The Central Bank of Nigeria (CBN) yesterday released framework for implementation of the N500 billion solar connection facility to complement the federal government’s effort of providing affordable electricity to rural dwellers.
The facility is targeted at providing long term low interest credit facilities to the Nigeria Electrification Project (NEP) pre-qualified home solar value chain players that include manufacturers and assemblers of solar components and off-grid energy retailers in the country.
According to the framework, companies can access up to 70 per cent of their total cost at nine per cent interest rate for upstream participants which are majorly manufacturers and 10 per cent interest rate for downstream participants.
The framework expressly stated that the funds from the facility cannot be used to import fully assembled solar components and balance of system. The federal government as parts of its support to economic recovery in response to the COVID-19 pandemic had launched an initiative as part of the Economic Sustainability Plan (ESP) to achieve the roll out of five million new solar-based connections in communities that are not grid connected.
This programme is expected to generate an additional N7 billion increase in tax revenues per annum and $10 million in annual import substitution, whilst expanding energy access to 25 million individuals through the provision of solar home systems (SHS) or connection to a
mini grid; increasing local content in the off-grid solar value chain and facilitating the growth of the local manufacturing industry; and incentivizing the creation of 250,000 new jobs in the energy sector.
To ensure local content, the framework states that eligible component manufacturers must be Nigerian-owned entities or consortiums involving a minimum of 70 per cent local ownership and must demonstrate commitment to employing local talent with a detailed vocational and technical training plan.
Eligible upstream participants according to the framework are companies that are engaged in the manufacturing of solar components and balance of system, establishment/expansion/upgrade of solar manufacturing facilities, assembly of solar components and balance of system, repair and maintenance of solar home systems and mini grid equipment as well as Solar component Research and Development (R&D).
Downstream participants are expected to be corporates that are involved in the distribution and after-sales support of solar home systems (SHS), mini grid project development activities including site identification and assessment, design and planning and customer acquisition as well as engineering, procurement and/or construction of mini grids.