FG Plans to Fund Domestic Biofuel Sector with $50b

By Modupe Gbadeyanka

Central Bank of Nigeria (CBN) has disclosed that the Federal Government will invest about $50 billion to the development of a domestic biofuel industry which would serve as an alternative energy source for Nigeria.

CBN Governor, Mr Godwin Emefiele, made this known at a workshop on biofuel development in Nigeria organised in Abuja by the Petroleum Products Pricing Regulatory Agency (PPPRA).

Mr Emefiele, who was represented by Mr Lawrence Odeh, an official of the bank’s Research Department, noted that the fund would provide credit facilities on favourable terms to the domestic biofuel industry.

He further disclosed that the $50 billion biofuel fund would be contributed by different government agencies and development banks including the Bank of Industry (BoI), Bank of Agriculture (BOA) and Development Bank of Nigeria (DBN).

The CBN boss said when established, the fund is expected to provide credit on favourable terms to meet the peculiarities of the industry in Nigeria.

Mr Emefiele said, “Fossil fuels have been and will continue to be the dominant source of energy for sometimes, but this category of fuels are non-renewable and raise environmental concerns because they pollute the environment while others are renewable, non-polluting and therefore regarded as clean, thus, they present a viable alternative to fossil fuel and if properly harnessed can be very beneficial.

“Nigeria potentially has global competitive advantage to be a major player in the industry. In the phase of growing global concerns for protecting the environment, funding biofuel development as a commercial venture is becoming a developmental agenda, to that extent, the scope of funding sources have become variable.

“On the domestic front, it is important to note that the Nigerian biofuel policy and incentives draft document has outlined funding arrangements and incentives arrangements for firms involved in biofuel production.

“Government envisages equity funding arrangements to be known as biofuel industry equity fund of $50 billion and to be jointly funded by parastatals and development banks including the Bank of Industry, Bank of Agriculture, and Development Bank of Nigeria.”

Also at the workshop was the Minister of State for Petroleum Resources, Mr Ibe Kachikwu, who was represented by his Technical Adviser, Mr Tim Okon.

The Minister explained that the biofuel policy which stakeholders are reviewing, was designed to help Nigeria take advantage of the potentials in her agricultural sector to create a biomass-based fuel economy.