The Central Bank of Nigeria (CBN) has introduced a Solar Connection Intervention Facility to complement the Federal government’s scheme which aims at expanding energy access to 25 million individuals through the provision of solar home systems or connection to a mini-grid.
According to the apex bank in its released guideline on Monday, the long term low-interest credit facility has a maximum limit of N500 million for pre-qualified home solar value chain players that include manufacturers and assemblers of solar components and off-grid energy retailers in the country.
Recently, the Federal Government said that the initiative, under the Economic Sustainability Plan, will achieve a roll-out of five million new solar-based connections in communities that are not grid-connected.
The scheme, according to FG, is expected to generate an additional N7 billion increase in tax revenues per annum and $10 million in annual import substitution.
“The solar connection Scheme is a Federal government initiative whose objectives are to expanding energy access to 25 million individuals (5 million new connections) 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..”
The CBN stated that participants in the upstream sector which involves the manufacturing of solar components, establishment, and upgrade of solar manufacturing facilities, must demonstrate a track record of experience in manufacturing of key off-grid components up to the quality standards instituted by the Rural Electrification Agency (REA) and/or Standards Organizations of Nigeria (SON).
It maintained that the funding with a maximum tenor of up to 10 years, shall not exceed 70 percent of the total cost of the project and it shall not be used to finance the importation of fully assembled solar components and balance of the system.
“The moratorium on principal shall depend on the type and nature of the project but shall not exceed 2 years or the construction/ completion period, whichever is shorter.
“Additional moratorium of up to 12 months may be added to the moratorium period in order to address the risk of completion delays,” it stated.
The apex bank revealed that the interest rate on the facility shall be administered at an “all-in” interest rate of NOT more than 9 percent per annum.
“As part of the Bank’s Covid-19 relief package, the interest rate to be charged up to 28th February 2021 shall not exceed 5 percent per annum.
“Interest shall be payable by the loan beneficiaries in accordance with the approved repayment schedule outlined in the Transaction Documents,” it added.
Meanwhile, participants in the downstream sector, involved in the distribution, and after-sales support of solar home systems, mini-grid project development activities including site identification and assessment, design and planning, and customer acquisition, must not take part in sales or deployment of fully imported solar home systems components.
The participants according to the CBN, will have up to seven years tenor and a moratorium of up to two years, depending on the nature of the project.
“Amount to be determined as a percentage of the average of 3 years adjusted projected cash flows subject to the maximum of a limit of N500 million,” it revealed.