The United Kingdom has announced a support of £10 million (N5.6 billion) to the Nigerian government in form of concessional financing alongside InfraCredit to mobilise pension and insurance investments to boost the Nigerian energy sector.
The UK Minister for Africa, Latin America and the Caribbean, Vicky Ford, made this announcement in a meeting with the Nigeria’s Minister of State for Power, Goddy Jedy Agba in Abuja on Monday.
Ford is on a three-day visit to Nigeria to strengthen ongoing efforts by both countries to build on the UK-Nigeria partnership and strengthen strong security, anti-corruption and economic ties.
According to the UK Minister, the £10 million of concessional aid will reduce the risk for pension and insurance funds to invest in energy access projects, and also support Nigeria’s Climate Change (COP26) commitments.
The financing according to the UK will help Nigerian investors focus on low carbon energy, supporting off-grid, low-carbon energy projects. The £10 million will be blended to de-risk transactions and therefore 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.
Ford in her remarks 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.”
Nigeria, she noted, has about 85 million people without access to reliable energy and these efforts will address those people’s needs.
She stressed that this is a strong demonstration of partnerships between both countries and consistent UK commitment to supporting Nigeria especially on low carbon energy sector.
This 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.
This 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.
Jedy Agba in his remarks said that Nigeria kick started 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 the African Continental Bank- this is currently the largest clean energy access programme across the continent,” he said