Financial Energy Review
……..by Ben Ndubuwa……
As Nigeria seeks opportunities to fund her $360 billion energy transition programmes experts have advocated that part of that funding can be sourced from the global bond Market which is expected to hit $5 trillion by next year.
Speaking on Wednesday at the on-going Nigeria Energy Leadership Summit in Lagos, the Executive Director and Chief Financial Officer Samuel Nwanze and the Senior Vice President, Stanbic IBTC Infrastructure Fund, Jumoke Ayo-Famisa said in Fireside chat that, industry leaders should focus on the potential for cross-border and agency cooperation to strengthen the funding of power sector which could translate into fast tracking the energy transition programme with meaningful development and growth in Nigeria.
Nwanze noted that the integration of agencies such as the Central Bank of Nigeria (CBN), the Nigerian Electricity Regulatory Commission (NERC), and the Rural Electrification Agency (REA) could yield significant improvements. “If we can have these organizations work together and leverage the expertise built over the years in various sectors, such as energy and infrastructure, we can expect substantial progress in power and other sectors” he said.
In financing, particularly in the context of Nigeria’s energy transition goals, which are estimated to require around $360 billion in funding. Both speakers acknowledged the challenges of funding large-scale projects but pointed to innovative financing mechanisms as a potential solution.
The Stanbic IBTC, Vice President said that Nigeria, which issued its first green bonds in 2017, has shown promise in tapping into the global green bond market, which is expected to reach $5 trillion next year. According to her the country could further explore blended financing structures, combining concessionary, development, and private capital to mitigate risks and attract investment.
“There is no one-size-fits-all financial solution for projects. It requires a customized approach that considers the risks, investor interests, and the expected returns. Green bonds, for instance, offer a strong potential for funding, particularly for environmentally-focused projects” Ayo-Famisa said.
Nwanze also emphasized the need to design projects that appeal to international investors. “The capital market for green bonds is largely outside Nigeria, particularly in the West, where there is a pool of funds looking for climate-focused investments. However, we need to address investors’ concerns about regulatory risks and ensure that Nigeria’s regulatory frameworks are cohesive and reliable” he said.
According to them the successful transition to cleaner energy in Nigeria will require a combination of integrated regulatory efforts, innovative financing mechanisms, and the ability to attract foreign investment. They pointed out that with the right strategies in place, Nigeria can expect to see sustained growth in both the energy and manufacturing sectors.
