by By Inyali Peter
The United Kingdom (UK) has announced the provision of up to £10 million of concessional aid to reduce the risk for pension and insurance funds to invest in energy access projects, and support Nigeria’s COP26 commitments.
UK Minister for Africa, Vicky Ford said that the financing will help Nigerian investors focus on low carbon energy, supporting off-grid, low-carbon energy projects.
While explaining that the £10 million will be blended to de-risk transactions and mobilise domestic institutional investment from local pension funds, insurance firms and other local institutional investors, she added that it will also 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.
According to her, “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 that the innovative blended finance initiative will provide affordable long-term financing from local investors for the low carbon energy sector to support scaling up of off-grid low carbon energy projects in unserved and underserved communities.
Continuing, she explained that the initiative will support the implementation of Nigeria’s Nationally Determined Contributions plan, which Nigeria submitted to the UNFCCC before COP26, its Energy Transition Plan, which was presented by the Nigerian government at COP26, and Nigeria’s plans to increase energy access including the Solar Naija programme.
Also speaking, Honourable Minister of Power, Engr. Abubakar Aliyu said that lack of access to local currency financing is a major setback towards the efforts to unlock private sector activities in the clean energy transition initiative.
The Minister who was represented by the Honourable Minister of State, Power, Goddy Jedy-Agba, OFR, said that local institutions such as pension and insurance funds have key role to play because there are the institutions with the scale of local currency liquidity required to accelerate the transition.
Aliyu narrated that “Nigeria Kickstarted its clean energy transition as far back as 2014 with the first Solar Hybrid Projects executed across Lagos, Kaduna and Borno States. Since then, we have continued to raise ambition by putting requisite regulations and policies in place, developing investor-grade data for project development, and securing the $550 million NEP facility from the World Bank and African Development Bank-this is currently the largest clean energy access programme across the continent “.
He added that” this trajectory culminated in the development Nigeria’s Energy Transition Plan at the end of 2021, with the support from the UK Government’s Energy Transition Council. This plan showed the pathway to an energized economy and carbon neutrality by 2060, and highlighted the need for additional investment of $410 billion above business as usual over the next 40 years”.
Also speaking, Uche Orji, Managing Director of the Nigerian Sovereign Investment Authority (NSIA), and Chairman of InfraCredit, said that, “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”.
Orji maintained that “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.”
