Uche Cecil Izuora
Nigeria’s thriving renewable energy market is looking gloomy with planned legislative action by the country’s lawmakers.
The National Assembly is scheduled to tinker with the Electricity Act 2025 with the aim of creating multiple market operators.
Foreseeing the dangers ahead, the Managing Director/Chief Executive Officer of the Rural Electrification Agency (REA) Abba Aliyu (PhD) cautions that the Electricity Act (Amendment) Bill, 2025, intending to establish the National Authority for Renewable Energy (NARE) will constitute serious risks to Nigeria’s electricity market.
Aliyu, said the Bill currently before the National Assembly would create regulatory confusion and scare investors away from the sector.
According to him, the Bill which also seeks to transfer renewable-energy functions from NERC, REA and the Rural Electrification Fund to a new authority, and allocate 40 per cent of the Rural Electrification Fund to it, will cause fragmentation to a market with a viable market.
The proposed architecture, according to him, risks attempting to solve a coordination problem by creating another coordination problem.
Aliyu remarked, “Every additional regulatory interface introduces another approval, another interpretation, another potential disagreement and another risk that must eventually be priced into the cost of capital.”
Sixteen states, he said, have already received regulatory oversight from NERC under the Electricity Act 2023, stressing that bringing another federal regulator organised around technology will create a new axis of jurisdiction.
He said: “We could end up with NERC, State commissions, NARE, NEMSA and other institutions interacting with different aspects of the same project. That is not simplification. It is fragmentation.”
He pointed out that Nigeria’s distributed-energy market is beginning to show results, with over 1,000 mini-grids under development and $750 million DARES programme targeting 17.5 million Nigerians, 1,225 mini-grids and 465MW.
He announced that REA has secured N350 billion potential domestic financing commitments – FCMB N100bn, Lotus Bank N100bn, Alpha Morgan N50bn and Stanbic IBTC N100bn.
Aliyu maintained that investors need predictable rules for 15 to 20-year investments, warning that ambiguity increases cost of capital and e tariffs.
He added that diverting the Rural Electrification Fund to fund a new institution confuses instrument with objective, stressing that every naira should be judged by how many Nigerians it connects.
He however advised that the National Assembly should conduct regulatory-impact analysis and get feedback from states, investors and development partners before taking a decision.