As implementation of Nigeria’s $410 billion Energy Transition Plan begins, the federal government has disclosed that approximately $8.2 billion of the $10 billion required annually to execute decarbonization initiatives has already been secured.
Lolade Abiola, Co-Head, Energy Transition Office, and Principal Specialist, Energy and Climate, disclosed this in Lagos during the Women in Energy Dialogue, a session aimed at encouraging female energy professionals and players to contribute their share to the realisation of the Nigerian energy transition agenda.
The Nigerian Energy Transition Plan is a brave and ambitious national policy aimed at addressing the country’s twin crises of energy poverty and climate change and achieving carbon neutrality by 2060.
The government has identified an initial $23 billion investment opportunity across a portfolio of projects, with an estimated $17 billion in private sector funding required for projects spanning power generation, transmission and distribution, metering, gas commercialisation, clean cooking, e-mobility and healthcare.
Experts estimate that between 2021 and 2060, Nigeria will need an additional $410 billion above its business-as-usual expenditures to reach its net-zero emissions goal.
$150 billion would be spent on increasing power generation capacity, $135 billion on transmission and distribution infrastructure, $79 billion would be spent on cooking, $21 billion would be spent on industry, $12 billion would be spent on transportation, and $12 billion would be spent on decarbonizing oil and gas.
Abiola stated, however, that some of the financial commitments were made by local and international partners, including the World Bank, the US Exim Bank, and Sun Africa, an American solar company, during her presentation at the forum.
She noted that Infracredit, the Nigerian Sovereign Investment Authority (NSIA), and other funding partners had committed to the plan financially, adding that their commitments were contingent on projects in critical areas.
Abiola explained, “So far, what have we accomplished? Again, we are not merely discussing these large numbers that do nothing. The mission of the ETO is resource mobilisation. How can we garner the necessary funding to implement the Energy Transition Plan in Nigeria?And to date, we’ve been able to facilitate approximately $8.2 billion in financing commitments, which we expect to complete by the end of the year. These commitments have primarily been in the power sector, for example, working with the World Bank on diesel displacements in Lagos State.
A portion of the financial commitments are project-based. For instance, I will proceed directly to the Sun Africa Framework Agreement. This is a large utility-scale on-grid initiative between the Niger Delta Power Holding Company and the US Exim Bank, working with American companies to deploy solar solutions in Nigeria, which the NDPHC is actively promoting. Thus, this concludes the US Exim Bank agreement with the government of Nigeria and the United States.Then, we transitioned to the World Bank-Nigeria Electrification Project. They are dedicated. They have already committed $500 million in the first tranche, which has been completely depleted. And now we’re aiming to bring in an additional $750 million, which is contingent on the diesel displacement programme.”
She stated that the programme funded by the World Bank concentrates on how to quantify the number of diesel generators in Lagos State, for example, and what must be done to replace them, with the potential to be replicated across the nation.
According to her, the NSIA possesses the funds and is committed to funding projects, just as Infracredit Nigeria is committed to funding projects that will assist the nation in achieving a carbon-free society.
She asserted that the private sector working group would play a significant role in ensuring that initiatives that are bankable and meet all criteria are presented to funding partners to persuade them to provide funding.
“Because you must present the NSIA with a well-structured and accurate business plan or proposal. “Therefore, you will be subjected to a process of supporting vetting by the private sector working group in order to access that money,” Abiola explained.
In addition, the Senior Special Assistant to the President for Planning and Coordination, Lanre Shasore, stated that the federal government must push the right policy buttons and make the right connections with Western nations, particularly the G7, in order for their funds to support Nigeria’s energy transition plan.
She stated that Nigeria requires $10 billion annually to implement the plan, and that funding could be obtained through various channels, including private sector support, multilateral financing, and grants, among others.
“Therefore, it is necessary to make the proper policy connections. Where shall we do this? The highest level of governance is represented by the Energy Transition Working Group. Then, they engage in a roadshow with international partners, G7 countries, who you may have heard in the news are working with countries such as Senegal, South Africa, and Indonesia to provide them with the just energy transition package to assist them in achieving decarbonisation.
“Therefore, the government requires these commitments from G7 nations to demonstrate that its energy transition plan is committed to decarbonization. These are the ventures requiring funding. Would you assist us in financing this? Thus, bilateral partners and G7 nations,” Shashore added.