REA Targets N100bn Local Financing in Power Sector

Abba Aliyu, the Managing Director of Rural Electrification Agency (REA) said the Federal Government of Nigeria is working towards facilitating N100bn as local financing for the developers in the power sector. A process he claimed as already commenced.

He disclosed this at the ongoing Nigeria Energy Summit, held in Lagos and organized by Informa Markets, with the theme “Breaking Barriers to the New Energy Era: Clean, Reliable and Sustainable”. He also noted that the federal government plans to crystallize N1.1bn private sector funding for the power sector.

According to him, “In as much as we know, there are lots of challenges in terms of the electricity aspect, the Federal Government is committing a lot of resources and a lot of strategies to be able to address this electricity gap.

“Apart from the $750m that has already been provided by the current administration, we expect that the $750m would crystallize N1.1bn private sector funding as a co-financing requirement because we do not finance the entire infrastructure cost. We provide grants and subsidies as a way of catalyzing this private sector funding, and we are also working towards catalyzing N100bn as local financing for the developers, and this process has already started.”

The REA boss asserted that exploring other sources of power generation was critical, describing solar as easy to deploy. “However, we are asked by the minister to look at how we can leverage on small hydro, micro-hydro, biomass, and wind, and we are working in that direction. In the next two to three weeks, you will have seen a notice of tender that will be sent out for a micro mini grid that we are partnering with which is about 336-kilowatt micro hydro plants that we are about to start implementing.

“Also, we have earmarked small and micro hydros in Katsina, Ondo, Ekiti, Cross River, Nassarawa, and Sokoto, and we are also about to start that. This is in our effort to integrate the other sources of renewable energy into our energy access drive.”

According to Aliyu, 1.5 million Nigerians grew interconnected mini-grids to enhance electricity reliability. “Three million of them grew isolated mini-grids to create electricity access for the first time, and about 12 million of them grew a mesh grid, stand-alone system, and solar home system. This is what the country is doing, and this program is starting next month.

“We are also improving the commercial viability of the players, and this has started even before the outcome of the World Bank report,” he said.

“The private sector must improve their financial viability. The entire sustainability of the mini-grid, as with any project finance infrastructure, is reliably computed upon the financial viability of the player that is implementing this. Whether it is mini-grid, off-grid, or any infrastructure financing, that viability is subject to the commercial viability of the implementing app, whether it’s the private sector or public sector.

“So, in the off-grid, that financial viability is contingent upon how financially lucrative and capable are the private sectors that are deploying this infrastructure app,” he said.

In the same vein, Hakeem Disu, the co-founder of Lihon Energy, lauded the Nigerian energy transition. He stated that it was the most advanced compared to other African nations because of the opportunities to go through some of the energy transaction plans.

His words: “The mini green and solar system that is coming from the rural electrification agency is the way governments pointed out that we can use it to improve the livelihood and economic activities of the people in rural areas.

“The net project improves investors’ confidence in Nigeria; it is like a World Bank reward grant, like a carbon credit for businesses that are improving or providing electricity to people in rural areas. Over 75% of negotiations are very much interested in renewable energy.

“Over less than 20% of the Nigerian population are into agriculture and most of these people live in rural areas. There are so many ways this project can improve the lifelong activities of people living in rural areas by providing solar power irrigation to improve some sort of water irrigation and solar power dryer to preserve agricultural produce.”

Earlier in his opening remarks, Ade Yusuf, the Exhibition Director of Energy Portfolio-MEA, Informa Markets, said the African region was increasingly becoming a supply house for global economic growth, driven by its rich natural resources and the growing appetite for innovation and investment.

“Being in the market for 11 years now, the event has adapted to this new reality of the global conversation on sustainability, energy transition, and climate change. Across this dynamic region, energy markets are transforming at an unprecedented pace.

“In recent years, we have shifted our focus to reflect the growing importance of renewable energy, energy efficiency, and the digitalization of the energy sector. We aim to create a conducive environment for policy development, investment attraction, technology adoption, and the renewable energy sector,” he said.