The Rural Electrification Agency says it will go to the capital market to raise N500bn, backed by a new renewable asset management company designed to hold and leverage federal solar investments worth $200m to $300m.
The Managing Director of the agency, Abba Aliyu, disclosed this at PwC’s power roundtable in Lagos recently, saying the move was part of a broader push to unlock long-term financing for off-grid projects.
He said the Minister of Power, Adebayo Adelabu, had approved the creation of the Renewable Energy Asset Management Company, adding that the agency would immediately move all its renewable assets into the new firm.
According to him, the new RAMCO will be created with a balance sheet of close to $200m to $300m, and the assets must be collateralised to create more private sector funding.
He explained, “For the sustainability of our projects, the minister approved the creation of the Renewable Energy Asset Management Company. And I presented this because the private sector needs to see this. So, all those assets of energising education that we have done, we have sent the request. Once the minister approves it, we are going to move those assets into the balance sheet of this RAMCO.
“So, the RAMCO will be created with a balance sheet of close to $200m to $300m. And we are not now going to wait and just look at our asset, just providing services. Those assets must be collateralised to create more private sector funding.
“REA will soon go to the capital market to raise N500bn using RAMCO, using the assets for us to have funding to continue to do the work that we are doing. And that is also the great finance and investment facility that we are now co-hosting. We want to now change that narrative because we can’t just sit and say there is no project development financing. What are we doing? So, we are changing that.
We’re discussing with the Bank of Industry to create a project planning, financing, and credit facility all embedded in one. And this is a discussion that has gone very far.”
Aliyu explained that REA’s planning data now shows that 22 million households need electricity access.
He said the agency’s modelling identified 9.9 million homes suitable for solar home systems, 5.3 million for grid extension, and 6.8 million for mini-grids.
But despite growing demand, Aliyu said large-scale renewable projects remain stalled by a crippling lack of early-stage funding.
“Limited access to project development financing is one key challenge. To date, there is no financier that I know that provides financing for project development,” he said.
According to him, developers of the earlier 14 grid-connected Independent Power Producers failed because banks refused to support them before project viability was established.
”We have seen the case of those that have spent money, that wanted to do the grid-connected renewables, the 14 IPPs. They spent money, and at the end of the day, they could not reach viability. So, that lack of viable financing for project development, to me, is one of the key challenges that is there,” he said.
He also faulted banks for staying on the sidelines, saying, “Apart from Sterling Bank, Stanbic IBTC, and FCMB, we have not seen other banks critically active in financing even the renewable energy due to lack of understanding of the infrastructure.”
Aliyu further listed supply-chain bottlenecks, low productive demand in rural areas and social hesitation toward solar as major barriers.
He regretted that some people have not seen renewable energy, specifically solar, as a viable alternative for providing electricity.
He argued that renewable energy must be treated as core national infrastructure, saying, “Renewable energy is an infrastructure project, and it should be seen as that.”
