Energy infrastructures financing in developing countries and project finance (Nigeria energy sector)

This paper discusses the challenges developing countries faced in financing energy infrastructures. Energy infrastructures development in most developing countries (such as Nigeria and other West Africa countries) through other finance sources ( corporate finance , Government budgets, multilateral and bilateral institutions) have not been sufficient to provide the finances needed to catalyse the socio-economic development of those developing countries.

The study critically examined the usage of project finance as an alternative source of financing energy projects in developing countries. Systematic literature review and data from World Bank, Africa Development Bank International Monetary Fund and Nigeria Government sources were analysed which showed the gap in energy accessibility /economic wellbeing and also revealed that financing energy infrastructures required high capital outlay mostly in hundreds of millions of dollars and the developing countries cannot afford the funding needed.

Furthermore, the research argues that project finance is an attractive option (values added financing sources that foster economic sustainability), because this financing sources does not necessarily consider assets or creditworthiness of project sponsors or collateral assets before agreeing to fund the projects such as energy infrastructures.