- Nigeria has awarded a US$1.5 billion concession for the 460 MW Grand Katsina Ala Hydropower Project in Benue State to Maverick Energy Partners under a 35 year DFBOT arrangement.
- The project has secured Federal Executive Council approval, ICRC certification and TCN grid connection approval, with financial close targeted for 2027.
- The development is expected to strengthen Nigeria’s renewable energy capacity, support agricultural industrialisation in Benue State and reduce dependence on gas fired power generation.
The Federal Government of Nigeria has signed a US$1.5 billion concession agreement for the 460 MW Grand Katsina Ala Hydropower Project in Benue State, appointing Maverick Energy Partners as the preferred concessionaire under a 35 year Design, Finance, Build, Operate and Transfer (DFBOT) framework.
The project has received approval from the Federal Executive Council, certification from the Infrastructure Concession Regulatory Commission and grid connection approval from the Transmission Company of Nigeria. Financial close is expected in 2027.
With an installed capacity of 460 MW, the Grand Katsina Ala project ranks among the largest utility scale renewable energy developments undertaken in Nigeria in recent years. The hydropower facility is expected to provide firm baseload electricity to the national grid, helping diversify the country’s generation mix and reducing reliance on gas fired power plants for continuous electricity supply.
The project also has the potential to deliver significant economic benefits for Benue State, widely regarded as Nigeria’s agricultural hub. Access to reliable electricity could accelerate investment in agro processing, cold storage infrastructure, food preservation and light manufacturing, creating new opportunities across agricultural value chains.
Challenges
Despite the project’s strategic importance, critical challenges must be addressed before financial close can be achieved.
One of the most significant hurdles is securing the financing structure required to attract US$1.5 billion in private sector capital. As construction costs and debt obligations will largely be denominated in US dollars while electricity revenues are traditionally collected in Nigerian naira, foreign exchange risk remains a major concern. The concessionaire is expected to pursue mechanisms such as foreign exchange guarantees or tariff structures linked to currency movements to improve bankability.
Additional credit enhancement measures may also be required to attract development finance institutions and international lenders. These could include partial risk guarantees from multilateral institutions such as the World Bank and the African Development Bank to mitigate payment risks associated with power sector off-taker arrangements.
Given the project’s 35 year concession period, political risk insurance is also expected to play an important role in protecting investors against potential regulatory changes or contractual disputes over the life of the asset.
Beyond financing, transmission infrastructure remains a key constraint for Nigeria’s power sector. While the project has secured grid connection approval, substantial investment will be needed in transmission lines and substations to ensure that the full 460 MW can be evacuated and delivered to demand centres across the country.
Grid reliability presents an additional challenge. Integrating a large hydropower facility into Nigeria’s often fragile transmission network may require advanced grid stabilisation technologies to manage voltage fluctuations and maintain system stability, particularly during periods of variable river flow.
Author: Bryan Groenendaal
