• Thursday, June 13, 2024
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BusinessDay

NSIA launches $500m renewables investment platform, signs pact with IFC

NSIA signs pact renewables investment

Onyinye Nwachukwu & Cynthia Egboboh, Abuja.

The Nigerian Sovereign Investment Authority (NSIA) has launched a $500 million Renewables Investment Platform for Limitless Energy (RIPLE), expected to boost Nigeria’s renewable energy drive and deepen access to electricity.

The Authority equally signed a Memorandum of Understanding (MoU) with the International Finance Corporation (IFC) as a strategic partner for a pilot investment – and more – in core focus areas of the Platform.

Built on three pillars – diesel displacement, franchising and backward integration towards Photovoltaic system (PV) manufacturing, NSIA’s RIPLE is a transformative initiative dedicated to the development, investment, and operation of renewable energy projects across the entire value chain in the country.

BusinessDay understands that the pilot project is located within the Tokarawa Industrial Hub in Kano State and involves setting up a generation and distribution system to meet 70 megawatts of unsuppressed energy demands of industrial activities, commercial enterprises, and residential customers in an area covering about 9,000 connections.

“This is a watershed moment in terms of actualizing some of NSIA’s ambitions in the renewable energy space,” Aminu Umar-Sadiq, Managing Director, NSIA said at the launch in Abuja at the weekend, where the pact was simultaneously signed.

“RIPLE has the high hopes of making a huge impact around renewable energy investing and with it, NSIA is positioned to expand energy access, enhance energy efficiency and ensure energy security.”

Umar-Sadiq further described it as another milestone initiative by the NSIA in the climate sustainability asset class, having previously lunched Carbon Vista with Vitol and the Construction Finance Warehouse Facility.

It is also the latest in line of the Authority’s initiatives in solving some of the value dislocations in Nigeria’s infrastructure space. Recall that the NSIA set up Infracredit, an institution that motivates local, long term financing into infrastructure development; the Nigeria Mortgage Refinancing Company (NMRC), a wholesale establishment which refinances mortgage provision for Nigerians; as well as the Family Homes Fund which offers developers cheap local currency to finance high quality, affordable proposition.

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According to him, NSIA has put down an initial $25 million funding and hopes to catalyze additional investments to make up the $500 million funding needed to implement the mandate of the platform.

“The ambition of the NSIA and the IFC as it relates to this fund is to scale up and go large. We are hopeful that in the course of time, we will begin to feel the impact of the projects that we are co developing, as well as co-executing for the benefits of Nigeria and Nigerians,” he added.

In the last one year, NSIA, which is the manager of Nigeria’s Sovereign Wealth Fund(SWF) has prioritized sustainability and climate as an asset class, leveraging its impactful ability and the nature of funds under its management.

The Managing Director noted that the approach for investments in the climate space has been based on ensuring institutional preparedness; undertaking a number of demonstration projects; and forging strategic partnerships.

…Authority’s investments in climate and sustainability reach $100mn

On the sideline of the event, he told BusinessDay that NSIA has so far invested about $100 million on projects geared towards climate and sustainability.

“We also have projects in clean cooking, biodiversity that comprise of climate and sustainability. When you add up all the projects, it’s almost a $100million committed capital.

“We are probably one of the largest investors and because our capital is modest relative to infrastructure deficits, what we spend a lot of time doing is conceptualizing and developing. We put in a modest amount of capital to get strategic partners that will match our funding,” he explained.

In his remarks, Dan Croft, Regional Manager Africa, IFC, said that the Corporation’s interest is to drive energy access, efficiency, security, on a climate friendly basis, and working with credible partners who are committed to the long term vision to develop projects.

“Reliable electricity is crucial for improving quality of life, productivity, and economic growth in Nigeria. IFC is pleased to collaborate with our longstanding partner, NSIA, to develop and implement the first phase of this innovative energy solution which will reduce greenhouse gas emissions and reliance on fossil fuel. The energy solution will also deliver reliable power supply for commercial, residential as well as industrial use.”

Speaking on the scope of commitment by the IFC, Croft further stated: “We don’t really have an upper limit for what we would like to finance in this space. Our problem is finding the opportunities to do so, which is why we are so excited about this.

“We have done a number of renewable energy investments in solar, wind and hydro as well as transmission and distribution. But it’s about finding the right way into the market, this is the first one of these we’ve done in Nigeria and we’d love to find more partners like this.”

Yusuf Umar, NSIA’s program manager, RIPLE who also spoke at the event, noted that RIPLE is inspired by the successful implementation of a previous 10 megawatt kind of solar project and builds on challenges faced, lessons learnt, relationships built and accomplishments achieved.
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He explained that the major objective of the platform is to address the challenges of Nigeria’s energy sector by expediting the development of renewable energy projects across the country.

He also listed the three main cornerstones to the NSIA’s energy strategy to include, expanding access, enhancing efficiency and ensuring energy security.

“Our experience with the procurement disruptions during the construction of the current solar project necessitated domesticating and strengthening our supply chains.

“An important pillar of RIPPLE is local upstream technology manufacturing.The platform’s focus will extend beyond just solar PV technology to include green hydrogen, waste to energy, mini hydro, and wind as we are seeing very interesting prospects for wind projects in Nigeria,” Umar further stated.