To attract investment, local renewable firms need bankable proposals
For Nigerian firms to attract investments or tap into opportunities in the country’s quest to diversify its power generation mix, experts say the firms need to have bankable proposals alongside corporate governance.
To provide context, it is estimated that 85 million out of Nigeria’s 200 million population lack access to electricity. Under the Paris Climate Agreement, the country has pledged to cut carbon emissions by 20 percent by 2030.
To achieve this, the Muhammadu Buhari administration has set an ambitious goal to generate 30 percent of Nigeria’s electricity from renewables.
Outside of the government’s announcements, several companies have sprung up, many with innovative payment models, to meet a need for affordable energy from renewable sources.
In order to leverage opportunities, Afolabi Akinrogunde, Investment Manager, All On, said local firms need to get their story right, get a team, make sure projections models are accurate, and do a lot of record-keeping.
“They need at least four years audited financial documents from credible audited organisations,” Akinrogunde said at BusinessDay’s power summit with the theme “Bridging the Gap with Renewable Energy”.
He advised local renewable energy firms to get certified accountants and make sure tax documentation is in line with global best practices.
He noted that Nigeria needs to put the right incentives to make solar investments more viable for local players, most especially in terms of clarity and uniformity of solar importation in Nigeria.
“A situation whereby a solar developer pays 15percent levy then pay 28 percent six months later makes too difficult to plan,” he added
Ifeanyi Orajaka, CEO, GVE Projects Ltd, said the renewable industry is currently in an exciting moment which gives room for lots of improvements despite the current laudable initiatives by the present government.
Suleiman Babamanu, Project Lead, Solar Naija Program, said the government is ready to work with the private sector through access to fiancé with the aim of supporting more renewable energy companies in Nigeria.
He advised the private sector to develop capacity and package a bankable proposal to attract more government funding.
In order to make the country the number one investment destination, Rory Connor, a Partner at London-based Addleshaw Goddard LLP said the country needs a functioning market, credible off-takers, basic political will and improve ease of doing business.
“Nigeria cannot make investors nervous and expect private investments,” Connor said.
Simon Shaibu, Managing Director, GEL Utility Ltd, advised local firms to adopt enough digitalisation, strategic partnership and be more attractive for long-term investment in order to remain relevant in a post-COVID-19 world.
“We need to develop a local concept to bring down the cost of improving solar components,” Shaibu said.
Lande Abudu, Executive Secretary of the 140-member Renewable Energy Association of Nigeria, said the group has been strategic about renewable investment in the last five years.
“Access to finance, enabling environment and policy implementation, capacity building are the major challenges facing Nigeria’s renewable sector,” Abudu said.
Other panelists also assess Nigeria’s success of diversifying the power generation mix and boosting electricity supply with renewable energy sources.
They also did a comparable overview of renewable energy as a solution for generating power in other countries.
Recall that the Nigeria Economic Sustainability Plan (NESP), which was prepared by the Economic Sustainability Committee (ESC), chaired by Vice President Yemi Osinbajo, was approved by the Federal Executive Council in June 2020.
Embedded in the NESP was a commitment to provide energy access, specifically renewable energy on an unprecedented scale.
Out of the N2.3 trillion ($5.6 billion) of government spending earmarked to spur post-COVID recovery, 10 percent will be applied for this purpose. It would target the installation of solar home systems in 5 million homes to serve up to 25 million Nigerians who are currently not connected to the National Grid.
More capital is also being injected into space, with the ‘Solar Naija’ intervention facility introduced by the Central Bank of Nigeria to provide cheaper access to capital for developers and other players in the space.
For these providers, as they have grown, they have started to push for specific protections and guarantees that recognise the unique situation of their business as a vital contributor to Nigeria’s energy future.