NIGERIA: NIDF buys the debt of solar energy provider Starsight

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NIGERIA: NIDF buys the debt of solar energy provider Starsight ©Starsight

In Nigeria, solar energy provider Starsight Energy has reached an agreement with Chapel Hill Denham Nigeria Infrastructure Debt Fund (NIDF). The finance company agrees to refinance Starsight's debt with two development finance institutions.

Good news for Starsight Energy. The solar photovoltaic energy provider has entered into a long-term partnership with Chapel Hill Denham Nigeria Infrastructure Debt Fund (NIDF). The Nigeria-based investment fund is refinancing Starsight’s debt over 10 years to the tune of 8 billion naira ($20 million).

The Lagos-based company has taken out loans from the Norwegian Government Investment Fund for Developing Countries (Norfund) and the Finnish Fund for Industrial Cooperation (Finnfund). Starsight has secured two lines worth a combined $20 million in 2019 and 2021. Since 2015, the company, which provides solar power to commercial and industrial (C&I) customers, has installed its small-scale plants at more than 500 sites, with 36 MW of generation capacity and 28 MWh of electricity storage capacity.

Refinancing in local currency

NIDF refinanced Starsight’s debt in the local currency, the naira. This is an important transaction that allows the company to better utilize financing for business development. “The increasing difficulty of sourcing U.S. dollars in Nigeria, as well as the devaluation of the Nigerian naira on the parallel market over the past five years, has made U.S. dollar debt increasingly expensive,” says Paul van Zijl, Starsight’s CFO.

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According to the solar energy provider, the refinancing of its debt will therefore remove the currency mismatch and exchange rate volatility associated with its Nigerian business. This transaction also allows for a reduction in the cost of its debt in terms of local currency and an increase in the duration of its debt “with favorable clauses”.

This refinancing comes more than a year after a first transaction with NIDF. In January 2021, Starsight signed an agreement for a N3.6 billion (over $9 million) credit facility with NIDF. The 10-year credit facility is intended, according to the solar power provider, to significantly expand its existing portfolio, which includes banks, gas stations, schools, hospitals, agricultural companies and other large C&I customers in Nigeria.

Jean Marie Takouleu

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