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Nigeria’s wealth fund sees the potential to expand a carbon credits programme with Vitol 10-fold in a venture currently worth US$50 million, according to its chief executive officer.
The Nigeria Sovereign Investment Authority, which manages as much as US$5 billion in assets, formed a US$50 million enterprise with Vitol in April known as CarbonVista. The venture announced an agreement to sell the credits to a unit of Saudi Arabia’s sovereign wealth fund this month. The pact effectively sees the sovereign wealth funds of two of the world’s biggest oil producers partnering with one of the largest oil traders to mitigate the climate-warming effects of burning fossil fuels.
The program forms part of NSIA’s mandate. CEO Aminu Umar-Sadiq, said as a custodian of Nigeria’s money, his organisation needs to invest in sustainable economic development.
“I want to say half a billion, but that depends on how well we do with the US$50 million” programme, he said in an interview, referring to the project’s potential, adding that CarbonVista plans to focus on efficient wood stoves, water purification and re-afforestation projects to earn credits.
African countries from Zimbabwe and Malawi to Gabon and Kenya are seeking to benefit more from the production of the offsets. Each carbon credit represents a ton of climate-warming carbon dioxide or its equivalent removed from the atmosphere or prevented from entering it in the first place.
Under the initial agreement NSIA contributed US$20 million and Vitol US$30 million. Vitol declined to comment.
The venture plans to get a clean-cooking project, which will use more efficient wood stoves than those currently used to reduce deforestation, underway in the third quarter, according to Umar-Sadiq.
An agreement is being negotiated with a stove manufacturer that will set up a plant in the northern town of Kano and CarbonVista may take a stake in the company to guarantee offtake, he said, declining to identify the firm.
“They are in Kenya and we are trying to bring them to Nigeria to set up shop,” Umar-Sadiq said. “They are very, very happy to do” this, he said. – Bloomberg
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