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Policy tweak in the works: Green energy purchases likely to be mandatory

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The Union government is planning to amend the Electricity Act and the National Tariff Policy to make it mandatory for electricity distribution companies (discoms) and other bulk buyers to meet their renewable purchase obligations (RPOs), a move that will give a fillip to investments in solar, wind and hydro energy sectors.

The move comes at a time when companies engaged in the renewable power segment have lined massive expansion plans and are looking to raise funds from different sources including domestic banks and financial institutions, overseas banks, capital markets and multilateral institutions.

The plan is also sync with New Delhi’s new commitment to meet half of its energy requirement from renewable sources by 2030.
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The RPOs were introduced in 2010 under the Section 86(1) (e) of the Act. Via this section, the Centre urges bulk buyers of power, including discoms to meet a certain percentage of electricity requirements through renewable sources.

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But compliance with this norm has been lax, as most state governments haven’t showed a firm resolve to enforce it. While RPO rates among states vary roughly in the 9-17% range, some states including Uttar Pradesh have even waived the penalty for non-compliance.

“Now that India has updated its 2030 commitments under the Paris Agreement, there is more urgency to reduce dependence on coal. Since RPO compliance has been found quite poor, the government is now revising the tariff policy to make them mandatory,” said a Delhi-based executive from the power finance sector.

Some of India’s largest conglomerates are ramping up renewable capacity in the hydro and wind power segments, bankers said. Solar energy has been one of the leading sectors for banks in the last few years in terms of loan demand, but capex demand for hydro and wind segments is starting to firm up now, they added.

“There is a clear push from the government in favour of renewable sources. We are seeing strong demand for hydro projects in the states where it is viable, and that includes Himachal Pradesh, Uttarakhand, Jammu & Kashmir and the northeastern states,” said a senior executive with a large public-sector bank.

Historically, the exposure of the banking sector to alternative sources of energy has been limited. According to a March 2022 paper by Reserve Bank of India (RBI) researchers, as of March 2020, only about 8% of the bank credit deployed in the electricity industry was towards non-conventional energy production. The ratio varied from 17% in Punjab to a measly 0.1% in Odisha. The share of non-conventional energy in utility sector credit was higher for private banks at 14.8%, as against only 5.2% in public sector banks (PSBs).

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Of late though, thermal power has been losing favour with banks and the lending taking place in the coal-based power segment is largely in the form of refinance transactions. Bankers are also wary of coal-based projects from an asset quality standpoint after the grim experience of the last bad loan cycle. A number of thermal power plants financed in the late 2000s went bad in the absence of power purchase agreements.

State Bank of India (SBI) is now closely assessing its exposure to thermal power projects. “The life cycle of coal projects could be anywhere between 20 and 30 years. So we need to ask ourselves whether such projects could become a threat to India’s global sustainability commitments and, in turn, create asset quality issues for us,” said a senior executive with the bank.

The government had, in 2020, launched the Renewable Energy Certificate (REC) scheme as a market instrument to facilitate compliance with RPO targets. Under the scheme, buyers of conventional power such as discoms and corporate entities who fall short of meeting their RPO targets can buy RECs on the exchanges from registered RE power producers. However, higher prices on the exchanges and regulatory uncertainties have made project developers reluctant to register under the scheme. Also, buyers have started to enter into individual contracts with developers at lower prices compared to exchange rates. So, a mere 4526 MW or 4%of the installed renewable energy capacity stands registered under the scheme as of December, 2021.

In the United Nations Climate Change Conference (COP26) held in Glasgow in November last year, Prime Minister Narendra Modi announced that India will reduce the total projected carbon emissions by one billion tonne till 2030. By 2030, the country will reduce the carbon intensity of its economy by less than 45%, he said.

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Electric van maker Arrival misses quarterly production goal

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LONDON, Sept 30 (Reuters) – British electric van and bus maker Arrival said on Friday it had missed its third-quarter target to start van production because of supply chain problems, but was on target to meet its goals for the end of 2022.

“The supply chain is broken and we’re a new company,” chief executive Denis Sverdlov told Reuters. “We are going through our own production hell … but we expect we can go through this much quicker than traditional companies.”Elon Musk, CEO of Tesla (TSLA.O), famously complained of “production hell” as the electric carmaker struggled to scale up the manufacturing of its mass-market Model 3 sedan.

Arrival and other commercial electric vehicle (EV) startups are burning through cash as they race to bring vans or trucks to market before the funds run out or customers choose to buy from legacy automakers instead.

In July, Arrival said it would reorganise its business, possibly resulting in up to a 30% reduction in its workforce. In August, the company said it would delay spending on its bus project as it seeks fresh funds.
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By the end of the third quarter, Arrival said it had managed to build a “production verification vehicle” at its British “microfactory” in Bicester and would still deliver 20 vans to customers by the end of 2022 as previously announced.

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Arrival still does not expect to book any revenue in 2022.

Like many within the auto industry, Arrival said it had experienced supply chain problems, including securing supplies of metal, and parts such as lights and wire harnesses.
Arrival said it still expected to generate revenue in 2023 and would need to raise capital for its second van microfactory in Charlotte, North Carolina, which will focus mostly on fulfilling an order from package delivery company UPS (UPS.N) for up to 10,000 vans.

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Top 10 Nigerian tech companies funds raised in Q2 2022

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Nigeria continues to dominate the startup ecosystem in Africa in terms of the number of innovative companies springing up by the day. with this, it is not surprising that the country is attracting the largest funding across the continent as foreign and local investors inject more funds into its young innovators.

According to Africa Tech and Fintech report by Renaissance Capital, Nigerian tech startups raised a total of $678 million in 107 different deals between January and April this year. The country accounted for 31% of the total funds raised by African tech companies in the four months, which stood at $2.2 billion.

Although not as much as was recorded in the preceding quarter, Nigerian tech startups in Q2 202 also raked in millions of dollars from Venture Capitals and Angel Investors covering different stages of investments.

Here are the top 10 tech startup deals that made the news in Q2 2022:

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Identitypass ($2.8 million)
Identitypass, a Nigerian identity verification startup, raised $2.8 million in seed funding to expand its business. With the funding announced in June, the company said it planned to roll out new verticals around compliance, security, and data collection, push into new African countries and make new hires to its 14-man team.
The startup had raised $360,000 in pre-seed investment last November, bringing its total funding to $3.1 million. The latest funding was led by MaC Venture Capital with participation from other investors such as Y Combinator, Soma Capital, True Capital Fund, and Sherwani Capital.
Founded by Lanre Ogungbe, Niyi Adegboye and Ebuka Obi, the two-year-old SaaS platform in addition to its APIs. The software was built to enhance Identitypass’ growth scale and excel among its competitors in the market.

Indicina ($3 million)
Indicina, a credit agency startup, raised $3 million in June to drive its African expansion plans. The company, which currently operates in Nigeria and Kenya said it would also use the fund to build more products for consumer credit recommendations, and bolster its infrastructure.
Berlin-headquartered and pan-European venture capital firm Target Global led the round, adding to its long list of investments in Nigerian startups, including Kuda, Kippa and Edukoya. The firm’s partner Ricardo Schäefer will join Indicina’s board. Greycroft also participated in this round, as well as RV Ventures.
The investors hinged their interest in Indicina on its unique approach to solving Africa’s credit problem. The company uses data to solve the loan eligibility problem previously decided by incomplete creditworthiness assessments.

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ImaliPay ($3 million)
ImaliPay, a Nigerian fintech that prides itself as a one-stop shop financial services platform, closed a $3 million seed in debt and equity round in April. The fintech had raised $800,000 pre-seed round in 2020, bringing its total raise to $3.8 million.
The round which was led by Leonnis Investments also received follow-on investors from VCs such as Ten 13, Uncovered Fund, MyAsia VC, Jedar Capital, Logos Ventures, Plug N Play Ventures, Untapped Global, Latam Ventures, Cliff Angels, Chandaria Capital and Changecom. Angel investors like Keisuke Honda of KSK Angels and others from Serbia, Kenya and Norway participated.
The company said the investment would go into expanding its 50-man team, amping up its technology, and exploring new markets like Ghana and Egypt.

Kaltani ($4 million)
Kaltani, a cleaning technology plastic waste recycling company, received $4 million in seed funding in May to expand its recycling operations across Nigeria.
Founded by Obi Charles Nnanna, Kaltani aims to solve Africa’s growing plastic waste crisis by promoting the circular economy and recycling best practices. The company’s technology utilises data analytics, predictive analytics, and geo-mapping to ensure transparency and traceability throughout the value chain.
With the funding, the company said it planned to open 20 new collection and aggregation centres across Nigeria and increase its staff strength to over 500 people.

OnePort 365 ($5 million)
Oneport 365, a digital freight forwarding startup that makes it easier to transport cargo to, from, and within Africa, raised $5 million in seed funding in April to enable its expansion into new markets across the continent and push end-to-end digitization of freight management in Africa.
Mobility 54 (the Venture Capital arm of Toyota Tsusho and CFAO Group) led the seed funding round, which included SBI Investment, Samurai Incubate, Flexport, ODX, a Singaporean syndicate fund, and other strategic angel investors.
The startup’s platform allows traders to connect with shipping and inland transportation vendors and manage the entire process. Traders get GPS-enabled, real-time visibility of their shipments and they can view all documents relating to the shipment via the platform, eliminating the laborious process of physically retrieving these documents from offices or shipping line centers.

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Afriex ($10 million)
Afriex, another Nigerian fintech startup, also closed a $10 million Series A round in April to expand its blockchain money transfer platform. The company, which was valued at $60 million runs a money transfer system that utilises blockchain to enable users to send funds by converting them into stablecoins, which are cryptocurrencies backed by reserve assets.
Launched in 2019, the startup founded by Tope Alabi and John Obirije had raised a $1.3 million seed round last year. The latest funding round was financed by Sequoia Capital China and Dragonfly Capital with participation from Goldentree, Stellar Foundation, and Exceptional Capital, among others.

Leatherback ($10 million)
Leatherback, a financial services provider startup secured its first external investment in April as it secured a $10 million pre-seed funding from Zedcrest Capital, a leading pan-African principal investment firm.
With the funding, the fintech startup, which was being bootstrapped by its founders, said part of the fund would be deployed to raise Leatherback’s profile in the fintech space as well as extend its capacity in the many countries that it is licensed in and where it is about to be approved like South Africa, Egypt, Uganda, India, and the UAE.

ZirooPay ($11.4 million)
ZirooPay, a Lagos and Helsinki-based startup that develops mobile POS payment systems designed to facilitate mobile payments raised $11.4 million Series A round in April. The company said the funding would facilitate the expansion of its payment infrastructure, accelerating growth and growing its team.
The funding round was led by Lagos-based VC fund, Zrosk Investment Management, and also involved participation from existing investors, Nordic Venture Fund. Other private and institutional funds such as Fedha Capital and Exotix Advisory also partook in the funding. Individual investors include Petri Kivinen, the former managing director at Deutsche Bank; Morgan Stanley and Renaissance Capital; Abiodun Ajai, the director, Sub-Saharan Africa of Bank of America; Kurt Bjorklund, managing partner at Permira; Stephane Kurgan, venture partner at Index Ventures; and Jonas Dromberg, former Bureau chief at Bloomberg.

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Umba ($15 million)
Nigerian digital banking startup, Umba, in April raised $15 million in a Series A funding round, which brought its total fundraising to date to $17.5 million.
The round was led by VC firm Costanoa Ventures and saw participation from Lux Capital, Lachy Groom, Act Venture Capital, Streamlined Ventures, Palm Drive Capital, Chandaria Capital and Banana Capital, as well as Monzo co-founder Tom Blomfield.
Umba prides itself as a customer-centric, mobile-first digital bank that increases access to financial tools, including current accounts, bill payments, loans, cashback, P2P payments, and bank transfers.With the funding, the company said it intended to launch in Egypt, Ghana, and Kenya as well as roll out new financial products including debit cards, savings accounts, and stock trading.

Interswitch ($110 million)
One of Africa’s largest fintech companies, Interswitch, landed the biggest deal by a Nigerian startup in Q2 2022 as it secured $110 million in a joint investment from LeapFrog Investments and Tana Africa Capital to scale its digital payment services across Africa. The two investors said they would be supporting Interswitch’s next chapter through continued product innovation and growth across the African continent.
The investment secured in May came almost three years since Interswitch’s last disclosed funding round when Visa paid $200 million for a 20% stake in the company. Interswitch powers much of the rails for Nigeria’s online banking system and is well-known for its point-of-sale terminals, online consumer payment platforms, Quickteller, and Verve, the biggest domestic debit card scheme in Africa, issuing over 35 million active cards since launch.

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Fidelity Bank renovates classroom blocks, commissions ATM gallery in Zaria

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Leading financial institution, Fidelity Bank Plc has commissioned the newly renovated Madrasatul Anwarul Islam school in Zaria, Kaduna State, as part of its Corporate Social Responsibility (CSR) initiatives targeted across Nigeria.

Established over five decades ago by the emir’s father, late Maga in garin Zazzau, Alhaji Nuhu Bamalli, Madrasatul Anwarul Islam is the alma mater of the current Emir of Zazzau and has produced several notable personalities in the country.

The bank also inaugurated a state-of-the-art Automatic Teller Machine (ATM) gallery to drive financial inclusion within the community.

Speaking at the official project commissioning event on June 18 Executive Director, North Directorate, Fidelity Bank Plc, Hassan Imam, said the bank’s decision to renovate the school was borne out of its commitment to make learning conducive for both students and teachers across the country.

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According to Imam, “Our CSR footprint extends beyond education, healthcare and youth empowerment initiatives across the country as we are driven by the belief that we can only succeed as an organization when the people and community where we do business succeed.

“That is why we have taken it upon ourselves to help upgrade the facilities here at Madrasatul Anwarul Islam. Our hope is that the teachers and students in the school will put the facility to good use.

“As part of our commitment to drive financial inclusion across the country and boost commerce in Zaria in particular, we have installed an ATM gallery at the emir’s palace.

“We hope this would make financial services easier and accessible to members of the Zaria community in line with our mission as a bank and thank the emir, His Royal Highness, Alhaji Ahmed Nuhu Bamalli, for his support in executing this project as well”, he said.

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Applauding the bank for its gesture towards promoting education and commerce in Zaria, HRM Ambassador Alhaji Ahmed Nuhu Bamalli encouraged members of the community to put the facilities to good use and protect them against vandalism.

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The monarch urged businesses and merchants to patronize the bank as a way of appreciating their efforts in developing the community.

Fidelity Bank is a full-fledged commercial bank operating in Nigeria with over 6.7 million customers serviced across its 250 business offices and digital banking channels.

The bank was recently recognized as the Best SME Bank Nigeria 2022 by the Global Banking & Finance Awards.

The bank has also won awards for the “Fastest Growing Bank” and “MSME & Entrepreneurship Financing Bank of the Year” at the 2021 BusinessDay Banks and Other Financial Institutions (BAFI) Awards.

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