By Opeyemi Adelakun
Nigeria may need as much as $23bn in additional funding to overcome its electricity supply and access challenges, the Rural Electrification Agency has disclosed.
The REA Managing Director, Abba Aliyu, made the disclosure on Friday in Abuja at the signing of a financing partnership between the agency and Alpha Morgan Bank.
The agreement will provide renewable energy developers participating in REA-backed programmes with access to financing of up to N10bn per project, depending on the bank’s assessment.
Alpha Morgan Bank is expected to provide as much as 70 per cent of the required counterpart funding, with loan repayment periods put between 12 and 24 months.
Aliyu, however, said the N50bn commitment remained far below the level of investment needed to transform Nigeria’s electricity system.
He said the country currently had access to less than $2.5bn, compared with the estimated $23bn required to significantly expand electricity access and make supply more dependable.
The REA chief said the funding challenge was becoming more urgent because electricity demand was set to grow sharply in the coming years.
He pointed to Nigeria’s expanding population, rapid digitalisation, artificial intelligence, data centres and the increasing dependence on electricity in transportation, agriculture, healthcare and other sectors as major drivers of future demand.
Aliyu said the country could not afford to approach electricity as merely another infrastructure project, stressing that reliable power would increasingly determine Nigeria’s economic competitiveness.
He also identified renewable energy as a major part of the solution, noting that technological advances had continued to reduce the cost of solar power generation and battery storage.
According to him, this trend would make renewable energy increasingly important in meeting Nigeria’s electricity requirements.
Aliyu disclosed that the Federal Government had approved a $750m renewable energy programme expected to deliver 1,350 mini-grids and extend electricity access to approximately 2.5 million Nigerians.
He said the initiative had entered its second year of implementation but acknowledged that much more funding would be required to close the wider electricity gap.
The REA is also expecting about $119m from the Japan International Cooperation Agency for additional mini-grid projects, he said.
Aliyu explained that the agency was deliberately creating financing opportunities for private developers through performance-based programmes, where companies receive support after achieving specified project milestones.
He said the arrangement could enable banks to provide temporary financing to developers, allowing them to execute projects while awaiting grant payments.
The REA boss further announced plans to introduce a Renewable Energy Asset Management Company, which he said would help preserve and manage existing renewable energy infrastructure while creating opportunities to raise new capital against such assets.
He revealed that renewable energy installations owned by the agency in universities were already valued at more than $300m, describing the assets as an opportunity to attract further investment.
Nigeria, he added, currently has a pipeline of about 3.7GW in renewable energy manufacturing capacity, supported by investments estimated at $225m.
The agency is also nearing completion of 288MW of interconnected mini-grid projects, with the first commissioning exercises expected from November.
Speaking at the event, Alpha Morgan Bank Executive Director, Doyin Anyaehie, said the bank entered the partnership because financing constraints remained one of the major obstacles preventing renewable energy projects from moving from the planning stage to implementation.
She said the N50bn facility was intended to help viable developers obtain the capital needed to deliver projects, particularly in communities where unreliable electricity continues to restrict economic activity.
Anyaehie said the success of the partnership would ultimately be measured by the number of renewable energy projects financed and the tangible improvements experienced by households, businesses, schools and healthcare facilities.
She stressed that Nigeria’s electricity problem should not be viewed only through statistics on generation capacity, but also through its impact on ordinary people and businesses.
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