Nigeria has signed agreements with SkyPower FAS Energy, a joint venture between SkyPower Global and FAS Energy, to develop and operate 3,000MW of utility-scale solar photovoltaic power plants over the next five years.
These agreements were finalized through a Foreign Investment Promotion and Protection Agreement between Canada and Nigeria during the World Economic Forum on Africa, and will start bringing clean distributed generation online in phases-this will start as soon as 2015.
The projects will be financed through a combination of bank debt, development bank financing and equity partners.
The agreements are valued at approximately US$5 billion in capital requirements and over 30,000 jobs will be created as a result. Many of the posts will be filled by locals.
Solar development will see Nigeria benefit
The solar developments will be situated in the Delta State of Nigeria. The area is known as the country’s biggest oil-producing region.
Despite Nigeria’s abundant supply of oil, gas and coal, up to 70% of people living in rural areas do not have access to electricity. Those who do have access, experience power outages on a regular basis.
This new development will see Nigeria benefit in a number of ways. Solar may cause the country to rely less on fossil fuels, bring many Nigerians out of energy poverty, create jobs, and meet the country’s growing energy demands. This will all go a long way towards creating a sustainable economy.
The biggest operational cost for businesses in Nigeria is to ensure that there are sufficient provisions to avoid interruptions to the electricity supply.
More investors may follow
Investors have recognised the need for a reliable electricity supply in Nigeria but have been put off by corruption, social and political instability and poor transparency.
This latest development is expected to attract more foreign direct investment to the country.
According to Dr Lyal White, economist and director of the Centre for Dynamic Markets at the Gordon Institute of Business Science, says the investment is a very positive development for Nigeria as it is likely to set off a chain reaction of foreign direct investment to the region. He explains: “Investors are prone to the herd effect – as soon as one goes many will follow. A lot of businesses are waiting for a leader to do this.”