Rural Electrification: Nigeria Gets $200m AfDB, China Loan

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By Chineme Okafor in Abuja

Nigeria’s efforts at extending electricity supply to semi-urban and rural communities received a boost Tuesday with a $200 million loan from the African Development Bank (AfDB) and China via the Africa Growing Together Fund (AGTF), managed by the AfDB on behalf of China.

A statement by the Rural Electrification Agency (REA), the $200 million financial package was approved on Monday by the board of directors of the AfDB.

The facility comprises a $150 million sovereign loan to the Federal Government of Nigeria to finance the Nigeria Electrification Project (NEP), as well as $50 million from a $2 billion AGTF facility sponsored by the People’s Bank of China and administered by the AfDB.

The statement added that the financing will support rural electrification efforts in Nigeria by facilitating private sector development and roll out of off-grid solutions, as well as the installation of dedicated power systems for federal universities.

The AGFT, it added, would co-finance the project.

The joint financing from the AfDB and AGTF, it noted, will support Nigeria’s efforts to address critical energy access deficit in the country, and catalyse achievement of universal energy access by 2030 as reportedly targeted.

Explaining the concept of the NEP, the statement said it will be implemented by the REA, adding that it presented Nigeria an innovative approach to addressing its huge energy access deficit by channeling private sector investments into commercially viable mini grid and off grid electricity solutions.

Quoting AfDB’s Vice President for Power, Energy, Climate Change and Green Growth, Amadou Hott, it stated that he endorsed the board’s approval of the NEP, which he said, underscored the importance of projects that leverage private sector investment into energy access solutions.

According to Hott: “Given the limited amount of public financing available, projects that catalyse 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 statement indicated that the NEP was aligned with the AfDB’s New Deal on Energy for Africa, the High-5 priorities, as well as with its Climate Change Action Plan.

It added that the project further aligned with Nigeria’s Rural Electrification Strategy and Implementation Plan (RESIP), as well as the Power Sector Recovery Programme (PSRP) which seeks to increase private investments into Nigeria’s electricity sector.

It added that one of the key objectives of NEP was to de-risk and scale up private sector investment in the off-grid electricity sector.

The statement noted that AfDB, 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.

AfDB’s Nigeria Country Office Director, Ebrima Faal reportedly celebrated the loan approval in the light of recent reforms undertaken by Nigeria to facilitate private sector development of the off-grid electricity sector.

Faal was quoted as saying: “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.”

The AfDB Country Director added: “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.”

In the statement, the Managing Director of REA, Damilola Ogunbiyi, who noted that: “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 particular focus on women and young people,” Ogunbiyi explained.