The Rural Electrification Agency (“REA”) (an agency under the Federal Ministry of Power, Works and Housing) has recently stated its intent to support 1.5 million Nigerian households as well as micro, small and medium sized enterprises (“MSMEs”) with off-grid electricity in 2019.
The REA’s goal under the solar home system component of the Nigerian Electrification Project is to ensure that the targeted 1.5 million households and MSMEs have access to quality, yet affordable energy sources through stand-alone solar home systems to be funded by the private sector through Public Private Partnership programs. The REA also aims to provide 1 million single solar lanterns which are expected to be distributed during the course of the solar home systems project (“Project”).
The Project is expected to be executed by utilizing two components. The first component which is the “Accelerator Grants” will constitute the provision of upfront grants to the strongest and most capable providers of solar home systems. Pre-qualification for this grant is based on evidence that the applicant has ready-to-go capabilities for scaling rapidly.
The second component is “Output Based Grants” which will focus primarily on strong new entrants and Nigerian start-ups. Pre-qualification for this grant is based on business capabilities and solar home systems technical standards. This grant will be set at 15%-20% of the nominal retail price and paid in tranches on verified product installations.
Considering statistics which show that 90 million Nigerians live without electricity, this move towards electrification of off-grid areas in Nigeria provides investment opportunities to prospective investors who may be looking at investing within the Nigeria’s power sector. However, as with all new initiatives of the Federal Government of Nigeria, it will be necessary for the Government to ensure the effective implementation and enforcement of any policies and regulations issued in respect of the Project.
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