FG’s N10.96bn Green Bond  for Renewable Energy, Forestation Financing

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The Debt Management Office, DMO, has said that   the Federal Government N10.75 billion sovereign green bond  would be used to finance renewable energy projects, energising education and forestation programmes.

It also said the bond was expected to be open to the investing public from  December  18, 2017 to December 21, 2017.

The Director General of DMO, Patience Oniha,  disclosed this in Lagos at an  investor forum convened to present the Green Bond. 

She said: “The Federal Government is ready to raise N10.75 billion Series 1 issuance under the N150 billion green bond programme. The macro environment is improving , as we can see the country has come out of recession from second quarter, Q2 and  third quarter, Q3 , the  Gross Domestic Product, GDP has improved , even though at low pace. But that shows that the outlook looks brighter for Nigeria. Also the external reserves is on the increase, which will help boost the stability of our currency with increase in foreign investor confidence.”

 “The DMO strategy is to continuously restructure the Federal Government’s debt portfolio to replace short tenured bonds with long tenor and high rates with lower rates. This strategy includes the tapping of the international capital markets and a green bond issuance with the right framework. We set 60 per cent domestic and 40 per cent external borrowing target in order to have diversity and not to have one source of finance. It is our hope that this green bond offer would be oversubscribed given the benefits to investors and the country in general.”

In her own presentation, Hajia Halima Buhari, a representative from the Ministry of Environment, said: “The Ministry of Environment in collaboration with the Ministry of Finance have initiated action towards the issuance of Nigeria’s maiden sovereign green bond. Nigeria’s emissions are expected to grow by about 900 million tonnes per year in 2030, which translates to about 3.4 tonnes per person. Our aim is to reduce emissions by around 45 per cent.”

“The following work streams have been completed in furtherance of the green bond project: Development of guidelines Identification of qualifying projects  Establishment of an Inter-Ministerial Committee on Climate Change comprising of key applicable  Ministry Department Agencies, MDAs  key requirements for the bond issuance include: The projects should be green in nature  Project costs should form part of the Medium Term Sector Strategies (MTSS) of selected MDAs  The project should have a defined revenue model or economic impact that generates resources that will be used to service the green bond The emissions contributions of the projects should be calculated and documented  .The ministry also set up a Green Bond Private Public Sector Advisory Group (“GB-PPSAG”) to support this process . 

The GB-PPSAG comprises of development partners, relevant regulators, capital market operators and MDAs.

 The process should also enable the country tap into the growing global market for green bonds which is estimated to reach USD150billion  by the end of 2017,” she added.

A representative of Chapel Hill Denham Advisory Limited, the Lead Financial Adviser to the Federal Ministry of Environment Green Bond, Muhammad Mamman-Daura, said: “ The Green Bond will be listed on the Nigerian Stock Exchange, NSE and FMDQ OTC  Exchange. The proceeds of the Bond will be allocated as follows: Renewable micro utilities N150 million; Energising education programme N8.5 billion and Forestation N1.9 billion. The minimum subscription is N10 million and allotment confirmation is Thursday December 21, 2017.

“The benefits include: Provides competitive investment returns relative to conventional bonds. Strong investment grade ratings; Avoid the runaway costs of climate change; Create jobs via renewable energy initiatives such as providing solar powered systems for rural electrification; Deliver benefits to low-income households; Save households and business money due to the eventual resulting drop in energy and electricity bills, among others .”