In a bid to end age-long power woes, the Federal Government is in talks with commercial banks and other investors to fund its ambitious universal electricity access, which requires a whopping $23.2bn investment.Nigeria will require $23.2bn of aggregate investment to achieve the planned universal electricity access in five to 10 years, reaching 120 million people across 22 million households.
It was gathered that $14.1bn of the cost is an upfront investment to which multiple stakeholders must contribute. The $14.1bn initial investment is 60 per cent of the total $23.2bn investment required to provide universal electrification to Nigerians.
As the country still struggles with a paltry 5,500 megawatts of electricity, the universal electrification plan aims to supply 11,499 gigawatt-hours of electricity per annum to the 22 million unelectrified residential households.
Grid connection is expected to gulp $5.5bn; solar home systems would require $11.1bn; and mini-grid connections would take $6.6bn.
The Managing Director/Chief Executive Officer of the Rural Electrification Agency, Abba Aliyu, disclosed that some banks have already committed funds to the sector, while the agency is still in talks with others.
In an exclusive interview with our correspondent, Aliyu highlighted the commitment of President Bola Tinubu and the Minister of Power, Adebayo Adelabu, to ensuring Nigeria achieves universal electricity.
He revealed that the REA and other agencies have carried out a survey in each state to determine how best to electrify Nigeria, saying mini-grids and solar home systems will be mostly deployed as grid extension is not viable in most states.
Aliyu said that though the $23.2bn required to provide electricity across the country is huge, banks and other private investors will provide funding as they are assured of returns on investments through tariffs.
According to him, First City Monument Bank has committed $100m, while Stanbic IBTC with Standard Bank also committed $100m. He said talks are ongoing with Access Bank, Zenith Bank, and others.
The REA boss maintained that funds from the local banks would augment those from the government, the World Bank, the African Development Bank, and other development partners.
“The wisdom of the current government is to drive private sector funding into the sector. The Minister of Power secured the Distributed Access through Renewable Energy Scale-up (DARES) $750m, and we have access to that funding. That funding will catalyse a private sector funding of $1.1bn. As we bring the public funding, it will catalyse private sector funding to combine to do more,” he said.
Aliyu disclosed that the REA is targeting 17.5 million Nigerians under the DARES programme. “We have $750m and the private sector will bring $1.1bn. That is $1,850,000,000,” he said.
He recalled that the power minister is also working towards securing additional co-financing from the Japan International Cooperation Agency, having secured the approval from the Japanese government to put in $190m as co-financing to electrify an additional 1.83 million Nigerians.
“This will also catalyse close to an additional $300m financing to be added to the private sector funding. So, we, the Federal Government, are creating public funding that will catalyse private sector funding. When the President was in Tanzania, there was the signing of $20m financing to four Nigerian local developers by the International Finance Corporation.
“They commit to financing these developers with a $20m debt financing. That’s another financing. Also, there is conversation around $700m of Desert-to-Power financing that will come from the African Development Bank.
That $700m will also catalyse another $1bn of private sector financing. All this is the strategy being implemented to make sure there is financing to achieve this universal electricity access.
“We have also seen banks committing funding. First City Monument Bank has committed a $100m pool of debt financing to the developers. Stanbic IBTC with Standard Bank also committed $100m. So all these finances are there.
“In the last few days, I was with the Access Bank management with their sustainable finance group. They are putting in place their funding for the sector. The same thing with Zenith Bank. Also, there are Nigerian local banks that have seen it and are committing funding to it. I don’t have any fear with financing; we will be able to achieve the level of financing that is required,” he stated
Punch
