At the fourth edition of the Nigerian Energy Forum (NEF) held in Lagos from April 9-10 in Lagos, it was revealed that over $300m new funding was coming to the sector in the coming months but these funds would come in the form of grants and low interest loans from private equity funds abroad and development agencies like the World Bank and African Development Bank.
Wiebe Boer, CEO of All On, an impact investment firm seeded by Shell, in a keynote address said: “There is over $200 million in grant capital coming through the REA’s Nigeria Electrification Program. There is another $80 million in debt capital coming through the EU/ AFD’s SUNREF program through Access and UBA. The EU is announcing another funding window tomorrow through Electrifi. There is the AfDB’s Off Grid Energy Fund. DeutscheBankis coming with a debt fund. Sterling Bank is the first Nigerian commercial bank to lend to the space in a serious way.
“Persistent Energy Capital now has an office in Nigeria. Acumen has moved from Accra to Lagos and is actively seeking off grid energy investment opportunities. Leading local PE firm Verod just made a big investment in Daystar. Helios has invested significant capital in Starsight. NorFundand Breakthrough Energy Ventures have both just made their first investments in the Nigerian off grid energy space. It is big and is only going to get bigger,” said Wiebe.
But there is concern over what will happen when these funding begins to dry up. Grants and donor funds usually help start-ups to get off the floor but it will require much more to get an industry going.
Wiebe alluded to this in his address. “So, even if the goodwill goes, and if the donor funding and investment capital reduces or dries up, we understand that in spite of it all, the burden rests on us squarely to get the work done and commit to leaving no Nigerian in darkness. This is a revolution, and we are the army to get it done.
During panel discussions at the event, this issue was brought to the fore. Commercial banks in Nigeria are yet to be convinced of the viability of the sector. This is why few banks including Sterling and First Bank have programmes to address funding in the sector. The issue for most banks is how to get the money bank back.
At the recent launch of Azuri solar-powered television in Lagos, First Bank of Nigeria officials who were providing financing for the project said a challenge funding renewable energy projects in Nigeria is because they are not bankable.
This is worsened by poor regulation of the sector. Policy implementation has proven to be untidy with government ministries failing to converge around a coherent plan. While the ministry of trade and investment is granting the sector pioneer status, the custom is enforcing new tariffs.
Nigeria’s Energy demand is expected to double over the next 10 years and consumers are willing and able to pay for alternate sources of power hence this presents massive opportunities but the sector is constrained by poor government policy including an obnoxious solar panel tariff enforced last year by the Nigerian customs.
ISAAC ANYAOGU
