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CBN’ll reject some rescued bank bids — Sanusi

LAGOS—CENTRAL Bank Governor Lamido Sanusi, yesterday, said that he had received good bids for some of the eight rescued banks but he needed to protect shareholder value and that not every bid would be accepted.

Sanusi told Reuters in an interview in London: “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.”

He admitted that bank lending had not grown as quickly as it should meaning there was a limited risk of inflation rising in Nigeria, adding that as far as upside risk to inflation is concerned, it is not very high.

Speaking ahead of a monetary policy committee, MPC, meeting next Tuesday, he said he was hopeful of achieving single-digit inflation by the end of the year but did not want to make any policy moves that could disrupt growth.

He added: “We are hopeful of achieving single digit inflation by the end of 2010 but it depends on the indicators in the economy. Let me assure you that whatever we do should not disrupt growth.”

Sanusi also said in another interview with Financial Times of London that Nigeria planned to free up N400 billion ($2.7bn) from its pension funds to spur foreign investment in its electricity sector, as it sought to turn an ambitious reform plan into a solution to the chronic power shortages in the country.
Electricity sector

It will be recalled that President Goodluck Jonathan, last month, unveiled a blueprint to throw open the electricity sector in the hope of generating the $50 billion of investments needed to meet demand. The pension fund proposals are designed to ease potentially critical constraints on financing in a country with shallow capital markets and banks that struggle to muster affordable long-term loans.

Sanusi told the Financial Times: “It’s extremely important that power projects get access to long-term money at reasonable rates of interests for them to succeed.”

The government plans to break up the state_owned utility into several distribution and generation companies and privatise them by May. It will partially deregulate the sector to make new projects commercially viable. The power reforms have attracted interest from prospective investors from India, Canada, China and Europe.

A central plank in the reforms is an increase in the tariff charged to electricity consumers. However, the tariff would remain regulated, meaning power companies might struggle to pass on currency fluctuations to their customers.

Sanusi said his plan, which requires approval from the pensions regulator, would allow power projects to issue naira-denominated bonds. Previous power projects had been choked by awkward financing deals with local banks that lack the resources to provide the long-term loans infrastructure projects require.


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