An energy expert, Ms Ify Malo, on Thursday canvassed the need for the Federal Government to use proceeds from green bond to fund renewable energy projects in rural communities.
Malo, a Director of Power for All, an international organization, gave the advice in Abuja.
President Muhammadu Buhari had announced, while presenting the 2018 Budget that government will launch the first African Sovereign Green Bond in December 2017.
“I am pleased to inform this distinguished assembly that the Federal Government will be launching the first African Sovereign Green Bond in December 2017, the bond will be used to finance renewable energy projects,’’ Buhari said.
The green bond is issued following Nigeria’s endorsement of the Paris agreement on climate change in 2016 designed to strengthen global response to threat of climate change.
The N10.69 billion green bond offers whose proceeds will be used to finance projects in the 2017 budget have been certified as green because of the positive effects on the environment.
Among the projects to be financed with the proceeds of the bond are the renewable energy micro utilities and a forestation programmes.
Malo, however, said, “while the breakdown of how the expected bond to be raised will be spent is yet to be known, we will advocate that it is used to fund renewable energy projects that will increase access to energy for rural areas.’’
She said proceeds from the bond could be used to increase the amount of funding available to the Rural Electrification Fund with projects such as mini-grids construction.
The expert said the proceeds could also be used to increase funding for the Energising Economies programme of the Rural Electrification Agency (REA) targeted at providing constant energy to economic clusters using renewable energy-powered mini-grids.
According to her, a portion of the fund can be used to give low interest loans to renewable energy entrepreneurs through the Central Bank of Nigeria (CBN) through a specific fund.
She said this would help address the challenge of access to funding prevalent in the renewable energy sector.
Malo called for channelling the funds for the development of renewable energy production through the Rural Electrification Fund, a development fund with the CBN.
She said this could be through programmes such as those of the REA that would ensure adequate and effective utilisation of the bond proceeds for renewable energy development.
She explained that making the details of projects being funded and the modalities for accessing funds open and transparent would make it easier to ensure the proper utilisation of the funds.
The expert said the allocation of 30 per cent of the 2018 budget to the Power Sector “is very commendable’’.
“It shows that the government is not only aware of the infrastructural challenges facing the country, but is also serious in making efforts to solve these challenges.
“While we are yet to see a detailed breakdown of the proposed budget, we hope that projects that will accelerate the development of decentralised renewable energy will receive adequate funding.
“This is very critical to deepen infrastructure, particularly in rural areas that form the bulk of un-electrified areas in Nigeria. This will help to further unlock the economy in such areas,’’ Manu said.