The World Bank has approved a loan of $750 million to the federal government of Nigeria to provide subsidies to developers and operators of solar mini-grids in unserved and underserved areas in Nigeria.
The World Bank’s Country Director for Nigeria, Shubham Chaudhuri, and Nigerian Minister of Finance, Wale Edun, signed a financing agreement for the loan on February 19 and March 31, 2024, respectively.
Nigeria received the approved loan under the Distributed Access through Renewable Energy Scale-up (DARES) project, which aims to better electricity supply to households and micro, small, and medium-sized enterprises (MSMEs) through the distribution of private individual-owned renewable energy projects.
The World Bank’s loan is divided into three distinct credit segments: $350 million, $250 million, and $150 million, which total $750 million. Each credit is designated for different aspects of the project.
The Nigerian Electricity Management Services Agency (NEMSA), the Federal Ministry of Power, the Federal Ministry of Environment, the Nigerian Electrification Regulatory Commission (NERC), and the Federal Ministry of Finance will contribute to the project.
The Rural Electrification Agency (REA) and the Lagos State Electricity Board (LSEB) will lead the implementation.
According to the document release, the loan will be partially utilised to provide a grant that will also cover Standalone Solar (SAS) Systems and its expansion for Households, MSMEs as said earlier, and Agribusinesses in rural areas through Performance-Based Grants for Standalone Solar: These grants, known as “PBGs,” are given to qualified businesses to help them quickly implement SAS solutions in underserved and rural areas.
The grants are based on independently verified outputs and provide supply and demand side support. Additionally, the grants support deploying solar productive use of electricity (PUE) equipment to MSMEs, agribusinesses, and commercial customers.
Catalytic Grants will be provided to eligible SAS companies that target poor, rural, or distant consumers in Nigeria.
