Nigeria requires about $23 billion in additional investment to address its electricity challenges and improve the reliability of power supply, the Managing Director of the Rural Electrification Agency, Abba Aliyu, has said.

Aliyu disclosed this on Friday in Abuja during the signing of a collaboration agreement between the REA and Alpha Morgan Bank, which committed up to N50 billion in financing for renewable energy developers.

The partnership is aimed at addressing part of the financing gap facing Nigeria’s electricity sector, particularly in rural and underserved communities where millions of households and businesses still lack reliable access to electricity.

Under the agreement, eligible developers participating in REA programmes, including the Distributed Access through Renewable Energy Scale-up project, can access revolving loans of up to N10 billion each, subject to the bank’s credit assessment and approval.

Alpha Morgan Bank will provide up to 70 per cent counterpart funding for eligible projects, with proposed loan tenures ranging from 12 to 24 months.

However, Aliyu said the N50 billion facility was only a fraction of what was required to address the country’s electricity deficit.

“Currently, this era is being termed as the era of electricity. Electricity is going to drive almost every single thing that we are going to do. Electricity will drive transportation, electricity will drive agriculture, electricity will drive health, education and everything we do,” he said.

Electricity demand set to rise

The REA boss identified population growth, the electrification of different sectors, digitalisation, artificial intelligence and data centres as major factors expected to drive electricity demand in the coming years.

According to him, Nigeria’s population is growing faster than electricity infrastructure is being expanded, further worsening the country’s electricity access challenge.

He said the increasing deployment of artificial intelligence and data centres would place additional pressure on power systems, making reliable and affordable electricity increasingly important to economic development.

Aliyu said Nigeria needed to treat electricity as a strategic component of its infrastructure planning as other countries increase investments in power infrastructure to support manufacturing, technology and data centres.

He also pointed to the falling cost of solar power generation and battery storage as factors supporting the continued growth of renewable energy.

“Solar will continue to be a dominant source of electricity generation,” he said.

$750m renewable energy intervention

Aliyu disclosed that President Bola Tinubu had approved a $750 million renewable energy intervention aimed at deploying 1,350 mini-grids and expanding electricity access to about 2.5 million Nigerians.

He said the programme was currently in its second year of implementation but stressed that the available funding remained insufficient compared with the estimated $23 billion required.

“But still, what is required to address the electricity challenge in Nigeria and to enhance reliability of supply is about $23bn. What we currently have is less than $2.5bn,” he said.

He added that the REA was expecting an additional $119 million from the Japan International Cooperation Agency to support interconnected and isolated mini-grid projects.

REA seeks more private financing

The REA boss said the agency had adopted performance-based financing models for several of its interventions, requiring private developers to meet specified project milestones before accessing catalytic grants.

He said the approach created opportunities for Nigerian financial institutions to provide bridge financing to developers, enabling them to execute projects and subsequently access grant funding.

Aliyu said Nigerian financial institutions had increasingly embraced renewable energy as an infrastructure investment opportunity.

He also announced that the REA planned to launch the Renewable Energy Asset Management Company, which he described as a platform expected to become Africa’s largest renewable energy asset holder.

According to him, the company would support the operation and maintenance of renewable energy projects, recycle capital and leverage existing assets to attract additional private-sector financing.

“We currently have assets worth over $300m in various universities. We want to leverage those assets to raise more financing,” he said.

3.7GW renewable manufacturing pipeline

Aliyu further disclosed that Nigeria had developed a pipeline of about 3.7 gigawatts of local renewable energy manufacturing capacity, backed by investments estimated at $225 million.

He said the growth of renewable energy was also creating opportunities for equipment leasing companies, energy service providers, fintech firms and other businesses involved in revenue collection and project maintenance.

The REA boss added that the agency was close to completing 288MW of interconnected mini-grid projects, with commissioning expected to begin in November.

Bank commits N50bn

Speaking at the event, Alpha Morgan Bank’s Executive Director, Doyin Anyaehie, said the bank’s N50 billion commitment was aimed at helping viable renewable energy projects overcome financing challenges.

She said the bank recognised that inadequate financing structures remained one of the major obstacles to the development of Nigeria’s power sector.

Anyaehie said unreliable electricity was not merely an infrastructure problem but also affected rural businesses, healthcare facilities, schools and the livelihoods of communities.

“Our success is going to go beyond signing this MOU. The real success will be what we can look at one or two years from now and say: because we provided this financing, developers were able to build renewable energy projects and this is the impact that we can point to,” she said.

She added that the bank was prepared to work with developers with viable projects and appropriate fundamentals.

The agreement between the REA and Alpha Morgan Bank is expected to strengthen collaboration between public-sector programmes and private-sector financing as Nigeria seeks additional investment to expand electricity access and meet rising power demand.