Economy
Expert Examines Rising Trend Towards Corporate Procurement of Power in Sub-Saharan Africa
Renewable technologies are evolving at a rapid pace and there has been a dramatic decline in the costs associated with its procurement. This provides an opportunity for corporates to reap the benefits of procuring renewable energy directly from generators through the use of a power purchase agreement (corporate PPAs).
Corporate PPAs aim to provide corporates with lower or more stable electricity costs and grid reliability and can contribute significantly to their sustainability targets.
This is according to Mike Webb, Senior Associate in the Banking & Finance Practice at Baker McKenzie in Johannesburg.
He notes, however, that despite these benefits, corporate PPAs have struggled to take off in sub-Saharan Africa, commonly as a result of regulatory challenges. To guide corporates through numerous regulatory frameworks and legal developments governing this sector across Africa, Baker McKenzie’s new report, Opportunities for Corporate Procurement of Power in Sub-Saharan Africa studies corporate PPAs in Ethiopia, Ghana, Kenya, Namibia, Nigeria, South Africa, Tanzania, Zambia and Zimbabwe.
“We have found that the key issue that obstructs the use of corporate PPAs in most of these markets is that a licence is required to either operate a power asset or sell power, or both. Most markets have a threshold where a licence is required, usually ranging between 100kW and 1000kW. Where projects exceed these thresholds, a license is required which can often be difficult to obtain. To overcome this, developers may structure the PPA as a hire-purchase agreement or lease,” explains Webb.
“However, in addition to potentially triggering unfavorable tax consequences (where the PPA becomes a contingent liability on the corporate’s books), these solutions carry enforceability risk and may not pass a lender’s bankability requirements.
“It’s worth noting that there are currently no licence requirements in Senegal and Mozambique and the threshold in Uganda for a licence is 2000 kW,” he notes.
“In addition to licence requirements, most jurisdictions require approval from the local distribution network operator to install an on-site power plant (e.g. rooftop solar PV). This approval can also be difficult to obtain and sometimes gets held up in months of administrative delays,” Webb explains.
Webb says that the good news is that as the energy transition slowly makes its way into sub-Saharan Africa, some utilities and regulators are showing signs of key market reforms that will enable more opportunities for corporate PPAs.
“For example, as of 1 September 2019, Namibia introduced a new energy policy that will allow the bilateral trading of power between generators and customers. In a small power market such as Namibia, the opportunities may be limited. However, it is expected that neighbouring countries, such as Zambia, could follow Namibia in this reform.
“A further key reform required in power markets to unlock opportunities of corporate PPA is net metering, where plants are able to supply unused power into the grid in return for a feed-in tariff. This is not available in most countries in sub-Saharan Africa and where it is available, such as South Africa, the tariff is often too low to enhance the economics of the project,” Webb explains.
Webb notes that as a result of strong resources, as well as poorly maintained and limited grid networks, sub-Saharan Africa has seen an increase in the roll out of mini-grids. Rapid technological development and operational efficiencies have made mini-grids a practical, cost effective and viable solution to electrify rural areas in Africa. The International Energy Agency estimates that at least 40% of new power connections in sub-Saharan Africa during the next decade will be provided by mini-grids. For example, Rwanda plans to provide over 90% of its electricity supply through mini-grids by 2024.
“The regulatory environment around mini-grids in Africa can be quite different depending on the country. Tanzania has fairly clear policies and regulations that favour mini-grids. Nigeria has issued regulation detailing the framework for the establishment of mini-grids. Uganda is currently developing a mini-grid framework with the support of various donor programmes. Similarly, Rwanda has been in consultation with private mini-grid companies in the development of their mini-grid framework,” he says.
Webb notes that a good sign that the power market is maturing is the increase in trading activity in the Southern Africa Power Pool (SAPP) in the last 18 months, which is beginning to show signs of a functional power pool. The SAPP currently serves more than 300 million people and has an available generation capacity of 67.19 GW. A total of 2,124 GWh was traded on the SAPP market during 2018, resulting in USD 106.6 million being exchanged on SAPP’s competitive market. Current operating members of SAPP include Botswana, Democratic Republic of Congo, Lesotho, Mozambique, Namibia, South Africa, Swaziland, Zambia and Zimbabwe. Namibia’s move to allow bilateral trading is expected to extend into the use of the SAPP. As the approval of the relevant utility is required for a person to become a participant in the SAPP, these signs are positive.
“In terms of sub-Saharan Africa countries to watch for corporate PPA opportunities, a recent Bloomberg New Energy Finance report noted that Nigeria, Ghana and Kenya stand out, based on positive economics and relatively accommodating regulatory systems. Senegal, Uganda and Rwanda, with increasing grid tariffs and reasonable momentum in renewable energy adoption, also offer opportunities. However, due to the small nature of the commercial and industrial power demand, the scalability of project portfolios appears to be limited,” he says.
“South Africa, being the most industrialised economy in Africa, is often considered a good starting point for corporate PPA development. Regulatory and policy uncertainty have been the main reasons why adoption has been relatively low. However, continued increases in Eskom supplied grid electricity tariffs has resulted in a notable increase in corporate PPAs over the last 18 months. This is expected to grow further once the Integrated Resource Plan is finalised and regulations are aligned,” he adds.
By Adedapo Adesanya
The Lagos Chamber of Commerce and Industry (LCCI) has noted that the N15.52 trillion allocation to debt servicing in the 2026 budget remains a significant fiscal burden.
LCCI Director-General, Mrs Chinyere Almona, said this on Tuesday in Lagos via a statement in reaction to the nation’s 2026 budget of N58.18 trillion, hinging the success of the 2026 budget on execution discipline, capital efficiency, and sustained support for productive sectors.
She noted that the budget was a timely shift from macroeconomic stabilisation to growth acceleration, reflecting growing confidence in the economy.
She lauded its emphasis on production-oriented spending, with capital expenditure of N26.08 trillion, representing 45 per cent of total outlays, and significantly outweighing non-debt recurrent expenditure of N15.25 trillion.
According to Mrs Almona, this composition supports infrastructure development, industrial expansion, and productivity growth.
However, she explained that the N15.52 trillion allocation to debt servicing underscored the need for stricter borrowing discipline, enhanced revenue efficiency, and expanded public-private partnerships to safeguard investments that promote growth.
She added that a further review of the 2026 budget revealed relatively optimistic macroeconomic assumptions that may pose fiscal risks.
“The oil price benchmark of $64.85 per barrel, although lower than the $75.00 benchmark in the 2025 budget, appears optimistic when compared with the 2025 average price of about $69.60 per barrel and current prices around $60 per barrel.
“This raises downside risks to oil revenue, especially since 35.6 per cent of the total projected revenue is expected to come from oil receipts.
“Similarly, the oil production benchmark of 1.84 million barrels per day is significantly higher than the current level of approximately 1.49 million barrels per day.
“Achieving this may be challenging without substantial improvements in security, infrastructure integrity, and sector investment,” she said.
Mrs Almona said the exchange rate assumption of N1,512 to the Dollar, compared with N1,500 in the 2025 budget and about N1,446 per Dollar at the end of November, suggests expectations of a mild depreciation.
She said while this may support Naira-denominated revenue, it also increases the cost of imports, debt servicing, and inflation management, with broader macroeconomic implications.
The LCCI DG added that the inflation projection of 16.5 per cent in 2026, up from 15.8 per cent in the 2025 budget and a current rate of about 14.45 per cent, appeared optimistic, particularly in a pre-election year.
She also expressed concern about Nigeria’s historically weak budget implementation capacity, likely to be further strained by the combined operation of multiple budget cycles within a single year.
Looking ahead, Mrs Almona identified agriculture and agro-processing, manufacturing, infrastructure, energy, and human capital development as key drivers of growth in 2026.
She said that unlocking these sectors would require decisive execution—scaling irrigation and agro-value chains, reducing power and logistics costs for manufacturers, and aligning education and skills development with private-sector needs.
The LCCI head stressed the need to resolve issues surrounding the Naira for crude, increase the supply of oil to local refineries to boost local refining capacity and conserve the substantial foreign exchange used for fuel imports.
“Overall, the 2026 Budget presents a credible opportunity for Nigeria to transition from recovery to expansion.
“Its success will depend less on the size of allocations and more on execution discipline, capital efficiency, and sustained support for productive sectors.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited witnessed Santa Claus rally on Wednesday after it closed higher by 0.12 per cent.
Strong demand for Nigerian stocks lifted the All-Share Index (ASI) by 185.70 points during the pre-Christmas trading session to 153,539.83 points from 153,354.13 points.
In the same vein, the market capitalisation expanded at midweek by N118 billion to N97.890 trillion from the preceding day’s N97.772 trillion.
Investor sentiment on Customs Street remained bullish after closing with 36 appreciating equities and 22 depreciating equities, indicating a positive market breadth index.
Guinness Nigeria chalked up 9.98 per cent to trade at N318.60, Austin Laz improved by 9.97 per cent to N3.20, International Breweries expanded by 9.85 per cent to N14.50, Transcorp Hotels rose by 9.83 per cent to N170.90, and Aluminium Extrusion grew by 9.73 per cent to N16.35.
On the flip side, Legend Internet lost 9.26 per cent to close at N4.90, AXA Mansard shrank by 7.14 per cent to N13.00, Jaiz Bank declined by 5.45 per cent to N4.51, MTN Nigeria weakened by 5.21 per cent to N504.00, and NEM Insurance crashed by 4.74 per cent to N24.10.
Yesterday, a total of 1.8 billion shares valued at N30.1 billion exchanged hands in 19,372 deals versus the 677.4 billion shares worth N20.8 billion traded in 27,589 deals in the previous session, implying a slump in the number of deals by 29.78 per cent, and a surge in the trading volume and value by 165.72 per cent and 44.71 per cent apiece.
Abbey Mortgage Bank was the most active equity for the day after it sold 1.1 billion units worth N7.1 billion, Sterling Holdings traded 127.1 million units valued at N895.9 million, Custodian Investment exchanged 115.0 million units for N4.5 billion, First Holdco transacted 40.9 million units valued at N2.2 billion, and Access Holdings traded 38.2 million units worth N783.3 million.
By Adedapo Adesanya
Nigerian food and beverage company, Rite Foods Limited, has extended warm Yuletide greetings to Nigerians as families and communities worldwide come together to celebrate the Christmas season and usher in a new year filled with hope and renewed possibilities.
In a statement, Rite Foods encouraged consumers to savour these special occasions with its wide range of quality brands, including the 13 variants of Bigi Carbonated Soft Drinks, premium Bigi Table Water, Sosa Fruit Drink in its refreshing flavours, the Fearless Energy Drink, and its tasty sausage rolls — all produced in a world-class facility with modern technology and global best practices.
Speaking on the season, the Managing Director of Rite Foods Limited, Mr Seleem Adegunwa, said the company remains deeply committed to enriching the lives of consumers beyond refreshment. According to him, the Yuletide period underscores the values of generosity, unity, and gratitude, which resonate strongly with the company’s philosophy.
“Christmas is a season that reminds us of the importance of giving, togetherness, and gratitude. At Rite Foods, we are thankful for the continued trust of Nigerians in our brands. This season strengthens our resolve to consistently deliver quality products that bring joy to everyday moments while contributing positively to society,” Mr Adegunwa stated.
He noted that the company’s steady progress in brand acceptance, operational excellence, and responsible business practices reflects a culture of continuous improvement, innovation, and responsiveness to consumer needs. These efforts, he said, have further strengthened Rite Foods’ position as a proudly Nigerian brand with growing relevance and impact across the country.
Mr Adegunwa reaffirmed that Rite Foods will continue to invest in research and development, efficient production processes, and initiatives that support communities, while maintaining quality standards across its product portfolio.
“As the year comes to a close, Rite Foods Limited wishes Nigerians a joyful Christmas celebration and a prosperous New Year filled with peace, progress, and shared success.”
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