The federal government through the Rural Electrication Fund is planning to give concessionary loans at between 15 to 20 percent interest rates with about seven years moratorium to mini-grid operators

THE Rural Electrification Fund, REF, is planning concessionary loans of 15 to 20 percent interest rates with the Deposit Money Banks for mini-grid operators. Sanusi Ohiare, executive director, REF, said the banks are already conducting due diligence on the sector with the operators under the Nigeria Energy Support Programme, NESP 2.

At the mini-grid stakeholders’ workshop in Abuja, Ohiare said the lenders have reached a “stage where they are comfortable to take that leap. It is a good thing because once we have the local commercial banks key into this project; it is easy for us to scale up.”

On her part, Temitope Udo- Affia, advisor, Sustainable Energy Access (off-grid) NESP, said the loan is for between five and seven years moratorium period. The loan, according to her, will be denominated in naira to remove the foreign exchange risk and provide access to large amount of credit.

She, however, said how long the due diligence will take and the risk mitigation that the local financiers will need are yet unknown. “In NESP 2, we will also be targeting access to local finance which is good for replication. We are currently in discussion with a few local commercial banks.

“So, far we have received some terms from between 15 and 20 per cent interest rate for over five to seven years, plus grace period. The strength is that these are naira denominated loans, so it reduces or removes the forex risk, and there is access to large amount of finance.

“The weakness is that we are not yet sure what the duration of the due diligence process will take. And what the risk mitigation that these local financiers require in NESP 2. NESP 2 is also looking at concessionary finance, training finance and capital investments.”

– Feb. 1, 2019 @ 15:45 GMT |