Nigeria in talks with W’bank’s IFC for $6.3bn investment in solar, others

Nigeria’s federal authorities are negotiating a private sector-led investment portfolio with the International Finance Corporation (IFC) of the World Bank, wherein up to $6.3 billion could be raised to support power projects which include solar; hydro; and gas in the country, a classified government memo has disclosed.

Obtained by OGN in Abuja, the government memo was supposedly presented to the federal executive council (FEC) – the chief decision making body of the executive comprising its key functionaries, by the power minister, Mr. Babatunde Fashola.

Fashola, also signed the memo which was reportedly considered in February, 2017, and which amongst other things informed and sought the approval of the FEC on measures initiated by the ministries of power and finance, in partnership with the World Bank to reposition the power sector.

According to the memo, the first meeting between the parties at which they considered the subject was held between December 8 and 9 2016.

Through the funding package, Nigeria hopes to add up to 3500 megawatts (MW) of electricity generated from solar; hydro; and gas, to her daily national power generation and distribution.

It noted that they had considered “the critical state of the power sector; share(d) global knowledge on how similar situations have been addressed in other jurisdictions; and formulate(d) an action plan for further consideration by the Federal Government to fix the debt and liquidity challenge.”

“During the meeting, FGN and WBG discussed a comprehensive package of financial support: a) US$2,519,000,000 in power sector development and policy support through the WBG’s International Development Association; b) US$6,300,000,000 in private sector investment to support an additional 3,500MW of thermal, hydro and solar power generation as well as investments in distribution companies through the WBG’s International Finance Corporation; and c) US$1,400,000,000 in project guarantees and insurances for investments in the Nigerian power sector through the WBG’s Multilateral Investment Guarantee Agency,” explained the memo.

1125MW utility scale solar IPPS investments on the line

Based on this, it is expected that financial coverage would be provided for the final investment decision on some of the 14 utility scale independent solar power projects Nigeria signed power purchase agreements (PPAs) for in July 2016, to happen.

The government had subsequently shared the PPAs for these projects amongst the World Bank and African Development Bank (AfDB). While the World Bank has reportedly being measured in concluding the PPAs for the projects that were distributed to it because it wanted the government to credibly sort out the challenges of the power sector, the AfDB has on its part gone ahead with its consideration of its share of the PPAs.

OGN however gathered that the solar PPAs could be part of the discussions, and the financial guarantees requested by lenders to the projects addressed within the framework. A positive conclusion of these projects could help Nigeria diversify her energy mix, and attract further interest in her growing solar power market.