The Africa Minigrid Developers Association (AMDA) and the Renewable Energy Association of Nigeria (REAN) have called on state electricity regulators to adopt naira-denominated licensing fees and more consistent regulatory requirements to encourage private investment in electricity projects across the country.
The associations warned that differences in licensing charges, particularly fees linked to the United States dollar, could discourage investors from developing mini-grid projects in rural and underserved communities.
In a joint position paper titled The Cost of Regulation: Nigeria State Electricity Market Fees, the organisations stressed that predictable and affordable regulatory charges were essential to expanding electricity access and attracting long-term investment.
The paper examined licensing requirements under the Nigerian Electricity Regulatory Commission (NERC) and state electricity regulators in Kogi, Nasarawa and Niger states, highlighting significant differences in fees, permit validity and application procedures.
According to the associations, some state regulators require developers to pay licensing charges denominated in dollars, even though electricity consumers pay their bills in naira.
They explained that the arrangement exposes operators to foreign exchange risks, as changes in the value of the naira could increase regulatory costs before projects are completed or licences renewed.
The challenge is particularly significant for mini-grid developers, whose investments often involve solar panels, battery storage systems and distribution networks designed to supply electricity to communities outside the national grid.
AMDA and REAN maintained that uncertainty over regulatory expenses could affect investment decisions, particularly for companies planning to develop several electricity projects across different states.
The associations identified Kogi State as one example of the financial challenges facing developers.
Under the state’s 2025 electricity licensing regulations, projects within the one-megawatt to 10-megawatt category attract a processing fee of ₦200,000 and a licensing charge of $7,500 or its naira equivalent.
Using an illustrative exchange rate of ₦1,380 to the dollar, the combined upfront payment amounts to approximately ₦10.55 million.
The associations noted that the dollar-linked charge could become more expensive in naira terms if the exchange rate changes before payment is made.
They also identified differences in the cost of obtaining similar regulatory approvals across states.
For projects within the one-megawatt to 10-megawatt category, combined upfront charges were estimated at ₦5.5 million in Nasarawa, ₦850,000 in Niger and approximately ₦10.55 million in Kogi, using the illustrative exchange rate.
The variations, according to the paper, could influence where developers choose to invest, as companies may favour states offering more predictable and affordable regulatory conditions.
AMDA and REAN warned that this could leave communities in states with higher regulatory costs waiting longer for electricity infrastructure.
The associations therefore recommended that processing, permit and licensing fees should be fixed in naira, with charges designed to reflect the size and nature of electricity projects.
They also called for more consistent approaches to capacity classifications, licensing procedures and renewal requirements across state electricity markets.
The recommendations come as more states assume responsibility for regulating electricity activities within their territories following the enactment of the Electricity Act 2023.
The legislation provides a framework for states to establish and regulate their own electricity markets, creating opportunities for local investment and more responsive electricity supply arrangements.
However, the associations argued that the development of separate state regulatory systems should not create unnecessary financial and administrative barriers for operators seeking to expand electricity access.
They maintained that coordination among regulators would help reduce uncertainty while preserving the powers granted to states under the law.
Another concern raised in the position paper is the requirement for developers with existing NERC permits to undergo fresh state-level registration or approval processes.
The associations warned that repeated applications could increase project costs and delay investment, particularly where developers are required to pay additional fees for activities already authorised under previous arrangements.
To address the challenge, they recommended simplified procedures for recognising existing permits and reducing unnecessary duplication.
AMDA and REAN also proposed a portfolio authorisation system that would allow developers operating several similar mini-grid projects within a state to complete a single initial assessment, rather than undergo the full approval process separately for every location.
The associations further advocated renewable 10-year licences to provide greater investment certainty.
They explained that mini-grid infrastructure often operates for periods extending beyond a decade, while some state permits remain valid for only five years.
Shorter licence periods could create uncertainty for developers seeking long-term financing, particularly where investors need sufficient time to recover the costs of constructing and maintaining electricity facilities.
Beyond the regulatory concerns, the paper highlighted the importance of mini-grids in addressing Nigeria’s electricity access deficit.
Citing the 2026 Tracking SDG7 Energy Progress Report, the associations noted that approximately 87.2 million Nigerians lacked access to electricity in 2024.
They maintained that privately developed mini-grids could help extend electricity to communities where connecting to the national grid remains expensive or difficult.
Such projects can support households, small businesses, agricultural processing facilities, healthcare centres and other economic activities requiring reliable electricity.
The associations also linked their recommendations to Nigeria’s participation in Mission 300, an initiative supported by the World Bank and African Development Bank to connect 300 million Africans to electricity by 2030.
Nigeria is implementing the $750 million Distributed Access through Renewable Energy Scale-up (DARES) programme to expand electricity access through mini-grids and other renewable energy technologies.
AMDA and REAN argued that achieving these objectives would require state regulatory frameworks that encourage investment while ensuring adequate consumer protection and oversight.
They acknowledged that regulators need financial resources to carry out their responsibilities but maintained that licensing charges should not impose disproportionate costs on smaller developers.
The associations also called for greater transparency in the calculation of operating fees and recommended that such charges should reflect revenues actually collected by electricity providers.
They warned that excessively high regulatory costs could affect project viability and potentially contribute to higher electricity charges for consumers.
The proposed reforms are intended to create a more predictable investment environment while allowing states to maintain appropriate regulatory oversight.
For Nigeria’s expanding mini-grid market, the associations maintained that improving regulatory consistency would be important to attracting developers, reducing unnecessary costs and accelerating electricity connections in communities still without reliable power supply.
