Nigeria: Husk seeks up to $100m for mini solar-grid expansion

By David Whitehouse
Posted on Monday, 28 March 2022 10:04

Husk CEO Manoj Sinha. Photo supplied.

Indian mini solar-grid provider Husk Power Systems is seeking to raise between $90m and $100m in funding as it seeks to scale up its Nigerian operations, CEO Manoj Sinha tells The Africa Report.

The company in February started trying to raise between $35m and $40m in equity and between $50m and $60m in debt, which it aims to complete this year. Sinha’s goal is to increase the number of Husk’s Nigerian mini-grids from the current six to 500 over the next five to six years.

Husk aims to be fully commercial and pay a return to investors while having a social impact through reducing carbon emissions and removing Nigerian diesel generators, Sinha says.

He expects existing investors, which include Shell and Engie, to renew their commitments in the current fundraising. About 80% to 85% of the equity raised will go to Nigerian expansion, with plans to spend on R&D and strengthen the country management team with local hires. The new debt will be equally divided between Nigeria and India.

Sinha co-founded the company in Bihar in India 2008, and became CEO in 2013. He co-wrote a policy on solar mini-grids which was used by the Indian state of Uttar Pradesh and adopted almost verbatim by Nigeria in 2016. Husk entered the country in early 2020.

  • Nigeria has been “forward-looking” on mini-grids, but policy can still be improved, Sinha says. The fact that site-by-site approvals are needed for mini-grids is “cumbersome”, he argues. “The point is to do it fast.”
  • The difficulty of obtaining dollars in Nigeria is also a constraint on growth. Sinha is hoping to greatly reduce the company’s need for dollars in favour of naira finance in the next three to four years.

Energy-efficient devices

Husk is also planning to expand in the provision and financing of energy-efficient devices (EEDs) for Nigerian businesses and consumers. This is part of operations in India, and has been added in Nigeria this year.

  • The devices are economical for the user as they have lower energy consumption than competing alternatives. Sinha is confident that EEDs can contribute to energy transition in Nigeria at the same time as widening energy access.
  • Sinha is looking for a EED financing partner in Nigeria. In the long term, he argues, everyone can benefit from devices which are more efficient in terms of consumption.  “We expect this business to grow even faster than mini-grids.”

Husk also has a presence in Tanzania. The policies of late president John Magufuli “destroyed” mini-grid commercial viability, Sinha says. He’s waiting to see the policy stance of Magufuli’s successor President Samia Suluhu Hassan before making any decisions.

The company is evaluating African countries where it may establish operations. These include Uganda, Zambia and the Democratic Republic of Congo (DRC), though the analysis is still at an early stage, Sinha says.

  • Factors to be considered are regulations for mini-grids, the availability of funding and the company’s ability to get money out of the country, and the scale of the market opportunity, he adds.

Bottom Line

Husk is betting that Nigerians are ready to ditch diesel generators and switch to solar.

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