The Bank of Industry (BOI), a Nigerian development finance institution, and Shell-seeded All On, an impact investment firm, have signed a financing agreement which offers N1 billion to off-grid project developers in the nine states of the Niger Delta.
According to the terms of the agreement signed in Lagos on Monday, developers would bid to execute projects in the Niger Delta and obtain funding at 10 percent interest rate. The loan will be repayable over seven years and developers would have to set sustainable tariffs to successfully access funding.
While All On and BOI contributed N500 million each to raise the N1 billion financing, BOI will act as the fund manager and the development bank says it is willing to increase funding after the initial N1 billion financing, called the Niger Delta Off-grid Energy Fund, is depleted.
Olukayode Pitan, managing director of BOI, said developers would decide what source of renewable energy will be best suited for the community they choose to bid. Options include solar, wind, gas and biomass.
Wiebe Boer, CEO of All On, said BOI which already has a big footprint in funding the off-grid space will leverage its experience to reach more communities in the Niger Delta.
“Bank of Industry will manage the funds, so developers will need to apply through the different branches of the bank. We want this to take off very quickly as soon as the operations side has been completed,” said Boer.
Boer said the N1 billion in financing is capable of producing up to 15 mini grid plants as well as some solar home system solutions and single systems for small businesses.
The funding will be made available for projects in all six states of the South-South geopolitical zone: Akwa Ibom, Cross River, Bayelsa, Rivers, Delta, and Edo States. Others are Ondo, from the South West geopolitical zone, and two states from the South East zones, namely Abia and Imo.
Pitan said this funding round can be considered a pilot phase as the bank has experience managing funding for off-grid projects. “We have had success in two UNDP partnered projects and what we have learned is that as long as you have the capacity to collect tariff, the project will be sustainable,” Pitan said.
In 2016, BOI signed a $2 million agreement with the United Nations Development Programme (UNDP) to provide solar-powered electricity to six communities in six states of the federation.
Culled From: PressReader