The support seeks to help Nigerian investors focus on low carbon energy
The UK minister for Africa, Vicky Ford, on Monday announced a 10 million pounds concessional aid for the Nigerian energy sector.
According to Ms Ford, the fund will help reduce the risk for pension and insurance funds when they are investing in energy access projects and support Nigeria’s COP26 commitments.
The financing will help Nigerian investors focus on low carbon energy, supporting off-grid, low-carbon energy projects. It will also be blended to de-risk transactions and mobilise domestic institutional investment from local pension funds, insurance firms and other local institutional investors.
This will help scale up domestic financing for eligible off-grid clean energy infrastructure, such as solar mini-grid and home systems, clean cooking infrastructure and SME cold storage infrastructure in Nigeria.
“This is a clear demonstration of the strong partnerships between our countries and the UK’s commitment to supporting Nigeria, especially in your low carbon energy sector,” Ms Ford said.
“The UK is committed to increasing both renewable energy and energy access in Nigeria, driving clean, sustainable and resilient growth. As the world looks to transition to clean growth, we are witnessing an era-defining opportunity for the private sector. This transaction is particularly exciting as it brings together UK government support with the institutional capital which is essential to grow the sector at scale,” she added.
Godwin Jedy-Agba, Nigeria’s minister of state for power, in his remarks, noted that Nigeria started its clean energy transition in 2014 with the first solar energy hybrid project executed in Lagos, Kaduna and Borno states.
According to Mr Jedy-Agba, “whereas all efforts have been geared towards unlocking private sector activity in the clean energy transition, one major challenge continues to be private sector access to local currency financing.”
The mobilisation of both funds will be done alongside InfraCredit, a Nigerian entity that provides local currency (Naira) guarantees to enhance the credit quality of debt instruments issued by eligible infrastructure project sponsors.
The Managing Director, Nigerian Sovereign Investment Authority (NSIA) and Chairman of InfraCredit, Uche Orji, said, “InfraCredit is pleased to be working with FCDO to mobilise private investment from domestic pension funds and other institutional investors into such an important developmental area as low carbon energy access. This programme is aligned with NSIA’s other clean energy initiatives which aims to deliver up to 250-500MW of renewable energy capacity in Nigeria that will reduce annual CO2 emissions, alleviate poverty, create jobs and support local economic growth.”
Present at the event were Ahmad Ahmad, Managing Director, Rural Electrification Agency (REA), and Lamido Yuguda, Director General, Securities and Exchange Commission (SEC).