AfDB approves $200 million to boost electricity in Nigeria

The African Development Bank Group (AfDB) has approved $200million to boost electricity in Nigeria, particularly, in the off-grid expansion being implemented by the Rural Electrification Agency (REA).

The fund is a sovereign facility to the government to finance the Nigeria Electrification Project (NEP) with the World Bank, a private sector-led approach to speed up the development of mini-grid solutions in Nigeria’s rural communities.

The project which has four components —solar hybrid mini-grids for rural economic development, stand-alone solar systems for homes and enterprises, energising education as well as technical assistance. —will provide electricity to households, medium, small and micro enterprises (MSMEs) and public institutions at the least-cost and in a timely manner.

The NEP comes at a crucial time when the Nigerian power sector is experiencing a lot of challenges. Nigeria has the largest off-grid population on the continent with more than 100 million people lacking access to grid electricity. Majority of whom are found in the country’s rural regions where the average electricity access rate is 41.1 percent compared to the urban rate of 86 percent.

Mini-grid systems, comprising hybrid or pure solar mini-grids ranging from 50 kW to 1 MW, are deemed a sustainable solution to address rural energy access deficit in communities with productive loads and/or decent spending power.  

According to the AfDB’s 2018  Electricity Regulatory Index (ERI), Nigeria boasts of having one of the most developed regulatory frameworks for mini-grid development in Sub-Saharan Africa. The Nigeria Electricity Regulatory Commission (NERC) instituted a mini-grid policy that did the following to be among the top countries on the index:

  1. Ensuring that licensing produces for mini-grids under 100 kW in capacity do not need to apply for a license.
  2. The policy allows for setting cost-reflective tariffs,
  3. It also establishes the procedures for compensation or incorporation when the grid arrives in a community serviced by a mini-grid. These regulatory measures, which were designed and implemented with the assistance and guidance of the donor community and have been  received by private sector developers.

From all indications solving the deficit in Nigeria’s access to electricity will need a multifaceted approach which will involve public support to leverage private financing and development.