The Central Bank of Nigeria (CBN) has released the guidelines for the assessment of its Solar Connection Intervention Facility – a low-interest loan with up to ten years repayment period and up to 3 years moratorium.
CBN said the facility with amount of up to 70% of the total cost of the project, shall not be used to finance the importation of fully assembled solar components and Balance of System into the country.
The apex bank said it introduced the facility 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 the Nigeria Electrification Project (NEP) pre-qualified home solar value chain players that include manufacturers and assemblers of solar components and off-grid energy retailers in the country.”
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According to CBN, the Federal Government of Nigeria (FGN) has launched an initiative as part of the Economic Sustainability Plan (ESP) to achieve the roll-out of 5 million new solar-based connections in communities that are not grid-connected.
The bank’s guideline for the facility is sub-divided into 2 sections: upstream participants and downstream participants.
Guidelines for upstream participants
Upstream participants are companies engaged in the manufacture/assembly of solar components and Balance of System, those involved in repair and maintenance, or Solar component research and development among others.
Those eligible shall receive up to 70% of the total cost of the project, with a maximum tenor of up to 10 years as determined by the project’s cash flow profile but not exceeding 31st December 2030.
CBN said “the facility shall be administered at an “all-in” interest rate of NOT more than 9 percent per annum. However, 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.”
Eligible companies should demonstrate verifiable evidence of technical capacity, financial capacity, off-take agreement, minimum 70% local ownership, job creation focus, and vertically integrated participants.
Required documents as listed by CBN include; written request from the project promoter, certificate of incorporation, copy of MEMART, copy of Form CAC 2A, and business plan among others.
Guidelines for downstream participants
Downstream participants are companies involved in and after-sales support of solar home systems, mini-grid project development activities including site identification, engineering, procurement, and/or construction of mini-grids among others.
CBN prohibits the following activities under the facility;
- Sales or deployment of fully (100%) imported solar home systems components with no proof of existing local content or credible plan for near-term integration of local content.
- Deployment of mini-grid projects with 100% imported components solar PV and Balance of System with no proof of existing local content or credible plan for near-term integration of local content
Eligible companies shall receive up to 70% of the project cost at an annual rate of 10% with a tenor of up to 7 years and up to two years moratorium.
Required documents include;
- Three (3) years Actual Cash Flows (minimum of one full year CF for new companies could be accepted).
- Five – year Projected Cash Flow
- List of Revenue Accounts with DMBs
- List of 3rd Party Revenue Collecting Agents
- Certificate of Incorporation
- Copy of MEMART
- Form CAC 2A (Return of allotment of Shares)
- Business plan including Completed Environmental and Social Management System (ESMS) template, Organizational chart among others.
For more details read framework for implementation of the solar connection facility.