CBN offers 7 Billion Naira loan facility for mini-grid developers

The Central Bank of Nigeria (CBN) has offered N7 billion loan facility for the mini-grid power sub-sector, which has been plagued by dearth of investment.

The mini grid sector, a small, privately-owned and operated system with generation of up to 10 megawatts (MW) capacity and a network that distributes power to several customers, is a potent addition to efforts to get Nigeria out of acute power insufficiency.

The apex bank, this newspaper gathered, raised the N7 billion for the sub-sector, as the embargo placed by lenders on financing took toll on the mini-grid investment.

All the commercial banks in Nigeria had, prior to this loan, embargoed funding for the mini-grid.
“Banks, truth be told, are not social service entities; they are basically for business,” head of energy unit of one of the commercial banks told this newspaper. “And so, they cannot be blamed if they have refused to advance facilities towards ventures they are not convinced guarantee quick returns on investment.

“The good news is that CBN has offered facilities to be given to investors through the commercial banks. The accompanying conditions for the facility include a five-year repayment period with a single digit interest rate.”
The mini-grid, an investor who said he had keyed into the loan through application said, “refers to a stand-alone power system or an integrated local generation and distribution system with installed capacity below 1MW, capable of serving numerous end-users independent of the national grid.”

The mini-grid, she said, craving anonymity based on injury a full disclosure of her name could inflict on her loan application, “can provide constant and affordable electricity in remote places where the population density is too low to economically justify connecting that community to the national grid and represents a viable and cost effective solution for the electrification of Nigerian communities through a decentralised energy system.

“A mini-grid under the regulation may be ‘isolated’ with no link to any other network or ‘interconnected’ with the main grid such that energy exchange is possible between them,” she said.
Aside from the mini-grid and off grid, the power sector investment is capital intensive with $1million investments needed to set up a one Mega Watt power generation plant.

The term mini-grid as defined by the regulation applies only to any isolated or interconnected mini-grid generating between 0KW and 1MW. Generation of electricity beyond 1MW is governed by the provisions of the Electricity Power Sector Reform Act (EPSRA), which makes it mandatory for an operator generating electricity beyond 1MW to obtain the permits required under the EPSRA.

Similarly, power distribution companies are entering into partnerships with renewable energy firms for the development of mini-grids to boost the supply of electricity in Nigeria.According to officials from the Rural Electrification Agency and stakeholders in the renewable energy space, already, they have signed memorandum of understanding (MOU) for the execution of the project, adding that the move will reduce the poor power supply situation in communities not energised by the national grid. Chief Executive Officer, Rubitec Solar Nigeria Limited, a renewable energy firm, Bolade Soremekun, stated that interconnected mini-grids were being established by some Discos.

 

Source: New Telegraph

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