By Oyetola Muyiwa Atoyebi, SAN FCIArb. (U.K)


In Nigeria, the accessibility of stable electricity presents a significant challenge, impacting approximately 59% of the population with irregular power supply.[1] This concern not only impedes the country’s economic advancement but also undermines poverty reduction efforts.[2] Notably, the Nigerian National Electricity Grid encompasses generation companies, distribution companies, and the Transmission Company of Nigeria (TCN), forming an integral part of the nation’s infrastructure. The transmission system comprises 330 kV and 132 kV circuits, alongside substations. Thermal generation facilities are predominantly situated in the southern region near gas reservoirs, while hydro-generation plants are strategically positioned further north at Jebba, Kainji, and Shiroro. Distribution is structured into 11 zones, each equipped with networks featuring 33 kV, 11 kV, and low-voltage circuits. [3] Nevertheless, the system has encountered various challenges, encompassing technical issues such as extended transmission lines, transformer losses, and ageing infrastructure, alongside non-technical challenges like vandalism, financial constraints, and revenue losses, all of which significantly impact its efficiency and reliability. [4]

To address these challenges, the Electricity Act of 2023 was enacted, with the primary goal of attracting private sector investment into the Nigerian electricity supply industry (NESI) by providing a comprehensive framework for the operation of “a privatized, contract and rule-based competitive electricity market in Nigeria through transformative policy and regulatory measures”.[5]

This article explores diverse private financial strategies accessible for private investments in power transmission projects within Nigeria, intending to enhance the sustainability of the energy sector. Additionally, it addresses pertinent legal considerations associated with these investments.


  1. The Infrastructure Concession Regulatory Commission (ICRC) Act of 2005: This legislation serves as the primary law governing PPP contracts involving Federal Government infrastructure. It facilitates private sector involvement in financing infrastructure projects through concessions or other contractual arrangements.
  2. The National Policy on Public-Private Partnerships (PPPs) (2009): Ratified by the Federal Executive Council, this policy aims to cultivate a conducive environment for private sector engagement in delivering infrastructure development services within Nigeria.
  3. The Public Procurement Act (PCA) of 2007: This act establishes the Bureau of Public Procurement (BPP) as the regulatory authority tasked with overseeing and regulating public procurement activities. It standardizes government policies, establishes guidelines, and enhances the legal framework and professional capabilities in public procurement across Nigeria.
  4. The Fiscal Responsibility Act of 2007: This legislation ensures governmental transparency, accountability, and fiscal prudence in budget formulation and expenditure frameworks.
  5. The Debt Management Office Act of 2003: This act governs all loans, borrowings, guarantees, and other long-term contingent liabilities of the Federal Government of Nigeria.


  1. Build-Operate-Transfer (BOT):

A Build-Operate-Transfer (BOT) agreement is a legally recognized financial arrangement commonly employed for large-scale projects, particularly in the realm of infrastructure, facilitating collaboration between the public and private sectors.[6] Within the framework of a BOT agreement, the host government grants a consortium of private investors or companies the authority to finance an infrastructure project.[7] These investors are responsible for the construction, development, and operation of the project over a predetermined period, to cover costs and generate profits. Upon completion of this period, ownership of the project is transferred to the government without any additional charges. The private entity involved, often referred to as the concessionaire, holds a concession from the public party, known as the principal or client, for a fixed duration to develop and manage a public facility.

The relevance of the BOT model is significant in the context of power transmission in Nigeria, as evidenced by its successful implementation in various countries, such as the Philippines, wherein the Lligan Combined-Cycle Power Plant, constructed in 2005, stands as the largest natural gas facility in the Philippines, encompassing 1200 NW combined-cycle, dual-fuel electricity generation facilities with a design life of 25 years.[8]

  1. Public-Private Partnerships

A Public-Private Partnership (PPP) is a collaboration between a public agency (at the federal, state, or local level) and a private sector entity.[9]  The partnership aims to provide a service or facility for the benefit of the general public. Both parties contribute skills and assets and also share the risks and rewards associated with the project.[10] PPPs often focus on service delivery and form a genuine partnership between the public and private sectors.[11]

PPP models have been widely used globally in various sectors, including the power sector. One successful example is the Azura-Edo Independent Power Plant (IPP), located in Edo State, Nigeria, which addressed power transmission challenges and attracted private sector investments to bridge the significant deficits between electricity demand and supply. [12]

  1. Independent Power Transmission Companies (IPTCs):

Independent Power Transmission Companies also known as Independent Electricity Distribution Network Operators are private investors who have opportunities to collaborate with the Transmission Company of Nigeria (TCN) Plc. and invest in transmission assets following the Commission’s regulatory framework. These independent operators are actively engaged in the distribution of power sourced from their respective embedded generation plants with operational licenses and operational status granted to them.[13]

According to the NERC report in 2023, the Commission has granted licenses to a total of seventeen (17) independent electricity distribution network (IEDN) operators, with eleven (11) of them currently in operation.[14]


The financing options for power transmission project development in Nigeria include[15]:

  1. Project Finance

Project finance plays a pivotal role in Nigeria, driving essential initiatives, addressing infrastructure gaps, and fostering economic growth. This collaborative effort involves government bodies, private enterprises, and international investors, resulting in ventures that have far-reaching societal implications.[16]

In essence, project finance involves securing funding for industrial production, infrastructure development, and public services. Lenders, including commercial banks, investment banks, institutional investors, and multilateral agencies, provide long-term debt and equity, assuming associated risks.[17] Repayment is derived from project-generated cash flows, utilizing instruments such as loans, equity, and guarantees. This approach is particularly favoured by the private sector for off-balance sheet financing, allowing ventures to exceed their capital capacity.[18]

Nigeria’s focus on enhancing electricity generation and distribution underscores the transformative potential of project finance. Notable projects, such as the Azura-Edo Independent Power Plant (IPP)[19] in Edo State, serve as tangible examples of how project finance positively impacts the nation’s infrastructure landscape.

  1. Infrastructure private equity investments:[20]

Private equity firms specializing in infrastructure focus on investments in assets critical for providing essential utilities and services, such as energy, social infrastructure, transportation, and utilities. In the context of Nigeria, private equity investments in infrastructure primarily targeting power transmission projects involve private equity firms or investors providing capital to support the development, construction, and operation of power transmission infrastructure in the country. The primary aim of these investments is to address the pressing need for modernizing and expanding Nigeria’s power transmission network. Through these initiatives, they contribute to enhancing electricity access, reliability, and efficiency nationwide. Private equity investments in power transmission projects encompass various elements, including financing, project development, construction, operation, and risk management.


Project finance and infrastructure private equity investments serve as viable means for private investors to engage in electricity generation and distribution in Nigeria under the relevant statutes, aiming to address challenges within the Nigerian Electricity supply industry. [21] However, navigating the legal complexities of project finance requires careful consideration of various crucial factors. Therefore, it is essential to seek guidance from legal professionals to minimize risks and potential legal consequences. They include:

  1. Adherence to Securities Laws: Private investments frequently involve the sale of securities, necessitating compliance with securities laws and regulations. This entails filing requisite documents with regulatory bodies and furnishing potential investors with comprehensive disclosure documents containing pertinent information about the investment opportunity. [22]
  2. Identification of Involved Parties: Thoroughly identify all parties involved, including contractors, operators, and suppliers, to establish clear roles and responsibilities within the project framework.
  3. Preparation of Essential Documentation: Meticulously draft essential documents like concession agreements, loan agreements, and security documents. These instruments collectively delineate risk allocation and the rights of involved parties within the project finance sphere.
  4. Provision of Insurance: Implement insurance mechanisms within the existing legal framework to mitigate risks, enhance operational efficiency, minimize losses, and foster equitable business relationships.[23]
  5. Due Diligence: Both the investing company and potential investors must conduct comprehensive due diligence to evaluate the feasibility and associated risks of the investment opportunity. This process may encompass scrutinizing financial statements, engaging with management, and conducting market analysis.
  6. Compliance with Anti-Fraud Regulations: Adherence to various securities market laws and regulations is imperative to prevent fraudulent activities. Ensuring that capital-raising endeavours steer clear of misleading statements, omissions, or fraudulent practices is essential, thereby upholding investor confidence and averting legal complications.


Private financing strategies present promising opportunities for power transmission projects in Nigeria. Private investors can address the country’s energy needs and bring much-needed capital, efficiency, and innovation to the power sector through mechanisms such as Build-Operate-Transfer agreements, Public-Private Partnerships, and Independent Power Transmission Companies.

However, successfully navigating the legal aspects of project finance requires engaging legal professionals. This is crucial to mitigate risks and ensure adherence to relevant statutes, careful attention to securities laws, documentation, insurance, due diligence, and compliance with anti-fraud regulations.

Moreover, collaboration between the public and private sectors is essential for Nigeria to modernize and expand its power transmission network. This will lead to a more dependable and sustainable energy future, economic growth, and improved quality of life for its citizens.

Snippet: Project finance and infrastructure private equity investments serve as viable means for private investors to engage in electricity generation and distribution in Nigeria under the relevant statutes, aiming to address challenges within the Nigerian Electricity supply industry

Keywords: Project finance, Infrastructure private equity investments, Build-Operate-Transfer, BOT, PPP in Nigeria, Public-Private Partnerships

AUTHOR: Oyetola Muyiwa Atoyebi, SAN FCIArb. (U.K)

Mr. Oyetola Muyiwa Atoyebi, SAN is the Managing Partner of O. M. Atoyebi, S.A.N & Partners (OMAPLEX Law Firm).

Mr. Atoyebi has expertise in and vast knowledge of Corporate and Commercial Practice and this has seen him advise and represent his vast clientele in a myriad of high-level transactions.  He holds the honour of being the youngest lawyer in Nigeria’s history to be conferred with the rank of Senior Advocate of Nigeria.

He can be reached at


Chikezie is a member of the Dispute Resolution Team at OMAPLEX Law Firm. He also holds commendable legal expertise in Corporate Practice.

He can be reached at

[1] M.O. Dioha, N.V. Emodi, Investigating the impacts of energy access scenarios in the Nigerian household sector by 2030, available at Resources | Free Full-Text | Investigating the Impacts of Energy Access Scenarios in the Nigerian Household Sector by 2030 ( accessed on 18 February 2024

[2] H.A. Daggash, N.M. Dowell Delivering low-carbon electricity systems in sub-Saharan Africa: insights from Nigeria

Energy Environ. Sci., 14 (7) (2021), pp. 4018-4037, available at Delivering low-carbon electricity systems in sub-Saharan Africa: insights from Nigeria – Energy & Environmental Science (RSC Publishing)

[3] Nigeria Electricity System Operator ‘History of system Operations’, available at :: The Nigeria Electricity System Operator ( accessed on 18 February 2024

[4] Engr. Francis Akpojedje, ‘A Comprehensive Review of Nigeria Electric Power Transmission Issues and Rural Electrification Challenges. Available at A Comprehensive Review of Nigeria Electric Power Transmission Issues and Rural Electrification Challenges | Engr. France Akpojedje – accessed on 18 February 2024

[5]  Section 1 of the Electricity Act, 2023

[6] Adam Hayes, ‘Build-Operate-Transfer Contract: Definition, Risks, and Framework’ INVESTOPEDIA (26 June, 2023) available at accessed on 18 February 2024

[7] Moses Etila Shaibu. ‘Sustainable Infrastructural Development in Africa: The Build Operate and Transfer (BOT) Alternative for the Power Sector In Nigeria’ Americas Journal of Humanities and Social Sciences Research (AJHSSR)

Volume -03, Issus-11, pp-188-196 available at Sustainable Infrastructural Development in Africa: The Build Operate and Transfer (BOT) Alternative by ajhssr.editor – Issuu accessed on 18 February 2024

[8] Ibid

[9] Infrastructure Concession Regulatory Commission (ICRC) ‘PPP Public-Private Partnership’ available at,and%20rehabilitation%20of%20the%20system. Accessed on 18 February 2024

[10] Ibid

[11] Ibid

[12] World Bank Group, Nigeria: The Azura-Edo Independent Power Plant (MULTILATERAL DEVELOPMENT BANKS’ COLLABORATION: INFRASTRUCTURE INVESTMENT PROJECT BRIEFS) available at accessed on 18 February 2024

[13] Japan International Cooperation Agency (JICA): ‘Preparatory Survey For Power Transmission Project In The Federal Republic Of Nigeria (Phase 2)’ available at JICA%20Preparatory%20Study%20Report_final.pdf accessed on 18 February 2024

[14] Omono Okonkwo, ‘Here are the 11 active NERC-licensed independent power distributors as of 2022’ NAIRAMETRICS (9 October 2023)available at accessed on 18 February 2024

[15] Nextier, ‘Financing Options for Renewable Energy Development in Nigeria’ available at accessed on 18 February 2024

[16] Nicholas Idoko, ‘Project Finance in Nigeria: An In-depth Exploration’ ( available at accessed on 18 February 2024

[17] Op-Ed Contibutor ‘Project financing mechanism: Solution to Nigeria’s infrastructural deficit?’ NAIRAMETRICS (25 April, 2021) available at Project financing mechanism: Solution to Nigeria’s infrastructural deficit? – Nairametrics accessed on 18 February 2024

[18] SuKFin ‘INFRASTRUCTURE / PROJECT FINANCING’ available at  accessed on 18 February 2024

[19] Joel Nwankwo, ‘EmPOWERing Edo State: What the Azura-Edo Independent Power Plant Can Offer’ TECHECONOMY (23 January, 2024) available at accessed on 18 February 2024

[20] Akorede Folarin, ‘Leveraging infrastructure funds to unlock private capital for sustainable development’ THE CABLE (12 December 2023) available at accessed on 18 February 2024

[21] Star Credits ‘Project Financing in Nigeria’ available at,also%20apply%20to%20project%20finance%20transactions%20in%20Nigeria. Accessed on 18 February 2024

[22] FasterCapital, ‘What Are The Legal Considerations When Seeking Private Investment’. Available at accessed on 18 February 2024

[23] Aneta Spaic ‘Legal Aspects of Mitigating Risks in Project Finance’ Mitigating Commercial and Political Risks in Project Finance (2ed edition) available at of_Mitigating_Risks_in_Project_Finance accessed on 18 February 2024

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