Ngozi Amuche
The Central Bank of Nigeria on Monday has issued a framework for implementation of solar connection facility, which will create about $2 billion market opportunity.
CBN also reiterated that its aggressive deployment of unconventional policies since the outbreak of the COVID-19 was to help manage the supply shock in the system as well as calm inflationary pressure.
The apex bank noted that with less than five per cent penetration currently, of total market potential, the solar programme would see the roll-out of five million new solar-based connections in Nigerian communities.
In April this year, the bank said it was setting aside an initial intervention fund of N500 billion over the medium term for manufacturers to procure equipment that would fast-track local production, especially environmentally-friendly energy production.
On the framework released, the bank said the initiative under the Economic Sustainability Plan (ESP), would further generate about N7 billion in terms of taxes and $10 million in annual import substitution.
Part of the guidelines, the bank said, would be the total prohibition of the use of the facility to finance the importation of fully assembled solar components and Balance of System (BoS).
It added that the eligible obligors should demonstrate verifiable evidences of technical capacity, must show financial capacity and provide evidence of an irrevocable off-take agreement with one or more Nigeria Electrification Project (NEP) prequalified companies.
On local content, the apex bank stressed that eligible component manufacturers must be Nigerian-owned entities or consortiums, involving a minimum of 70 per cent local ownership.
In line with the programme’s job creation objectives, it said eligible manufacturers must demonstrate a commitment to employing local talent with a detailed vocational and technical training plan.
CBN said, “The pathways to energy access, financial inclusion and poverty reduction are closely linked and requires a rapid scale of pay-as-you-go (PAYG) off-grid technologies that will create a $2 billion (N7.5 trillion) annual market opportunity as penetration today is less than five per cent of total market potential.
“To support the economic recovery in response to the COVID-19 pandemic, the Federal Government of Nigeria (FGN) has launched an initiative as part of the Economic Sustainability Plan (ESP) to achieve the rollout 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.
“The solar connection scheme is a federal government initiative whose objectives are to expand energy access to 25 million individuals (five million new connections) through the provision of solar home systems (SHS) or connection to a mini-grid.”
According to the bank, it would also increase local content in the off-grid solar value chain and facilitate the growth of the local manufacturing industry; and incentivising the creation of 250,000 new jobs in the energy sector.
The intervention facility, it said, was to complement the Federal Government’s effort of providing affordable electricity to rural dwellers through the provision of long term low-interest credit facilities to Nigeria Electrification Project pre-qualified home solar value chain players.