The Rural Electrification Agency (REA) has secured a financing commitment of up to N50 billion from Alpha Morgan Bank to accelerate renewable energy projects in unserved and underserved communities across Nigeria.
The facility is expected to provide developers with the funding needed to execute projects before accessing grants under REA’s results-based financing programmes, potentially speeding up the delivery of electricity to communities currently outside the national grid.
Under the financing arrangement, eligible developers participating in REA programmes, including the Distributed Access through Renewable Energy Scale-up (DARES) project, can access revolving loans of up to N10 billion each, with tenures ranging from 12 to 24 months.
Alpha Morgan Bank will provide up to 70 per cent counterpart financing for qualifying projects, subject to its credit assessment and approval.
Managing Director of REA, Abba Abubakar Aliyu, said the financing arrangement was designed to tackle one of the major constraints slowing the expansion of decentralised renewable energy in Nigeria.
“Access to finance remains critical to the successful delivery and scale-up of decentralised renewable energy projects,” Aliyu said.
He explained that developers under REA programmes operating on a results-based financing model are required to deliver projects before accessing catalytic grants, creating a financing gap that local banks can help bridge.
Aliyu said Nigeria requires about $23 billion to address its electricity access and reliability challenges, compared with less than $2.5 billion currently available.
He disclosed that REA was also expecting an additional $119 million financing from the Japan International Cooperation Agency for the deployment of interconnected and isolated mini-grids.
The agency, he added, is working towards completing 288 megawatts of interconnected mini-grid capacity, with commissioning expected to begin from November.
Beyond the new financing facility, REA is developing the Renewable Energy Asset Management Company (RAMCO), which is expected to support the operation and sustainability of renewable energy assets while recycling capital into new projects.
Aliyu disclosed that REA currently has renewable energy assets worth more than $300 million across various universities that could be leveraged to attract additional private-sector financing.
He also said Nigeria now has a pipeline of 3.7 gigawatts of renewable energy manufacturing capacity, backed by about $225 million in investment.
Managing Director of Alpha Morgan Bank, Ade Buraimo, said the financing intervention was driven by the need to address structural funding gaps in Nigeria’s power sector.
Represented by Executive Director of the bank, Doyin Anyaehie, Buraimo said the bank was prepared to offer financing on terms that reflected the developmental nature of the projects.
Developers that have completed REA’s project selection process and signed grant agreements will undergo the bank’s credit assessment before accessing the facility.
The partnership is expected to provide renewable energy developers with additional financial capacity to expand electricity access in communities where grid infrastructure remains unavailable or inadequate.
