N1.6trn Idle Fund: PENCOM Lauded Over Innovations

The Managing Director/Chief Executive Officer, EnergyInc, Rolake Akinkugbe-Filani has lauded National Pension Commission (PenCom) for allowing part of its funds to fund infrastructure.

During a panel session at the Nigeria Energy Leadership Summit in Lagos, she also said such a decision by PENCOM is in the right direction. The panel session was titled: “Leadership dialogue- What Nigerian Energy Projects need to attract international capital and how investors expectations are shifting.”

Recently, PenCom stated that about N1.6 trillion representing 20% of a total investable pension of N7.94 trillion earmarked for infrastructure and financial instruments, is sitting idle, due to the absence of bankable projects.

Acting Director General of the Commission Mrs Aisha Dahiru-Umar spoke at the June Edition Breakfast Seminar of the Chartered Insurance Institute of Nigeria (CIIN) in Lagos.

The DG who was represented by the Commission’s Head of Contribution and Bond Redemption Department, Olulana Loyinmi, stated that out of the N1.6 trillion, just a little over N1 billion or 5% is being utilised.

Filani said the commission had introduced some flexibility in fund management for the growth of infrastructure and the energy sector.

She said: “PENCOM is doing the right thing. Pension assets can invest in infrastructure. They allow upto 20 per cent. I think we’re moving in the right direction. I think PENCOM should take a bit by bit approach as they did, for instance with the Dangote refinery. We should look at when there is a high energy infrastructure project, we should see if we can introduce some flexibility to the regulatory parameters to enable the private sector to do some infrastructure and energy projects.

“We need to create and structure more bankable projects in the energy sector to get the required funding. That is to ensure that we have fantastic upto date contracts where investors can invest and see how their money be returned to them.

“The level of development in the energy sector is pretty good. We have come a very long way. In the oil and gas sector, for instance, we now have very high investments and we have achieved a lot.”

She added: “The best thing the government can do now is to put the power subsidy in the budget as a live item. And I say this because if the market can pay its bill, then investors are more likely to want to finance the market. I can’t be prescriptive about what state governments should do because that much of this is politically driven.

“But the reality is open to what point. We can’t keep dealing with legacy debt issues. Going forward, if we freeze tariffs and we’re not going to deal with tariffs, then let’s fund it through the federal budget. And so I guess that would be to the next administration, whether it’s the incumbent administration or a new one. So basically just create the subsidy, the tariff issue. That’s the tariff issue, head on, at the last wave.”

Senior Investment Manager, Norfund, Mr. Obafemi Awobokun, during the panel session also commended the government for some of the regulations which he said were providing clarity to investors.

He said such a development has rejuvenated the sector.

He was addressing the most important thing the government could do this year to turn investor interest into deployed capital.

Oba said: “I think the government has done a lot of good work. I think some of the regulation perspective has created increased interest, from pools of capital coming out of Nigeria. I think, you know, that path towards more clarity and some sort of assurance, on the macro levels as well as, being able to invest in Nigeria and get money out, but also, being very robust on what we think should be a regulatory infrastructure in Nigeria.

“It is providing that clarity to investors as well. That would be very key. Because when you think about it, the market is there. We do see the opportunity, but even sponsors that we like to buy also need that regulatory infrastructure that is strong. So, I’ll say clarity and forward thinking from the regulatory perspective.”