Introduction
Renewable energy is rapidly transforming the global power landscape, with solar energy emerging as a key solution to electricity challenges. In Nigeria, where millions of homes and businesses face unreliable power supply, the demand for alternative energy sources has surged. Among other renewable energy sources — such as hydropower, wind energy, and geothermal energy—there is a rapid and growing reliance on solar energy, which presents immense opportunities for businesses looking to provide sustainable power solutions. It is therefore essential, in order to navigate this expanding market in Nigeria, for businesses to understand the legal and regulatory framework governing operations in the solar energy sector.
In this newsletter, we highlight key regulatory considerations to operate a solar energy business in Nigerian.
Key Regulatory Considerations
For businesses looking to set up operations in Nigeria, the following key requirements must be met:
1. Business Registration
All businesses must first register with the Corporate Affairs Commission (CAC) to legally operate in Nigeria. This process includes choosing a name, submitting necessary documentation, and paying registration fees. The CAC issues a certificate evidencing registration, which is required to open a business bank account and for various other regulatory processes. For other considerations on business registration and available business structures, please see our newsletter on Frequently Asked Questions (FAQ) here. For foreigners intending to set up business in Nigeria, please see our newsletter providing guidance here.
2. Importer/Exporter Number from Nigerian Customs Service
To import or export solar products, businesses must register with the Nigerian Customs Service (NCS) and obtain an Importer/Exporter Number (IEN). This number is essential for proper documentation and clearance of goods through Nigerian ports.
Required documents to accompany application for registration with the NCS include: Certificate of Incorporation, Tax Identification Number (TIN) from the Federal Inland Revenue Service (FIRS), Bank Reference Letter, Identification of business owners or directors, and Company contact information.
The process typically takes 1-2 weeks, and the applicable fees may vary.
3. Standards Organisation of Nigeria Certification for Solar Products
Solar products must undergo certification by the Standards Organisation of Nigeria (SON) through the SON Conformity Assessment Programmes. This ensures the products meet local quality and safety standards.
Certifications:
- Mandatory Conformity Assessment Programme (MANCAP): This is a quality assurance initiative established by SON to ensure that locally manufactured products meet the required quality and safety standards before introducing the product to the market. A MANCAP certificate and MANCAP logo is issued to a manufacturer by SON upon application, after formal inspection and product testing have been conducted by SON. A MANCAP certificate is valid for three years, after which the product will have to undergo recertification.
Required Documents for SON Registration include CAC certificate, picture of the product, power of attorney (if you are an importer), manufacturer's agreement (if you are an importer), trademark certificate (if you have a brand name).
Fees and timelines vary based on product type and completeness of documentation.
- Product Certificate: For products to be imported into Nigeria, the first step to certification with SON in Nigeria is obtaining the product certificate from the manufacturing country. The product certificate confirms that the product meets the required quality standards. It contains information relating to the product, the testing and details of the product manufacturer.
- SON Conformity Assessment Programme (SONCAP): Upon arrival in Nigeria, imported products must be registered with SON. When the registration of the product is completed and successful, a SONCAP Certificate will be issued to confirm compliance with the required quality and safety standards.
Required Documents for SON Registration include: duly completed application form, valid product certificate, company certificate of incorporation, photographs of the product, manufacturer's agreement, trademark certificate (if applicable), list of items to be imported and sample proforma invoice.
The SONCAP certificate is issued after product inspection and payment of fees. Fees and timelines vary based on product type and completeness of documentation.
4. Generating Set Import Clearance from the Nigerian Electricity Regulatory Commission
To be able to import solar-powered generators, clearance certificate must be obtained from Nigerian Electricity Regulatory Commission (NERC). The clearance certificate is valid for six months and can be renewed upon payment of renewal fees.
Required information and documents for obtaining the clearance certificate include: name of applicant and quantity of generators to be imported; noise level (not more than 35Db) and pollution control; make of generators as well as the technical and environmental rating, purpose of importation; country of origin and capacity of the generator; copy of the Certificate of Incorporation; three years Tax Clearance Certificate; Value Added Tax registration certificate, commercial invoice/proforma invoice; SONCAP Certificate; and proof of conformity with extant environmental regulations (emissions, noise etc).
The associated fees are dependent on the size (kVA) of the generating set. The timeline for the issuance of the clearance certificate is dependent on the availability of the required documents and NERC's satisfaction with the application.
Other Regulatory Considerations
In addition to the key regulatory considerations outlined above, other regulatory factors to be considered include:
- Import Duty and Tariffs: While solar panels are exempt from import duties, other solar energy products may be subject to duties unless exempted.
- Customs Clearance: Imported solar products must undergo clearance at Nigerian ports. Documents required for customs clearance include Bill of Lading, Commercial Invoice, Certificate of Origin, and Packing List.
- Environmental Impact Assessment (EIA): For large-scale solar projects, an EIA must be obtained from the National Environmental Standards and Regulations Enforcement Agency (NESREA).
- Electrical Safety and Installation Standards: Businesses engaging in the installation and maintenance of solar energy products must have a qualified engineer who will oversee solar installations to ensure compliance with safety regulations.
- Electricity Licensing: NERC license must be obtained before businesses can generate solar power exceeding 1 MW.
Conclusion
As solar energy becomes a key solution to Nigeria's power challenges, businesses in the sector must navigate essential regulatory requirements. By understanding and adhering to these legal frameworks, businesses can effectively tap into the potential of the solar energy sector and contribute to a sustainable energy future. The foregoing is, however, not exhaustive, and it is advised that businesses stay up to date on regulatory and compliance requirements for their operations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
