The N1billion fund for off-grid developers in nine Nigerian states established in February by the Bank of Industry (BOI), a Nigerian development finance Institution and Shell-seeded All On, an impact investment firm, is now operational the institutions have said.
According to the terms of deal, developers would bid to execute off-grid projects in the Niger Delta and obtain funding at 10% interest rate. The loan will be repayable over seven years with a 1 year moratorium. 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 had previously said it is willing to increase funding after the initial N1bn financing, called the Niger Delta Off-Grid Energy Fund, is depleted.
At the agreement signing ceremony two months ago, 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.”
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.