In a fresh move to tackle Nigeria’s lingering electricity problems, the Federal Government has opened talks with local banks and investors to raise $23.2 billion needed to deliver electricity to every home across the country.
Findings show that the ambitious electrification plan aims to connect 120 million Nigerians in 22 million households within the next five to ten years. Of the total amount needed, $14.1 billion must be released upfront, involving several stakeholders.
Currently, the national power grid barely generates 5,500 megawatts, leaving millions in the dark. The new plan is expected to deliver over 11,000 gigawatt-hours of power annually to homes yet to be connected.
Breakdown of the cost shows grid expansion will take $5.5 billion, mini-grid networks will require $6.6 billion, while solar home systems will gulp $11.1 billion.
The Managing Director of the Rural Electrification Agency (REA), Abba Aliyu, revealed that discussions are ongoing with Access Bank, Zenith Bank, and others, while First City Monument Bank (FCMB) and Stanbic IBTC have already committed $100 million each to support the project.
Speaking in an exclusive interview, Aliyu said President Bola Tinubu and Power Minister Adebayo Adelabu are fully backing the project, with surveys already completed across all states to determine the best mix of mini-grids and solar solutions.
According to him, despite the huge sum involved, banks are confident of returns from electricity tariffs, especially in areas where mini-grids are being deployed. “This is infrastructure investment. Financiers recover their money over time through tariffs, which cover capital cost, operations, and maintenance,” he explained.
He further said the $750 million Distributed Access through Renewable Energy Scale-up (DARES) project from the World Bank will attract another $1.1 billion from private investors. That’s a combined $1.85 billion aimed at powering 17.5 million Nigerians.
Aliyu also disclosed that the Japanese government has approved a $190 million co-financing package through the Japan International Cooperation Agency (JICA), which is expected to unlock an additional $300 million from private partners.
While speaking on other sources of funding, he mentioned that the African Development Bank’s $700 million “Desert-to-Power” initiative will also trigger a further $1 billion from private investors.
He debunked fears that rural communities can’t afford to pay for electricity, insisting that their payment track record is even better than city dwellers. “We are seeing a 95% collection rate from rural users. They pay because the supply is stable, and they know exactly what they’re paying for,” he said.
Aliyu shared the story of Ibaragun, a community on the Ogun-Lagos border, where residents pleaded to leave the national grid for a solar mini-grid due to more reliable supply.
He also advocated for a system where Nigerians can choose their electricity provider, just like in India, where consumers can switch between different power sources. He suggested changing REA’s name to “Renewable Electrification Agency” to allow the agency serve more communities beyond rural areas.
A document seen by our reporter revealed that in the overall funding plan, 60% of the grid expansion cost will come from the private sector, with the public sector contributing the remaining 40%. For mini-grids, developers are expected to source their own funds through loans, equity, or grants. Solar home systems will be fully paid for by end-users.
The document also showed that solar systems will cover 45% of new connections, mini-grids 31%, and grid expansion 24%. The mix is based on population spread, proximity to the grid, and local demand.
With renewed commitment from both government and private players, stakeholders say the dream of powering every Nigerian home may finally be within reach.
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