Nigeria’s move to solve its energy crises has received a boost following the approval of $150 million sovereign loan to the federal government by the Board of Directors of the African Development Bank Group to finance the Nigeria Electrification Project (NEP).
The financing will support rural electrification efforts in Nigeria by facilitating private sector development and rollout of off-grid solutions, as well as the installation of dedicated power systems for Federal Universities.
The Africa Growing Together Fund (AGTF), a $2 billion facility sponsored by the People’s Bank of China and administered by the African Development Bank, has also approved a $50 Million Loan to the Federal Government of Nigeria to co-finance the project.
The joint financing from the Bank and AGTF will support the Federal Government of Nigeria’s efforts to address critical energy access deficit in the country and catalyze achievement of universal energy access by 2030 targets.
The NEP, which will be implemented by the Rural Electrification Agency (REA), presents an innovative approach to address the energy access deficit by channelling private sector investments into commercially viable mini-grid and off-grid solutions.
The Bank’s Vice President for Power, Energy, Climate Change and Green Growth, Amadou Hott, welcomed the Board’s approval of NEP, underscoring the importance of projects that leverage private sector investment into energy access solutions. “Given the limited amount of public financing available, projects that catalyze private sector investment are critical in enabling the Bank and its Regional Member Countries meet their shared objective of electrifying the continent within the next decade.”
The NEP is aligned with the African Development Bank’s New Deal on Energy for Africa the High 5 priorities, as well as with the Bank’s Climate Change Action Plan. The project is further aligned with the Federal Government of Nigeria’s Rural Electrification Strategy and Implementation Plan (RESIP), and the Power Sector Recovery Programme whose objective is to increase private investments into the energy sector.
One of the key objectives of NEP is to de-risk and scale up private sector investment in the off-grid sector. The African Development Bank, operating both within the framework of NEP and in the context of its other initiatives in the country’s energy sector, will work with public and private sector stakeholders to encourage the development of an ecosystem that is conducive to facilitating the rapid, effective and commercially viable electrification of Nigeria’s off-grid communities.
Also at the Board, the Bank’s Nigeria Country office Director, Ebrima Faal, celebrated the approval in light of recent reforms undertaken by the Federal Government of Nigeria to facilitate private sector development of the off-grid sector: “Nigeria has already implemented one of the most comprehensive regulatory frameworks for off-grid development in Africa and has attracted preliminary interest from both large international companies and local firms. NEP will provide the spark that is needed to convert private sector interest into action.
NEP will also create jobs, and impact the Federal Government of Nigeria’s broader education sector goals by increasing access to affordable electricity at Federal Universities through hybrid power plants that reduce heavy reliance on diesel generators.
Speaking after the Board approval, the Managing Director of the Rural Electrification Agency, Damilola Ogunbiyi, noted: “We are extremely pleased with the African Development Bank’s decision to support NEP. By supporting the electrification of unconnected and underserved communities, NEP will contribute materially to their economic development.
“Access to reliable, affordable and clean electricity will result in savings for households and businesses, which can be deployed to other uses. NEP will also train and employ thousands of Nigerians with a particular focus on women and young people.”