The Rural Electrification Agency (REA) has disclosed plans to raise N500 billon from the capital market.
Managing Director of the agency, Abba Aliyu, who disclosed this at PwC’s power roundtable in Lagos, said the agency would be relying on the new renewable asset management company designed to hold and leverage federal solar investments worth $200 million to $300 million for this venture.
He explained that the move is part of a broader push to unlock long-term financing for off-grid projects.
According to Aliyu, the Minister of Power, Adebayo Adelabu, had approved the creation of the Renewable Energy Asset Management Company and the agency would immediately move all its renewable assets into the new firm.
He explained that the new RAMCO would be created with a balance sheet of close to $200 million to $300 million, and the assets must be collateralised to create more private sector funding.
Aliyu further stated that requests had been sent for all assets of energising education done and once the minister gives approval, the agency will move the assets into the balance sheet of the 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,” the managing director stated.
He said the REA was in talks 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.
According to Aliyu, the REA’s planning data now showed that 22 million households need electricity access.
Aliyu said large-scale renewable projects remain stalled by a crippling lack of early-stage funding, despite growing demand.
“To date, there is no financier that I know that provides financing for project development,” he said.
He claimed that developers of the earlier 14 grid-connected Independent Power Producers failed because banks refused to support them before project viability was established.
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.
The managing director 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.”
