The Bank of Industry (BOI), a Nigerian development finance Institution and Shell-seeded All On, an impact investment firm, have signed a financing agreement which offers N1billion to off-grid project developers in the nine states of the Niger Delta.
According to the terms of the agreement signed in Lagos on Monday, developers would bid to execute projects in the Niger Delta and obtain funding at 10% interest rate. The loan will be repayable over seven years and developers would have to set sustainable tariffs to successfully access funding.
While All On and BOI contributed N500m each to raise the N1bn financing, BOI will act as the fund manager and the development bank says it is willing to increase funding after the initial N1bn financing, called the Niger Delta Off-Grid Energy Fund is depleted.
Olukayode Pitan, managing director of BOI said developers would decide what source of renewable energy will be best suited for the community they choose to bid. Options include solar, wind, gas and biomass.
Wiebe Boer, CEO of All On, said the BOI who already has a big footprint in funding the off-grid space will leverage its experience to reach more communities in the Nigeria Delta.
“Bank of Industry will manage the funds, so developers will need to apply through the different branches of the bank. We want this to take off very quickly as soon as the operations side has been completed,” said Boer.
According to Boer, the N1billion in financing is capable of producing up to 15 mini grid plants as well some solar home system solutions and single systems for small businesses.
The funding will be made available for projects in all six states of the South South geopolitical zone: Akwa Ibom, Cross River, Bayelsa, Rivers, Delta and Edo). Others are Ondo, from the South West geopolitical zone and two states from the South East zones, namely Abia and Imo.
Pitan said this funding round can be considered a pilot phase as the bank has experience managing funding for off grid projects. “We have had success in two UNDP partnered projects and what we have learned is that as long as you have capacity to collect tariff, the project will be sustainable.”
In 2016, BOI signed a $2 million agreement with the United Nations Development Programme, (UNDP) to provide solar-powered electricity to six communities in six states of the federation.
The bank contributed $1.4 million while the UNDP provided the balance of $600,000. The project involved the provision of long-term financing for the installation of micro-grid and stand-alone solar solutions in Bisanti community, Katcha LGA in Niger State, Idi-Ita/Onibambu community, Ife North LGA in Osun State, Kolwa community, Kaltungo LGA in Gombe State, Onono community, Anambra West LGA in Anambra State, Obayantor 1 community in Edo State and Charwa/Chakun communities, Makarfi LGA in Kaduna State.
All On by this funding continues a untiring advocacy to ramp funding for off-grid projects which will unlock energy access to millions of underserved communities in Nigeria.
The company is currently running the 2019 Nigeria energy challenge along with the United States African Development Foundation (USADF) which is offering $100,000 to innovative off-grid solutions that will power underserved areas in Nigeria. Ten developers received funding in the previous year’s edition made up of $50,000 in seed capital and $50,000 in convertible debt.
To qualify, applicants who could be developers of their own technology or acquiring and implementing technologies developed elsewhere, need to be legally registered in Nigeria, demonstrate a capacity to track and manage project resources and operate in good standing with local governments in their areas of operation.