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InfraCredit mobilises third green local currency debt issue for solar project

InfraCredit, ATIDI sign N37bn local currency guarantee deal on risk sharing

InfraCredit, a Lagos-based credit guarantee institution, has announced the credit enhancement of the debt issue of ACOB Lighting Technology Limited, a renewable energy company.

The facility came under a co-financing arrangement with the Climate Finance Blending Facility with £10 million in seed funding from the United Kingdom Foreign, Commonwealth and Development Office, according to a statement on Thursday.

“It was the third transaction under the Climate Facility,” the statement said.

Chinua Azubike, CEO of InfraCredit, said in the statement that the company is pleased to have supported another indigenous distributed renewable energy company with the vision of increasing energy access in Nigeria through off-grid solar mini-grid infrastructure to access long-term affordable local currency financing.

“The Nigerian domestic institutional investors continue to demonstrate their appetite to invest in climate-aligned infrastructure that enables more inclusive access to essential services such as energy,” he said.

He added that the success of this transaction would not have been possible without the use of the catalytic first-loss capital from the Foreign Commonwealth Development Office, and the Technical Assistance Facility from FSD Africa.

According to Azubike, both support mechanisms, working together, have been instrumental in mobilising private sector and domestic institutional investors to invest in off-grid distributed renewable energy infrastructure with the potential impacts to create jobs, reduce GHG emissions, and increase energy access for households and productive use.

The InfraCredit’s clean energy funding program seeks to aggregate, de-risk and unlock domestic institutional investments to support eligible clean energy projects in Nigeria to contribute towards meeting the country’s universal electrification goal by 2030. It also seeks to reach the SDG 7 target of ensuring access to affordable, reliable, sustainable, and modern energy for all, whilst putting the country on a path to achieve net zero emissions by 2060.

The climate facility provided subordinated first-loss capital that helped de-risk and reduce the capital cost of the project by crowding in a 7-year fixed-rate local currency green debt issue in matching direct investments from eight domestic institutional investors in a solar mini-grid project for unserved markets, resulting in a blended affordable interest rate.

“The financing will be utilised to construct, install and commission isolated solar mini-grids with a total capacity of 335 kWp in seven communities without grid access within Edo State and Ondo State in Nigeria,” the statement said.