BusinessDay

UK injects £10m financial aid to support Nigeria’s COP26 commitments

The UK Authorities on Monday announced that it is providing up to £10 million of concessional aid to reduce the risk for pension and insurance funds to invest in energy access projects, and support Nigeria’s Conference of the Parties (COP26) commitment to reach net zero by 2060.

According to a statement from the British High Commission in Abuja, the financing will help Nigerian investors focus on low carbon energy, supporting offgrid, low-carbon energy projects.

It added that the financing will be blended to de-risk transactions and therefore mobilise domestic institutional investment from local pension funds, insurance firms and other local institutional investors.

This, the commission notes, will help scale up domestic financing for eligible off-grid clean energy infrastructure, such as solar mini-grid and home systems, clean cooking infrastructure and SME cold storage infrastructure in Nigeria.

The statement quoted Vicky Ford, the UK Minister for Africa, as saying “The UK is committed to increasing both renewable energy and energy access in Nigeria, driving clean, sustainable and resilient growth.

“As the world looks to transition to clean growth, we are witnessing an era-defining opportunity for the private sector. This transaction is particularly exciting as it brings together UK government support with the institutional capital which is essential to grow the sector at scale.”

Ford explains that the innovative blended finance initiative will provide affordable long-term financing from local investors for the low carbon energy sector to support scaling up of off-grid low carbon energy projects in unserved and underserved communities.

“This initiative will support the implementation of Nigeria’s Nationally Determined Contributions plan, which Nigeria submitted to the UNFCCC before COP26, its Energy Transition Plan, which was presented by the Nigerian government at COP26, and Nigeria’s plans to increase energy access including the Solar Naija programme,” he further said.

Read also: AfDB commits $164m to promote renewable energy in Nigeria, others

Uche Orji, MD/CEO of the Nigerian Sovereign Investment Authority (NSIA), and Chairman of InfraCredit, was also quoted as saying “InfraCredit is pleased to be working with FCDO to mobilise private investment from domestic pension funds and other institutional investors into such an important developmental area as low carbon energy access.

“This programme is aligned with NSIA’s other clean energy initiatives which aims to deliver up to 250-500MW of renewable energy capacity in Nigeria that will reduce annual CO2 emissions, alleviate poverty, create jobs and support local economic growth.”

The UK hosted the UN Conference of the Parties (COP) event in November 2021, which aimed to reduce the rise in temperature from climate change and help mitigate the impacts of climate change. President Buhari attended and Nigeria submitted enhanced promises (Nationally Determined Contributions) around reducing carbon emissions by 20percent (or 45percent with support) and reaching net zero by 2060.

These promises included the use of increased renewable energy.

The UK government reiterates that Nigeria needs energy to grow and industrialise but its consumption is low – India and Indonesia use 7 times as much, and 87 million Nigerians are without energy at all. It added that renewable energy is the way forward as it has low carbon emissions and can create many jobs in Nigeria – potentially a lot more jobs than oil and gas.

Between 2014 and 2022, the UK has provided more than £80m into the renewable energy sector in Nigeria, including both grants, technical assistance and lending and is continuing to support the sector through advisory programmes such as UK Nigeria Infrastructure Advisory Facility. The UK also provided more than $50m to set up InfraCredit in 2016.

Meanwhile, the Federal Government of Nigeria and the Government of the United Kingdom of Great Britain and Northern Ireland on Monday signed a Memorandum of Understanding in a joint commitment to continue the fight against corruption.

The Memorandum of Understanding, which was signed by Vicky Ford, Minister for Africa, and Abubakar Malami, the Attorney General for Nigeria, sets out the terms and understanding between the Government of the United Kingdom and the Federal Government of Nigeria to make this compensation payment.

The agreement will enable a compensation payment to be made to Nigeria of £210,610, following a successful investigation by the UK’s Serious Fraud Office relating to the use of corrupt agents in the oil and gas sector.

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