The recent announcement by the Ministry of Power outlining plans to establish an Off-Grid Sector Coordination Secretariat, alongside initiatives like the newly launched Renewable Asset Management Company (RAMCO), is a familiar government reaction to a real problem. The off-grid energy sector is undeniably expanding in scale and complexity, yet it remains hindered by fragmented interventions, misaligned donor funding, and slow project deployment. However, attempting to solve administrative gridlock by superimposing yet another federal administrative layer or central asset management vehicle is a fundamental misdiagnosis.
Creating new secretariats or central bodies under the umbrella of federal ministries merely shifts the bottleneck. Centralised agencies inevitably inherit the same bureaucratic sluggishness, procedural red tape, and institutional inertia they were created to bypass.
An administrative body or centralised asset manager sitting in Abuja cannot possess the granular operational insight required to accurately assess local load profiles, evaluate site-specific micro-grid architectures, or structure bankable build-own-operate-transfer (BOOT) frameworks across 36 distinct socio-economic landscapes. While RAMCO’s goal of aggregating, maintaining and optimising renewable infrastructure is commendable in theory, attempting to manage localised mini-grids and hybrid assets from the centre forces state-level projects to run through an Abuja-based funnel. This does not streamline private investment; it imposes a tax of time, regulatory uncertainty, and administrative overlap onto off-grid developers and financiers.
This centralising impulse actively counters the statutory framework established by the landmark Electricity Act 2023. The Act explicitly dismantled the federal monopoly over the electricity value chain, granting state governments the legal authority to enact state electricity market laws, establish sub-national regulatory bodies, and mandate State Electricity Boards and Local Government Rural Electrification Committees.
The legislative intent of the Act is unmistakable: decentralisation is not a policy suggestion; it is the law. Attempting to centralise off-grid coordination and asset management runs counter to the fundamental shift toward sub-national electricity market design envisioned by lawmakers.
True alignment across off-grid energy investments lies at the sub-national level. State governments, operating closer to their unserved and under-served communities, are uniquely positioned to itemise their electrification needs.
Instead of waiting for federal directives, states must take full ownership of their energy futures by mapping out energy requirements across key state infrastructure, sizing capacity, defining single-line diagrams, and structuring clear commercial frameworks that mitigate risk for prospective Independent Power Producers (IPPs).
While political accountability will force state executives to act, the transition from a centralised market to an autonomous sub-national model will encounter immediate friction. State electricity laws must be engineered from day one to anticipate and neutralise these hurdles:
- The Institutional Capacity Deficit
The challenge: Most state governments currently lack the internal technical and commercial capacity to accurately audit baseline energy needs or structure complex, bankable BOOT agreements that private financiers trust.
The mitigation: States must bridge this gap through strategic outsourcing and targeted consultancy. Rather than waiting to build internal bureaucracy from scratch, governors must rely on independent energy infrastructure strategists and lead power systems consultants to execute the initial heavy lifting. Simultaneously, we will see significant talent migration, as smart states poach top-tier engineering and regulatory talent directly from private solar IPPs and distribution companies to build competent State Electricity Boards.
- “Cherry-picking” and the Rural Access Gap
The challenge: If left entirely to pure market forces, private capital will naturally cherry-pick the most lucrative commercial hubs and industrial corridors, leaving less profitable, deeply rural communities in the dark.
The mitigation: State regulators must embed Portfolio Bundling into their concession designs. A developer seeking a license for a highly profitable urban cluster can be required to take on a paired “bundle” that includes a nearby off-grid rural community, creating a self-sustaining cross-subsidy. Alternatively, states can enforce Universal Service Obligations (USOs) with regulatory credit trading. If a franchisee operates strictly in a high-yield zone, the law can require them to purchase “rural electrification credits” from specialised mini-grid developers who operate exclusively in remote areas.
- The Financial Viability of Deep Rural Projects
The challenge: Rural mini-grids often fail the initial private investment test due to high upfront capital expenditure (CapEx) relative to the low purchasing power of rural residents.
The mitigation: State electricity laws must establish State-Level Viability Gap Funding (VGF) and Guarantee Funds. Capitalised by concession fees or multilateral grants, these funds provide targeted CapEx subsidies that bring down the equity requirement for private developers. Furthermore, states must integrate Productive-Use Mandates, Â incentivise projects that power agricultural processing or cold storage rather than just residential lighting, ensuring the rural demand profile becomes commercially viable much faster.
Decentralisation does not render federal bodies like the Rural Electrification Agency (REA) obsolete; rather, it demands their structural evolution. The REA must pivot away from direct project execution and local asset procurement to function strictly as a high-level financial enabler, policy advisor, and standard-setter.
By managing the Rural Electrification Fund (REF), the REA can focus its resources on deploying Viability Gap Funding (VGF), capital subsidies, and credit enhancement facilities. These funds can be used to de-risk the investment-grade off-grid portfolios packaged and presented by the states.Â
Nigeria’s off-grid transition cannot be coordinated into success through central administrative directives or nationalised asset managers. It must be built from the ground up through empowered state electricity markets, clear sub-national regulation, and bankable private sector partnerships. The federal government must resist the temptation to build another administrative structure and instead focus on empowering the states to light up their own communities.
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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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