PenCom gives clue on accessing pension funds for infrastructure

To enable government access part of the over N5 trillion pension assets for infrastructure development, the National Pension Commission (PenCom) has offered clues that will make investment in infrastructure attractive to institutional investors, BusinessDay learns.

The Commission believes that focus should be on key infrastructure segments such as roads, rails, power and ports, but insists public private partnership vehicle will make it successful.

According to a memorandum submitted by PenCom to the House Committee on Pensions “On the Need to Invest Pension Funds to Meet Nigeria’s Infrastructural Challenges,” the Commission says as a way forward relevant Federal Government agencies should immediately put in place appropriate government guarantees that will improve ratings of infrastructure projects and thereby increase their attractiveness to institutional investors.

They should also provide other government support, such as long-term policy planning and tax incentives to encourage investors invest in less liquid, long-term infrastructure investments, the Commission recommends.

“Create a public/private intermediary that provides instruments, such as takeout financing, co-financing in the form of long-term or subordinated debt, and a variety of guarantees,” the Commission says.

According to the document accessed by BusinessDay, the Commission believes that the intermediary will need to have a credible governance and management structure in place that provides oversight as well as checks and balances to maximally insulate its operations and decision-making from political influence.

“The intermediary should provide the credit assessment and arranger functions, while there must be an improved coordination between key stakeholders such as the Central Bank of Nigeria, the Ministry of Finance, the Infrastructure Concession Regulatory Commission, Securities and Exchange Commission, and various line Ministries, Departments and Agencies to ensure that the right projects are initiated, financed and successfully completed,” the Commission states in the document.