The Nigerian electricity regulatory framework: hotspots and challenges for off-grid renewable electricity development

This paper analyses the policies and laws that govern the Nigerian electricity sector to ascertain the opportunities and challenges it presents for addressing the problem of affordability of the initial capital costs and financial sustainability of off-grid renewable electricity (OGRE) faced by private investors. It is argued that the absence of sector-specific targets for OGRE and the preference for gas electricity erode the effectiveness of the policies in enabling laws that will address the mentioned barriers to OGRE development. Analysis of the relevant laws shows that some of the provisions present opportunities for addressing the identified barriers. The latter include the establishment of the Rural Electrification Fund (REF) which provides capital grants to OGRE developers in rural areas, under the Electric Sector Power Reform Act 2005. However, some provisions inflame the identified obstacles to OGRE development, including the expensive licensing fees for OGRE projects and overriding powers of the National Assembly over a State House of Assembly for making laws that cover the sector. Key recommendations are made for the adoption of an overarching renewable energy law that will have some recommended features for addressing the identified barriers to the development of OGRE.