The Federal Government has approved a $750 million World Bank funding for the construction of 1,200 mini-grids in rural communities across Nigeria.
Managing Director/Chief Executive Officer of the Rural Electrification Agency (REA), Abba Aliyu, disclosed this Tuesday while addressing newsmen at the Alliance for Rural Electrification Energy Access Forum held in Lagos.
According to Aliyu, President Bola Tinubu approved the fund for the Distributed Access through Renewable Energy Scale-up project, which aimed at providing energy access to Nigerians in rural communities.
Aliyu noted that about 19 million of the 85 million Nigerians without access to energy would be provided electricity under the scheme.
While noting that Nigeria has the highest electricity gap in the world, Aliyu stated that the Federal Government was doing a lot to bridge the gap.
The REA boss explained that the fund would be used as a capital subsidy to incentivise the private sector to electrify 23 per cent of the total unelectrified Nigerians.
Aliyu stated, “The Federal Government, under the leadership of President Bola Tinubu approved the Biggest public sector-funded off-grid project across the entire world. It is a $750m project where REA will use that funding as a capital subsidy to incentivise the private sector to electrify 23 per cent of the total unelectrified Nigerians, and we are very clear about how we want to achieve that.
“We want to provide three million Nigerians with electricity access using isolated mini-grids; 1.5 million Nigerians with electricity through interconnected mini-grids and and also about 15.5 million Nigerians with solar system mesh-grids.
“We also intend to use that funding to capitalise private sector funding to provide over 40,000 farmers with productive use of equipment to enhance their productivity.”
He said the Federal Government is currently implementing one phase of the Nigeria Electrification Project, a $550m project funded by the World Bank and the African Development Bank.
The Minister of Power, Adebayo Adelabu, said one of the critical mandates of the power ministry is how to bring energy access to everyone in Nigeria.
Adelabu, who was represented by his Technical Advisor, Adedayo Awoniyi, explained that the ministry had realised that it would be impossible to achieve this through the national grid, saying off-grid is essential in accelerating access to energy.
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“We realise that it is going to be impossible to bring energy access to everyone through the grid. Off-grid technology is a great way to accelerate access to the energy that we have in rural areas. We have a great focus on distributed renewable energy. We see this as a great opportunity to bring 95 million Nigerians away from energy poverty. One of the key programmes that the Federal Government is driving is the DARES project,” he remarked.
Speaking on the $750m World Bank funding, Adelabu saw the need to shift from grant funding to commercially viable mini-grid investments.
“We believe that for us to actually electrify and bring 95 million Nigerians into energy access, this type of funding is not the only way to fund this programme. There have to be commercially viable mini-grid investments. We need to ensure there is a scale-up to ensure a certain level of derisking within organisations to be able to drive these projects themselves and create organisations that are capable of delivering these types of services without grant funding.
“We agree that a country like Nigeria still needs grant funding and one of what we have done with the REA is to ensure there is a clear electrification plan that can split what is a commercially viable project and what is a project that requires grant funding, so that we can try to allocate different types of capital to chase different types of projects.
“Our idea is that we can stop this process to ensure that Nigeria has 100 per cent access to electricity,” noting that the funds are loans that would be paid back by the Federal Government.
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Earlier, the Chief Executive Officer of ARE, David Lecoque, said the conference was to “capitalise investments and partnerships with the Nigerian government and other international partners” in the renewable energy sector.
Lecoque emphasised that the purpose is to debate on how to give energy access to 85 million unserved Nigerians.