said.
The CBN Governor also told Reuters that the CBN had received good bids for some of the rescued banks but he needed to protect shareholder value “and not every bid would be accepted.”
He said: "We would like to complete deals as soon as possible but we need to protect shareholder value. Many people are of the opinion that these banks are there for the taking and they can get them for nothing. Some of the bids are very good, some of them are acceptable given where we stand. Given that we have AMCON and they can recapitalise the banks, we can get a better deal, so we don't have to accept every offer."
On what to expect at the meeting of the Monetary Policy Committee (MPC) scheduled for next week in Abuja, the apex bank chief said: “The discussions at MPC next week will be on the relative balance of inflation and expenditure.”
The governor said the country must fashion out strategies to “attack” inflation, which he noted reached an annual 13 per cent in July after a re-weighting of the consumer price index.
Sanusi disclosed that bank lending has not been growing as expected while the upside risk to inflation is very high.
He said that higher government spending, with elections due next January, and the establishment of the Asset Management Company (AMCON) to soak up bad bank loans should help put more money into the system, meaning the inflation risk was not zero.
"(The risk) is there with an election year and with money likely to come in with the asset management corporation," he said.
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