KEY POINTS

• The UK, Federal Government and state governments are seeking private capital to develop three small hydropower projects in Oyo, Kano and Plateau states.
• The projects have received support for feasibility studies, dam safety assessments, environmental safeguards and financial planning.
• Nigeria has an estimated small hydropower potential of more than 3,500 megawatts, according to the Rural Electrification Agency.
• The Ikere Gorge project in Oyo State is expected to reach financial close by the end of the second quarter of 2027.
• A proposed solar and hydropower scheme could supply about 100 megawatts of electricity and support a large-scale poultry project in Oyo State.

MAIN STORY

The United Kingdom, Federal Government and participating state governments are seeking private investment to develop small hydropower projects in Nigeria, with three pilot schemes expected to help expand electricity supply to rural communities and support local businesses.

British Deputy High Commissioner Vicky Seymour disclosed this on Wednesday at a UK PACT stakeholder and investor roundtable in Abuja, where government officials, developers and financiers discussed ways to attract private capital into small hydropower development.

The initiative covers the Ikere Gorge project in Oyo State, Gari Dam in Kano State and the rehabilitation of the NESCO hydropower cascade in Plateau State.

According to Seymour, the UK has supported feasibility studies, dam safety assessments, environmental and social safeguards, financial modelling and transaction structuring to prepare the projects for investment.

The programme is being implemented by Africa PPP Advisory (AP3) and Ratio Consulting Ltd. Its current phase focuses on moving from technical assessments and project preparation to implementation.

Seymour said the projects could help deliver more reliable electricity while creating economic opportunities for rural households, smallholder farmers and other businesses that depend on dependable power.

She also pointed to the Federal Government’s draft National Small Hydropower Policy, deployment toolkit and project pipeline as potential tools for providing a consistent framework for developing the sector.

Minister of Power Joseph Tegbe, represented by the President’s Special Adviser on Power, Martin Olajide, said the government was working to attract renewable energy investment through policy reforms, infrastructure concessions and international partnerships.

He said the Electricity Act 2023 had expanded opportunities for state electricity markets and private sector participation. He added that the pilot hydropower projects needed to resolve outstanding issues involving water availability, transmission connections, electricity purchase agreements and payment security before they could reach financial close.

Tegbe said project development must also account for community benefits, dam safety and environmental protection.

Managing Director of the Rural Electrification Agency (REA), Dr Abba Aliyu, said Nigeria had an estimated small hydropower potential exceeding 3,500 megawatts, much of which remained undeveloped.

Aliyu, represented by his Technical Adviser, Jaafar Dikko, said existing dams could provide opportunities to supply electricity to rural communities, waterworks and agro-processing facilities. He disclosed that the agency had developed about 48 interconnected mini-grids with electricity distribution companies and state governments, although most were solar-powered.

The REA, he said, was ready to support small hydropower projects through public-private partnerships and financing arrangements capable of attracting investment.

Managing Partner of AP3, Dr Gori Olusina-Daniel, said combining hydropower with solar energy could improve electricity generation and provide a more reliable supply across dry and rainy seasons.

He cited the Ikere Gorge project, which had remained dormant for more than three decades, as an example of the opportunities available through renewed investment and cooperation between government and private developers.

The project, supported by concessionaire Quint Energy and the Oyo State and Federal Governments, is expected to reach financial close by the end of the second quarter of 2027. The proposed hybrid solar-hydropower scheme could generate about 100 megawatts of electricity for Oyo State and other locations, including potential customers connected to the national grid.

Tegbe also highlighted a proposed integrated poultry project in Oyo State designed to produce one million eggs daily. A hybrid hydropower and solar scheme could supply electricity for its feed mills, hatcheries, poultry houses and other facilities.

The associated agricultural plan includes coordinated irrigation to support the cultivation of 7,000 hectares of maize and soybeans for the poultry project’s feed mill.

THE ISSUES

The central challenge is turning Nigeria’s hydropower potential into projects that can attract investors and deliver electricity. Identifying a dam or estimating how much power it could generate is not enough. Developers must establish that the water supply is suitable, the equipment and infrastructure can operate safely, electricity can reach customers and payments will be reliable.

These issues matter to private investors because hydropower projects require substantial upfront spending, while returns depend on generating and selling electricity over time. Uncertainty over power purchase agreements and payment security can make it harder to secure the financing needed to begin construction or rehabilitation.

The three pilot projects also illustrate a potential advantage of developing existing water infrastructure. Where dams and related facilities are already available, developers may have opportunities to build on those assets rather than start entirely from scratch. However, the source material does not provide project-by-project costs or establish how much investment each site requires.

For rural businesses, dependable electricity could reduce operating difficulties and support activities such as food processing, irrigation and cold storage. The proposed poultry project in Oyo State illustrates how power investment could be linked to agricultural production and demand for locally grown maize and soybeans.

However, the expected benefits will depend on whether the projects secure financing, are completed and supply electricity at prices businesses and households can afford. The proposed generation capacity and agricultural output should therefore be treated as targets or expectations, not results already achieved.

WHAT’S BEING SAID

“The United Kingdom is really proud to work with Nigeria to advance a cleaner, more reliable, and more inclusive energy future,” – Vicky Seymour, British Deputy High Commissioner.

“Our note today is about moving from evidence to action together across the three pilot sites,” – Vicky Seymour, British Deputy High Commissioner.

“Our shared success should be measured by the difference the energy transition makes to people’s lives,” – Vicky Seymour, British Deputy High Commissioner.

WHAT’S NEXT

The immediate priority is to move the three pilot projects from preparation towards investment and implementation. This will require developers and government partners to address technical, financial and commercial issues, including water availability, electricity connections, purchase agreements and payment security.

For the Ikere Gorge project, the stated target is to reach financial close by the end of the second quarter of 2027. Financial close would indicate that the required financing arrangements have been secured, but it would not mean the project had already begun generating electricity.

The draft National Small Hydropower Policy and deployment toolkit could also help establish a more consistent approach to project development if finalised and implemented.

The source material does not specify when the Gari Dam and NESCO cascade projects are expected to reach financial close or begin supplying electricity.

BOTTOM LINE

Nigeria’s small hydropower opportunity will depend on whether governments and developers can turn existing dams and technical assessments into financeable projects. If the pilot schemes secure funding and deliver reliable electricity, they could support rural businesses, agricultural production and wider access to power. For now, the key test is whether project preparation leads to investment and implementation.

Source: NAN