Energy Infrastructure Financing and Project Finance (Nigerian Energy Sector as a Case Study)

Mr Nasir  Kolade, University of The West of Scotland

This paper focuses on the use of project finance as an alternative source of financing energy projects in order to contribute solutions to the challenges of energy infrastructural deficits that have effects on the economic growth and development in Nigeria. Energy infrastructure is one of the required conditions for sustainable growth and development. One of the problems that contribute to the energy deficit in Nigeria is finance. Building a large energy infrastructure requires significant finance, and to achieve substantial and sustainable energy access, long-term financial development strategies are pertinent. This is where project finance comes in; it provides resources to finance large energy projects with little or no recourse to sponsors’ collateral assets. Project finance is a mix of both local and foreign direct investment, and most foreign inflow of cash needs a well-developed market to act as an intermediary, however, project finance overcomes the challenges of not having a deep financial market. Project finance has a unique structure in its contractual framework including guarantees from multilateral/bilateral institutions and the host government, all of which have predominantly positive effects on the energy asset’s corporate and project governance.


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