Sustainable Energy Security for Nigeria Through Innovative Financing Mechanisms

An efficient and sustainable energy sector is indispensable to the economic, social and political development of any country. However, according to the 2015 United Nations Sustainable Development Factsheet, 1.3 billion people lack access to modern electricityElectricity with 3 billion people relying on alternative sources of energyEnergy such as wood, coal, charcoal or animal waste. In NigeriaNigeria , the defunct National Electric Power Authority was vested with the powerPower to generate, transmit and distribute electricityElectricity supply in the country up to 2005. A common feature of the period was incessant power blackouts that had a negative impact on the economic and social development of the country. One major factor identified as the cause of the blackout is inadequate funding for powerPower related infrastructuresInfrastructure and generationGeneration . The state of emergency warranted by the epileptic powerPower supply resulted in the enactment of the Electric Power Sector Reform Act of 2005. This reform led to the formation of the Power Holding Company of NigeriaNigeria comprising of one transmissionTransmission , seven generation and 11 distributionDistribution companies. Nonetheless, Nigeria’sNigeria current actual electricity generation is less than 50% of the generation capacity. This situation indicates the need for more local and foreign investments in the sector. Against the background of a need for adequate funding for the sector, this paper reviews the auctionAuction and forfaitingForfaiting financingFinancing modelsModel and its applicability to the Nigerian energyEnergy sector. Arising from the successes recorded in the use of these models as observed in literature especially as it relates to the distinct features of developing countriesDeveloping countries , the study recommends the introduction of these innovative means of financingFinancing in NigeriaNigeria . This will, among other benefitsBenefits , lead to effective price discovery, attraction of investorsInvestors and energyEnergy supply securitySecurity . Furthermore, the United NationsUnited Nations SustainableSustainable DevelopmentSustainable development Goal 7 of ensuring access to affordable, reliable, sustainable and modern energyEnergy for all will be easily achievable.