UK injects £10 million to support Nigeria’s energy sector

From Aidoghie Paulinus, Abuja

The United Kingdom, yesterday, announced the provision of £10 million of concessional financing alongside InfraCredit to mobilise pension and insurance investments in the country.

Visiting United Kingdom Minister for Africa, Latin America and the Caribbean, Vicky Ford, who made the announcement in Abuja, said the UK 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 COP26 commitments.

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The financing, the United Kingdom added, will help Nigerian investors focus on low carbon energy, supporting off-grid, and low-carbon energy projects.

The United Kingdom further explained that the £10 million will be blended to de-risk transactions and therefore mobilise domestic institutional investment from local pension funds, insurance firms and other local institutional investors.

The fund will also 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.

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“The UK is committed to increasing both renewable energy and energy access in Nigeria, driving clean, sustainable and resilient growth,” Ford said.

“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 growing the sector at scale.”

On his part, the Minister of State, Power, Goddy Jeddy-Agba, said that although all efforts have been geared towards unlocking private sector activity in the clean energy transition, one major challenge continues to be private sector access to local currency financing.

“This is where local institutions such as pension and insurance funds have a key role to play, as only these institutions possess the scale of local currency liquidity required to accelerate the transition.

“It is important for international partners to start contemplating on how best they can collaborate with these institutions to define blended finance models that combine local institutional capital with foreign currency-denominated support to unlock local currency financing of off-grid development in a large scale,” Jeddy-Agba said.