InfraCredit, an infrastructure credit guarantee institution, has announced the credit enhancement of ACOB Lighting Technology Limited, a renewable energy company’s debt issue.
The facility came under a co-financing arrangement with the climate finance blending facility with £10 million seed funding from the United Kingdom Foreign, Commonwealth and Development Office (FCDO). It was the third transaction under the climate facility.
The InfraCredit’s Clean Energy Funding Programme (CEFP) seeks to aggregate, de-risk and unlock domestic institutional investments to support eligible clean energy projects in Nigeria to contribute towards meeting the country’s universal electrification goal by 2030, the company said.
It is also aimed at achieving the Sustainable Development Goal (SDG) Seven target of ensuring access to affordable, reliable, sustainable and modern energy for all while putting the country on a path to achieve net zero emissions by 2060.
The climate facility provides subordinated first-loss capital that helps to de-risk and reduce the capital cost of the project by crowding in seven-year fixed-rate local currency green debt issue in matching direct investments from eight domestic institutional investors in a solar mini-grid project for unserved markets, resulting in a blended affordable interest rate, it stated.
The financing will be utilised to construct, install and commission isolated solar mini-grids with a total capacity of 335 kWp in seven communities without grid access within Edo and Ondo states.
The project, upon completion, will electrify up to 3,597 unserved households and small businesses, create up to 868 temporary and permanent jobs, and avoid 352 tonnes of GHG emissions whilst enhancing access to renewable energy for productive uses. The nominated projects and assets conform to the Climate Bonds standard solar sector criteria and the financing has been labelled and certified green by the Climate Bonds Initiative.
Speaking on the transaction, the Chief Executive Officer of ACOB Lighting Technology, Alexander Obiechina stated: “This funding presents a significant opportunity for ACOB to actualise its vision of bridging the huge energy poverty gap that exists in the country using decentralised renewable energy technologies. The local currency blended finance is no doubt a catalyst that unlocks the patient capital our sector has been yearning for over the years.”
CEO of InfraCredit, Chinua Azubike, said: “We are pleased to have supported another indigenous Distributed Renewable Energy (DRE) company with the vision of increasing energy access in Nigeria through off-grid solar mini-grid infrastructure to access long term affordable local currency financing. The Nigerian domestic institutional investors continue to demonstrate their appetite to invest in climate-aligned infrastructure that enables more inclusive access to essential services such as energy.
The success of this transaction would not have been possible without the use of the catalytic first-loss capital from the Foreign Commonwealth Development Office (FCDO), and Technical Assistance Facility from FSD Africa. Both support mechanisms, working together, have been instrumental in mobilising private sector and domestic institutional investors to invest in off-grid distributed renewable energy infrastructure with the potential impacts to create jobs, reduce GHG emissions and increase energy access for households and productive use.”
