The Rural Electrification Agency (REA) recently launched the Renewable Asset Management Company (RAMCO) with an urgent mandate: rescue publicly funded renewable energy infrastructure from post-commissioning deterioration. The intervention follows troubling performance under the Energising Education Programme (EEP), where internal audits indicated that only three of seven Phase 1 sites were fully operational.
On the surface, creating a dedicated entity to meter, bill and professionally maintain these solar micro-grids makes sense. But RAMCO also exposes a deeper problem in how Nigeria plans, procures, finances and operates public power infrastructure. Unless that underlying problem is addressed, the country risks creating another government entity to manage the consequences of a flawed model rather than correcting the model itself.
Since 2017, the Federal Government, through REA, with support from multilateral partners, has deployed about 82MW of solar-hybrid capacity across 22 federal universities and three teaching hospitals at a reported investment of ₦263 billion. That translates to approximately ₦3.2 billion per megawatt, or roughly $2.3 million/MW at prevailing project-cycle valuations.
Even allowing for battery energy storage systems and distribution infrastructure required for institutional micro-grids, the figure raises serious questions about capital efficiency.
More revealing is the government’s decision not to recover the initial construction cost through electricity tariffs. The ₦263 billion has effectively become a sunk cost, while RAMCO’s sustainability tariff is expected to cover operations and maintenance and build reserves for future battery and inverter replacement.
That decision may keep electricity affordable for universities and hospitals, but it also means taxpayers absorb the capital cost. The apparent affordability of the electricity therefore does not arise solely from lower generation economics; it depends substantially on writing off the original investment at the expense of tax payers.
The financing reality makes the problem clearer. Nigerian commercial lenders generally cannot provide the 15- to 20-year debt tenors typical of infrastructure financing in mature markets. If a private developer had to recover a similar ₦3.2 billion/MW investment over a six-year local debt tenor at an 18 percent intervention interest rate, while providing for O&M and site security, the resulting electricity cost could exceed ₦750/kWh.
At that tariff, the projects would struggle to compete with grid electricity or alternative generation. The public procurement model survives because the government can absorb capital losses that a commercial developer cannot.
The underlying weakness is the traditional Engineering, Procurement and Construction (EPC) model. Under EPC contracting, the contractor designs, procures, builds and hands over the plant. Once paid, however, its financial exposure to the asset’s long-term performance is limited. The incentive is therefore strongest around successful project delivery, not necessarily around 15 or 20 years of efficient operation.
This creates a life-cycle accountability gap. When batteries, inverters or other critical components require replacement years later, the original contractor may no longer have capital at risk, while the beneficiary institution may lack the budget and technical capability to sustain the system.
RAMCO is therefore responding to a genuine problem. But it should be treated as a transitional asset-resolution mechanism rather than a permanent state-owned operator.
Government-linked operators face their own challenges: collecting tariffs from cash-constrained public institutions, ring-fencing replacement reserves, responding quickly to equipment failures and navigating public procurement procedures. If revenues become inadequate or replacement reserves are depleted, the government could eventually face another choice between allowing the assets to deteriorate or providing further Treasury support. That would amount to double jeopardy for taxpayers—first absorbing the construction cost and later funding operational shortfalls.
A better approach is a three-stage transition toward private capital.
First, RAMCO should prepare the existing 82MW portfolio for competitive private concessioning. Because the government has already absorbed most of the original capital cost, qualified Energy Service Companies could take over institutional clusters at a minimal agreed asset acquisition value. They would operate and maintain the systems under regulated, cost-reflective tariffs that provide for professional O&M, replacement reserves and a reasonable return. Crucially, concession agreements should impose measurable uptime, asset-health and collection obligations, with failure carrying the risk of losing the concession.
Second, the next generation of public solar projects should move away from government-funded EPC procurement toward Build-Own-Operate (BOO) or Build-Own-Operate-Transfer (BOOT) structures.
Under a BOOT arrangement, private developers raise the capital, procure equipment, build the plant and operate it under a long-term Power Purchase Agreement. Their return depends on selling electricity reliably. If they overpay for equipment or inflate construction costs, they—not taxpayers—carry the consequences through an uncompetitive tariff and weaker project economics. Likewise, poor maintenance directly reduces their revenue. Capital efficiency and long-term asset performance become commercially linked.
Third, the REA’s role should evolve from primarily procuring and owning generation assets toward creating and de-risking markets for private investment. This could include aggregating institutional demand, strengthening payment security through escrow structures or partial risk guarantees, facilitating blended and concessional finance, and standardising PPAs, site-access arrangements and technical quality requirements.
This approach does not diminish the REA, instead, It gives the agency a more strategic role: using public resources to unlock private capital rather than repeatedly substituting for it.
RAMCO may be necessary to stabilise assets already built. But it should not become the destination of Nigeria’s renewable-energy strategy. The larger lesson from the ₦263 billion sunk cost is that the government should progressively move away from owning and operating commercial power assets where private capital can carry construction and operational risk.
The objective should be clear: rescue the existing assets, transfer them into accountable commercial management, reform the procurement model for future projects, and ensure that the next megawatt of public-sector solar capacity is structured to remain financially and technically sustainable long after commissioning.
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Masah Emmanuel Ikus is a Power and Energy Infrastructure Strategist and the Principal Consulting Partner at EMI Resources Limited. A University of Lagos-trained Electrical Engineer with an EMBA from Lagos Business School, he possesses over 27 years of experience managing complex infrastructure projects across the ICT, Oil & Gas, and Power sectors, specialising in the design of decentralised power systems and solar integration. He currently advises investors, project sponsors, and public institutions on leveraging Nigeria’s energy deficit into bankable commercial opportunities. He can be contacted via masahikus@gmail.com
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