Energy Access holds a strong identity and plays a fundamental role in achieving all other United Nations Sustainable Development Goals (SDGs). Energy is at the centre of a country’s economic productivity as all progress requires energy to function.
However, the lack of electricity has been a major constraint to the development of the Nigerian economy. According to a report by the International Energy Agency (IEA), some 92 million Nigerians still lack access to stable and efficient electricity.
Despite several policy frameworks and initiatives developed and implemented by the Federal Government and development partners, achieving universal energy access remains elusive. The grid has been saddled by liquidity and technical challenges that have deterred investors and impacted the ability to increase power supply capacity. For distributed clean energy solutions, access to finance for developers, consumer awareness and financing limitations have restricted the adoption of solutions.
On Thursday, 30th June 2022, The Electricity Hub (TEH), an electricity-focused media organisation in collaboration with the World Bank, organised its 71st Power Dialogue to discuss the possibility of achieving universal energy access in the country.
The Power Dialogue is a monthly public discourse series that aims to share information and pragmatic ideas, advocate policy positions and highlight investment opportunities in the Nigerian power sector. It is implemented by TEH, a media enterprise of The Nextier Group.
The panel discussants included Ahmad Salihijo, CEO/MD, Rural Electrification Agency; Alexander Obiechina, CEO, ACOB Lighting Technology Limited; Dele Faseemo, Group Head, Energy, Sterling Bank and Abigail Jibril-Okonta, Communications Manager, Havenhill Synergy Limited.
The panelists unanimously agreed that Nigeria’s key economic developmental challenge is the energy access deficit. In closing this gap, Engr Ahmad Salihijo noted that the Rural Electrification Agency (REA) is working tirelessly to bridge the energy gap through its various electrifying projects and financing programmes, including the Nigeria Electrification Project (NEP).
According to him, the last few months have seen increased disbursement of funds for off-grid energy developers under the Performance-based and Result-based financing initiatives. However, he emphasised the need for increased private sector investments in the space to supplement government efforts in ensuring adequate electricity for all.
Alexander Obiechina highlighted that ACOB lighting technology has installed sixteen (16) micro-grids in several off-grid communities in the country and plans to scale to 100 mini-grids in the coming years. He also disclosed that financing had been a major barrier to deploying renewable energy solutions.
However, it is gradually being unlocked as several local banks have begun providing local financing opportunities. In addressing the financing barriers and opportunities, Dele Faseemo noted that although there are many financing windows from international agencies, government and private sector players, the sector requires more funding aid to meet its electrification targets.
Discussing collateral requirements as a barrier to accessing funding, Dele stated that several businesses in this space are start-ups lacking the assets to put up.
Also, the minimal appreciation of the assets in terms of their secondary value and ability to redeploy are crucial challenges that affect lenders’ acceptance of collaterals from developers. To mitigate this, Dele highlighted that Sterling Bank had reduced its collateral requirement from developers. In addition, the bank is employing a strategic means of working with developers and development partners to share project risks.
Speaking on the ability of developers to scale project deployment, Mr. Obiechina noted that the success of projects relies not only on discovering a project site. Developers must also have a robust business plan and strategy implementation mechanism that ensures optimum energy utilisation.
Mr. Faseemo also noted that accelerating demand for these solutions is equally important to improve electrification. According to him, “financing becomes more sustainable when investment can be recovered over time.”
Engr. Salihijo called on energy stakeholders to unite efforts through increased engagement and coordination. He noted that the government needs to enforce more waivers on imported energy components to aid electrification efforts.