Nigeria to set up $50 billion biofuel equity fund

08 Feb 2017
Financial Nigeria

Summary

Godwin Emefiele said a vibrant domestic biofuel industry will provide alternative clean fuel for the country, curtail the importation of fossil fuel products, and help to conserve foreign exchange.

Godwin Emefiele, Governor, Central Bank of Nigeria

The Federal Government of Nigeria plans to set up a $50 billion biofuel industry equity fund to develop the domestic biofuel sector, according to Governor of the Central Bank of Nigeria, Godwin Emefiele, who spoke on Tuesday at a one-day capacity development workshop organized by the Petroleum Products Pricing Regulatory Agency (PPPRA) in partnership with the Ministry of Petroleum Resources in Abuja.

Emefiele, who was represented by Lawrence Odeh of the CBN’s Research Department, said a vibrant domestic biofuel industry will provide alternative clean fuel for the country, curtail the importation of fossil fuel products, and help to conserve foreign exchange.

“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,” Emefiele said.

The CBN Governor said the Nigerian biofuel policy outlines funding arrangements and incentives for firms involved in biofuel production. The policy is designed to enable the biofuel industry to work in collaboration with the petroleum industry to produce and distribute bioethanol and biodiesels across the country.

The funding arrangement for the $50 billion biofuel equity fund would entail contributions from various government agencies and parastatals, including the Bank of Agriculture (BOA), the Bank of Industry (BoI) and the Development Bank of Nigeria (DBN). Others involved are development partners such as United Nations Development Programme (UNDP), United Nations Environmental Programme (UNEP) and the UN-Habitat as well as private partners.

Traditional biomass such as firewood, charcoal and animal dung have for centuries provided crucial sources of cooking and heating energy for most of the world’s poorest populations. More innovative and resourceful conversion technologies now permit the extraction of biofuels – in solid, liquid and gaseous states – from constituents such as wood, waste materials and agricultural products.

In October 2016, the Nigerian National Petroleum Corporation (NNPC), in a statement made by its Group Managing Director, Maikanti Baru, announced intentions to cultivate jatropha plants along the borders of the over 5,000km of NNPC pipelines across the country as part of its plans to integrate biofuel production from specific energy crops with a vigorous agriculture development programme.   

Minister of State for Petroluem Resources, Emmanuel Ibe Kachikwu, in his speech explained that the biofuel programme, which is in review by investors, is formulated to enable Nigeria benefit from the potential of its agricultural sector to birth a vibrant biomass-based economy. Kachikwu, who was represented by his Technical Adviser, Tim Okon, said the policy will enable the biofuel industry collaborate with the Nigerian petroleum sector to sustain production and effectively distribute bioethanol and biodiesels nationwide.

Emefiele revealed that, upon establishment, the biofuel fund anticipates credit provisions based on favourable terms, to handle the peculiarities of this emerging sector in Nigeria.


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