FG To Provide Solar Subsidy In Nigeria Through $750 Million World Bank Loan

solar mini-grids

The Federal Government has secured a $750 million loan from the World Bank to provide subsidy to developers and operators of solar mini-grids in the country.

The Minister of Finance, Wale Edun, and World Bank’s Country Director for Nigeria, Shubham Chaudhuri, signed the loan agreement on March 31 and February 19 respectively.

The loan, according to a document made available to journalists on Thursday, is aimed at augmenting the supply of electricity to both households and micro, small, and medium-sized enterprises (MSMEs) through a surge in private sector-led distributed renewable energy initiatives.

It read: “The loan will be partly used to provide support to the development and operation of privately owned and operated solar hybrid mini grids in unserved and underserved areas through: 1.1. Minimum Subsidy Tender Carrying out of Minimum Subsidy Tender processes and provision of Minimum Capital Cost Subsidies to selected developers/operators of (a) Isolated mini- grids; (b) Interconnected mini-grids; or (c) Solar rooftop solutions in Participating States.”

Aside from providing the subsidy, the federal government plans to also provide performance-based grants.

“There will be a provision of Performance-Based Grants to eligible mini-grid operators based on new customer connections for isolated mini-grids and percentage of capital expenditures for interconnected mini-grid projects.

“The grant will also cover Standalone Solar (SAS) Systems for Households, MSMEs, and Agribusinesses. This grant will provide “Support to the expansion of SAS systems for households, MSMEs, and agribusinesses in rural areas through: 2.1. Performance Based Grants for Standalone Solar Provision of Performance Based Grants (“PBGs”) to eligible companies to rapidly deploy SAS solutions in rural and underserved areas, through supply and demand side support and based on independently verified outputs, and to support deployment of solar productive use of electricity (PUE) equipment to MSMEs, agribusinesses and commercial customers.”

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