Vanuatu Parliament Approves Bill for the National Green Energy Fund

In June 2018, the parliament of Vanuatu approved the National Green Energy Fund (NGEF) bill, supported unanimously by both the government and opposition members. The bill was then gazetted in July 2018 as Act 10 of 2018.  As the first national financing vehicle for the Vanuatu energy sector, this legislation will contribute towards accelerating the objectives and targets of the Updated National Energy Road Map (NERM) by 2030. The NGEF will play a vital role in helping Vanuatu achieve its policy targets of 100% electricity access throughout Vanuatu, 100% use of renewable energy sources, 14% reduction of energy use using energy efficient products, and 65% of tourism bungalows using renewable energy sources of electricity by 2030.

Vanuatu National Parliament approves the National Green Energy Fund Bill

The NGEF will operate as a revolving fund, attracting both domestic and external funds, which will then on-lend to customers through approved intermediaries. It will consolidate existing energy funds as part of its domestic resources and the Government’s financial contribution, which will be used as leverage to attract a larger portion of funding expected to come in from Vanuatu’s development partners. The revenues derived from its financial activities are expected to bring in additional funds into the NGEF. The initial focus of the NGEF will be on electricity access, mainly in off grid areas, use of renewable energy and energy efficient products.

Past Council of Ministers (CoM) decisions in April 2016 and May 2017 approved the establishment of the NGEF concept and its institutionalization within the Vanuatu Department of Energy (DoE) under the Ministry of Climate Change.  The NGEF concept development and its institutional setup was accomplished through technical and financial support from the Global Green Growth Institute (GGGI).  The NGEF’s draft Business Plan and Operations Manual have been completed and are awaiting approval by the newly established NGEF Board.

The next steps for the NGEF are two fold: capitalisation and operationalization of the fund. Operationalisation of the fund is in progress for the second half of the year, which will involve the appointment of the NGEF Board scheduled for end of August, and finalising the NGEF Operational Manual and its Business Plan.

Local capitalisation of the NGEF is also in progress through a proposed levy on electricity consumers which has been submitted to the Council of Ministers for deliberation. The NGEF Unit and Task Force is also is appealing to all donor partners and development agencies represented in Vanuatu, and international community to contribute to the fund. A proposal to the Green Climate Fund (GCF) through the Simplified Approval Process window is also being pursued to raise the bulk of the initial seed funding portfolio required of approximately US$15 million. This financial support will enable the Government of Vanuatu to initiate the NGEF pipeline of projects and support Government objectives as articulated in the National Energy Road Map (NERM).