The Central Bank of Nigeria (CBN) said it has introduced an intervention fund to support the growth of solar energy development in the country in line with government policy to boost power supply.
The regulatory bank in its guidelines on the Solar Connection Intervention Facility said that the move was to complement the Federal government’s effort aimed at providing affordable electricity to rural dwellers through the provision of long term low interest credit facilities.
According to the bank, the facility will have a 10-year tenor and a maximum of 9 percent interest rate and will support the solar value chain players that include manufacturers and assemblers of solar components and off-grid energy retailers in the country.
“The pathways to energy access, financial inclusion and poverty reduction are closely linked and requires rapid scale of pay-as-you-go (PAYG) off-grid technologies that will create a $2 billion (N7.5 trillion) annual market opportunity as penetration today is less than 5 percent of total market potential.
“To support the economic recovery in response to the COVID-19 pandemic, the Federal Government of Nigeria (FGN) has launched an initiative as part of the Economic Sustainability Plan (ESP) to achieve the roll-out of 5 million new solar-based connections in communities that are not grid connected.
“This program is expected to generate an additional N7 billion increase in tax revenues per annum and $10 million in annual import substitution,” the CBN stated in the guidelines.
It said the solar connection Scheme, an initiative of the Federal government, is expected to expand energy access to 25 million individuals (5 million new connections) through the provision of solar home systems (SHS) or connection to a mini-grid.
The CBN said the facilities will support local manufacturing of solar components and Balance of System and Solar component Research and Development and other players in the sector.
“The facilities granted shall have a maximum tenor of up to 10 years as determined by the project’s cash flow profile but not exceeding 31st December 2030,” the CBN said.
The moratorium on the principal sum of the loans, to be disbursed through participating financial institutions in the count would depend on the type and nature of the project but shall not exceed two years or the construction/ completion period, whichever is shorter, the regulatory bank stated.