FG Seeks $1.1bn for Mini-Grids Amidst Persistent Blackout
As Nigeria continues to grapple with frequent grid collapses and electricity shortages, the Federal Government is actively engaging local and international financial institutions to secure $1.1 billion for the construction of renewable mini-power grids.
The Managing Director of the Rural Electrification Agency (REA), Abba Aliyu, revealed this during the recently concluded Mission 300 Africa Energy Summit in Dar es Salaam, Tanzania. According to him, the REA has signed a Memorandum of Understanding (MoU) with the International Finance Corporation (IFC) and five renewable energy service companies—Havenhill Synergy Ltd, Prado Power Ltd, PriVida Power Ltd, Sosai Renewable Energies Ltd, and Virtuitis Solaris Ltd—to expand mini-grid projects across Nigeria.
The initiative falls under the World Bank Group’s Nigeria Distributed Access through Renewable Energy Scale-up (DARES) project, which aims to provide electricity to 400,000 Nigerians, particularly in rural and remote areas.
Funding and Financial Commitments
Aliyu disclosed that the IFC has committed $200 million to the project, while First City Monument Bank (FCMB) has provided $100 million. These funds complement an earlier $750 million grant from the World Bank.
However, the private sector funding requirement for the DARES project stands at $1.1 billion, and the REA remains in discussions with Standard Bank and Stanbic IBTC to bridge the financial gap.
Aliyu expressed confidence in securing the needed funding, highlighting that 65 new mini-grids are ready for commissioning under the DARES initiative.
“It was a very long negotiation with IFC, almost a year. At some point, we even joked about whether the funds would ever come. But last year, the MD of IFC visited, and we had a roundtable discussion where he assured us the funds would be made available. Now, we are seeing progress,” Aliyu stated.
Power Sector’s Mounting Challenges
Despite these efforts, Nigeria’s power sector remains in a dire state, plagued by aging infrastructure, poor maintenance, and chronic underfunding. Minister of Power Adebayo Adelabu acknowledged the magnitude of the problem, stating that Nigeria requires over $30 billion to achieve universal electricity access by 2030—a figure far beyond the government’s financial capacity.
“The government alone cannot provide the required funds. We need full cooperation and collaboration with the private sector, both locally and internationally. The power sector is like Oliver Twist—it always asks for more,” Adelabu remarked.
Reality Check on Nigeria’s Power Woes
While the government’s push for mini-grid solutions signals a step in the right direction, experts remain skeptical about the sustainability of these projects given Nigeria’s history of mismanaged energy initiatives.
Moreover, concerns persist over bureaucratic bottlenecks, policy inconsistencies, and the lack of long-term maintenance strategies, all of which have historically plagued similar projects. Without clear regulatory frameworks and a commitment to accountability, the success of the DARES initiative could remain uncertain, despite the large financial inflows.
As Nigeria seeks to diversify its energy sources and bridge the electricity gap, the real challenge lies not just in securing funds, but in ensuring efficient implementation, transparency, and long-term sustainability—elements that have eluded previous administrations.