Lagos — The Central Bank of Nigeria, CBN, has offered solar investors an intervention fund to access credit facility of not more than N500 million.
In a document entitled ‘Framework for implementation of the solar connection facility’, CBN said the fund is targeted at providing affordable electricity to rural residents.
“The central bank has introduced the solar connection intervention facility to complement the Federal Government’s effort of providing affordable electricity to rural dwellers through the provision of long-term low-interest credit facilities to the Nigeria Electrification Project pre-qualified home solar value chain players that include manufacturers and assemblers of solar components and off-grid energy retailers in the country,” the document said.
The CBN added that the Federal Government launched the initiative as part of the Economic Sustainability Plan to achieve the roll out of five million new solar-based connections in communities that were not grid-connected.
The programme is expected to generate an additional N7 billion increase in tax revenues per annum and $10 million in annual import substitution.
It also aims to expand energy access to 25 million individuals (five million new connections) through the provision of solar home systems or connection to a mini-grid.
Other objectives are to increase local content in the off-grid solar value chain and facilitate the growth of the local manufacturing industry; as well as incentivise the creation of 250,000 new jobs in the energy sector.
The interest rate to be charged up to February 28, 2021 would not exceed five per cent per annum.
It stated that the facility would be administered at an “all-in” interest rate of not more than nine per cent per annum, adding that the working capital would be determined as a percentage of the average of three year adjusted projected cash flows, subject to the maximum of limit of N500 million.
The CBN identified the pathway to energy access to financial inclusion and poverty reduction, which, it said, were closely linked and required rapid scale of pay-as-you-go off-grid technologies that would create a $2 billion (N7.5 trillion) annual market opportunity, with penetration currently less than five per cent of total market potential.
It however warned that the fund must not be used to finance activities such as sales or deployment of fully (100 per cent) imported solar home systems components with no proof of existing local content or credible plan for near-term integration of local content.