The United Kingdom (UK) is providing up to £10 million (N5.66 billion) in concessional aid to reduce the risk of pension and insurance funds investing in energy access projects and to support Nigeria’s commitments at the 26th United Nations Climate Change Conference (COP26).
According to a statement issued by the UK High Commission in Abuja on Monday, the £10 million will be blended to de-risk transactions and thus mobilize domestic institutional investment from local pension funds, insurance firms, and other local institutional investors.
The funding will assist Nigerian investors in focusing on low-carbon energy projects, such as off-grid and low-carbon energy.
This will aid in the expansion of domestic financing for eligible off-grid clean energy infrastructures in Nigeria, such as solar mini-grid and home systems, clean cooking infrastructure, and SME cold storage infrastructure.
“The UK is committed to increasing both renewable energy and energy access in Nigeria, driving clean, sustainable, and resilient growth,” said Vicky Ford, UK Minister for Africa. As the world prepares to transition to clean growth, the private sector is being presented with a once-in-a-generation opportunity. This transaction is particularly exciting because it combines UK government support with the institutional capital required to scale up the sector.”
According to the statement, this innovative blended finance initiative will provide affordable long-term financing for the low carbon energy sector from local investors to support the scaling up of off-grid low carbon energy projects in unserved and underserved communities.
This action plan will aid in the implementation of Nigeria’s nationally determined contributions plan, which the country submitted to the UNFCCC prior to COP26, its energy transition plan, which the Nigerian government presented at COP26, and Nigeria’s plans to increase energy access, including the Solar Naija program.
“InfraCredit is pleased to be working with FCDO to mobilize private investment from domestic pension funds and other institutional investors into such an important developmental area as low carbon energy access,” said Uche Orji, MD/CEO of the Nigerian Sovereign Investment Authority (NSIA) and Chairman of InfraCredit.
This program complements NSIA’s other clean energy initiatives, which aim to deliver up to 250-500MW of renewable energy capacity in Nigeria, reducing annual CO2 emissions, alleviating poverty, creating jobs, and supporting local economic growth.”