By: Bamidele Fashube
The Vice President, Prof. Yemi Osinabjo has challenged commercial banks in the country to support investments in clean energy.
The support, he said, would boost the economy and promote the federal government’s power projects on energy transition.
Osinbajo made the call at the opening of the 14th Annual Banking and Finance Conference of the Chartered Institute of Bankers of Nigeria (CIBN), held Tuesday in Abuja.
Investment in renewable energy, he said is the future, as it is one of the federal government’s commitments to reducing the carbon emission global target set at 2030.
According to him, such investment is “some of the game-changing interventions that the financial sector can make in the light of the extensive implications of climate change mitigation.”
“This is a significant challenge but also enormous an opportunity. So, the federal government of Nigeria (FGN) integrated a solar strategy for the electrification of 5 million households, serving about 25 million Nigerians in the Economic Sustainability Plan.
Speaking on ongoing efforts towards developing the renewable energy sector, he revealed: “the Central Bank of Nigeria CBN set aside N150billion for the program, made available through Banks CRR via a program administered by the Central Bank of Nigeria.”
The program, he stated, has three core objectives: expanding increasing energy access to 25 million individuals (5 million connections), increasing local content in the off-grid solar value chain and creating 250,000 new jobs.
He said the program was targeted at three key players including assemblers (or manufacturers), distributors and vertically integrated off-grid companies.
The vice president listed other proposed ideas to supporting clean energy component manufacturers and off-grid companies.
“For component manufacturers, direct lending through selected commercial banks or local development finance institutions (DFIs) to manufacturing entities backed by an off-taker agreement with SHS distributors or mini-grid developers.
“For off-grid companies, direct lending from local development finance institutions (DFIs) to SHS distributors and mini-grid developers through a CBN credit facility collateralised by pledged revenues and repaid through cash sweeps.
“The Federal Government also provided subsidies of up to 20% to 30% for each successful installation through the Rural Electrification Agency/World Bank Nigeria Electrification Program (NEP) to further de-risk the transactions.”
“The NEP program has been ongoing for the past two years with record collections of 90% and above for NEP Solar Developers showing a low-risk track record.”