REA seeks sustainable electricity market to attract investors

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Key points

• REA Managing Director Abba Aliyu says Nigeria must move beyond electricity subsidies to a financially sustainable power market.
• He argues subsidies should be used to attract private investment rather than sustain inefficiencies.
• Aliyu describes mini-grids as a viable commercial model capable of improving cost recovery and expanding electricity access.
• He says the REA is using decentralised renewable energy to strengthen Nigeria’s electricity market.

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The Managing Director of the Rural Electrification Agency (REA), Abba Aliyu, has called for the development of a financially sustainable electricity market in Nigeria, saying the country’s power sector must become attractive to private investors rather than rely indefinitely on government subsidies.

Speaking at the Samuel Ibiyemi Memorial Lecture, Aliyu said the future of Nigeria’s electricity sector would depend not only on increasing electricity generation but also on building a market capable of recovering costs and delivering reliable power.

He said creating a financially viable electricity market would boost investor confidence and attract the private capital needed to expand the sector.

Aliyu argued that subsidies were not inherently problematic but should be deployed strategically to de-risk investments, stimulate innovation and encourage private sector participation.

According to him, countries with successful electricity markets have used public funding to unlock private investment instead of replacing it.

The REA boss also identified mini-grids as a key component of Nigeria’s electricity reforms, describing them as more than rural electrification projects.

He said mini-grids represent a new commercial model built around verified demand, digital revenue collection and stronger cost recovery, making them more attractive to investors.

Aliyu said the agency was already implementing this approach through isolated and interconnected mini-grid projects as well as the DARES Programme, adding that decentralised renewable energy could strengthen distribution networks, improve electricity reliability and expand access to underserved communities.

He added that such initiatives would help build a more bankable electricity market capable of supporting long-term sector growth.

The issues

Nigeria’s electricity sector continues to face challenges including inadequate cost recovery, high subsidy costs, weak distribution infrastructure and limited private investment. The enactment of the Electricity Act and ongoing reforms seek to create a more competitive and financially sustainable market by encouraging greater private sector participation, decentralised electricity generation and improved access to electricity, particularly through renewable energy and mini-grids.

What’s being said

“Can Nigeria move from subsidising electricity to building an electricity market that is financially sustainable?” — Abba Aliyu

“Subsidies are not the problem; how we use them is.” — Abba Aliyu

What’s next

The REA is expected to continue expanding mini-grid deployment and implementing the DARES Programme as part of broader efforts to improve electricity access, attract private investment and support ongoing reforms in Nigeria’s power sector.

Bottom line

Aliyu says Nigeria’s electricity reforms should focus on building a commercially viable power market where targeted subsidies attract private investment, with mini-grids playing a central role in expanding reliable electricity access.