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In a move to bolster its energy sector, Nigeria has obtained a $750 million loan from the World Bank, aimed at expanding access to electricity for households and micro, small, and medium-sized enterprises (MSMEs) through private sector-driven renewable energy initiatives.
Financing Agreement Details
The financing agreement, signed by Finance Minister Wale Edun on March 31, 2024, and World Bank’s Country Director for Nigeria, Shubham Chaudhuri, on February 19, 2024, outlines the utilization of the loan to provide subsidies and performance-based grants for solar projects across the country.
Subsidies for Solar Hybrid Mini Grids
A significant portion of the loan will be allocated to support the development and operation of privately owned solar hybrid mini grids in underserved areas. This includes Minimum Subsidy Tenders and grants for new customer connections and capital expenditures.
Performance-Based Grants
In addition to subsidies, the government plans to offer performance-based grants to eligible mini grid operators based on new customer connections and capital expenditures, fostering the expansion of standalone solar systems for households, MSMEs, and agribusinesses in rural areas.
Catalytic Grants for Targeted Outreach
To ensure inclusivity, catalytic grants will be provided on a matching basis to companies targeting marginalized consumers, aiming to reach the poorest and hardest-to-reach populations.
Loan Structure and Implementing Agencies
The $750 million loan is structured into three segments, with $350 million, $250 million, and $150 million earmarked for specific project facets. The Rural Electrification Agency (REA) and the Lagos State Electricity Board (LSEB) will spearhead project implementation, supported by various governmen, Nigeria Unveils $2 Billion Initiative to Link 774 Local Government Areas with Fiber Optic Network, a Medium for Job Creation. bodies including the Federal Ministry of Power, Nigerian Electricity Management Services Agency (NEMSA), Federal Ministry of Environment, Nigerian Electrification Regulatory Commission (NERC), and Federal Ministry of Finance.