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n CPEEL Monograph Series - Financing mechanism/framework and resource mobilization strategy to support SE4All
Insufficient electricity supply and delivery to end users highlighted by the current generating capacity of 4,500MW is a major obstacle to rapid and sustained economic growth and development in Nigeria. The investment requirement to increase generating capacity from the current 4,500MW to 40,000MW in the next decade or two would involve an unprecedented scaling up of financial resources. Clearly, and from the perspective of this study, the financial implication in delivering universal rural electricity access based on the current conditions, seem quite daunting given that the investment risks in rural electricity projects are perceived to be far higher than in urban areas. Also, the return on investment adjusted for risks is less than urban or grid-based electricity supply. Improving electricity access for the rural poor is more challenging than in urban areas due to:
- Low electricity consumption per capita;
- High distribution cost because of more dispersed spatial configuration; and
- Low affordability capacity of the rural economy because of their relative poverty, dependence on a less productive rural economy exacerbated by the migration of the more productive labour force.
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