The Rural Electrification Agency (REA) and First City Monument Bank (FCMB) have forged a groundbreaking partnership aimed at revolutionizing Nigeria’s energy landscape. This collaboration centers around a N100 billion renewable energy financing facility designed to accelerate the deployment of decentralized renewable energy projects, specifically targeting unserved and underserved communities across the nation. This ambitious initiative seeks to bring reliable electricity to approximately two million households, significantly impacting the lives of millions of Nigerians and fostering economic growth in these often-neglected regions. The agreement marks a pivotal moment in the Nigerian power sector, leveraging private sector investment to address the persistent challenge of energy access and driving sustainable development.
This partnership signifies the practical implementation of the Distributed Access through Renewable Energy Scale-Up (DARES) initiative, a World Bank-supported program focused on expediting inclusive and sustainable power solutions. The N100 billion facility represents a substantial commitment from FCMB, demonstrating the increasing engagement of the private sector in renewable energy development. This initiative is further bolstered by the $750 million DARES World Bank funding, recently approved by President Bola Tinubu, which serves as a catalyst for attracting additional private sector investments. The combined resources will significantly amplify the impact of the program, extending electricity access to an estimated 17.5 million Nigerians residing in communities currently lacking reliable power supply.
The mechanics of the financing agreement involve FCMB providing a revolving loan facility of N1 billion per eligible mini-grid developer for a two-year period, with the possibility of scaling up the facility based on performance and demand. This structured approach ensures a continuous flow of funds for qualified projects, fostering a sustainable ecosystem for renewable energy development. The facility will be a crucial financial instrument for developers participating in REA’s DARES program, which focuses on expanding energy access through the deployment of interconnected and isolated mini-grids, along with productive-use applications that empower communities to leverage electricity for income-generating activities. This comprehensive approach not only addresses the immediate need for electricity but also contributes to long-term economic empowerment.
The leadership of both REA and FCMB have emphasized the strategic significance of this partnership. Abubakar Aliyu, Managing Director/CEO of REA, highlighted the critical role of access to finance in overcoming the challenges associated with decentralized renewable energy deployment. He emphasized that this facility will empower developers to scale their operations and achieve electrification targets, ultimately improving the quality of life for millions in rural and peri-urban communities. This sentiment was echoed by Yemisi Edun, Managing Director of FCMB, who underscored the bank’s commitment to inclusive growth and economic resilience across Nigeria. She emphasized the transformative power of reliable energy access, recognizing its catalytic effect on enterprise, education, and improved livelihoods.
A key innovation introduced within the partnership is the establishment of a “Deal Room,” a dedicated platform designed to facilitate seamless interaction between project developers, REA, and FCMB. This platform streamlines the project financing process, providing developers with clear guidance on project structure, disbursement procedures, eligibility criteria, and project evaluation mechanisms. The Deal Room serves as a central hub, fostering transparency and efficiency in the allocation and management of funds, further de-risking investments and ensuring accountability.
The partnership structure incorporates a risk-mitigation strategy wherein FCMB finances up to 70 percent of approved project costs, while REA deposits performance-based grant payments into a reserve account held within FCMB. This mechanism provides additional security for the transactions, further incentivizing private sector participation and demonstrating the commitment of both organizations to maximizing the impact of the initiative. This collaborative approach underscores the shared vision of bridging Nigeria’s energy access gap, promoting private sector engagement, and unlocking the immense investment potential within the renewable energy sector. The combined efforts of REA and FCMB represent a substantial stride towards a more sustainable and equitable energy future for Nigeria, demonstrating the power of public-private partnerships in driving impactful development.
