rural electrification strategy and implementation …

RURAL ELECTRIFICATION STRATEGY AND IMPLEMENTATION PLAN (RESIP)

INTRODUCTION TO THE RESIP

November 2017

01

2

CONTENTS

Background and starting point1

Rural electrification goals and strategy2

Institutional framework for delivery4

Rural Electrification Fund3

Our pathway forward5

3

ACHIEVING THE RURAL ELECTRIFICATION AGENCY (REA)

MANDATE IS CRITICAL TO OVERCOMING CURRENT CHALLENGES

A core part of the REA mission/mandate……is to tackle electrification challenges in Nigeria…

▪ Mission : To provide access to reliable

electric power supply for rural dwellers

irrespective of where they live and what

they do, in a way that would allow for

reasonable return on investment through

appropriate tariff that is economically

responsive and supportive of the average

rural customer.

▪ Mandate:

– I. Promote Rural Electrification in the

Country

– II. Co-ordinate the Rural Electrification

Programmes in the country

– III. Administer the Rural Electrification

Fund (REF) to promote, support and

provide rural electrification through

Public and Private Sector Participation

Achieving REA mandate has far reaching implications for the welfare of Nigeria’s citizens

▪ It is estimated that only 36% of the

rural population have access to electricity and 95 million Nigerians do

not have access to electricity.

1

4

Population without access to electricityMillions

244

95

73

41

36

36

Nigeria

Ethiopia

Kenya

Tanzania

Indonesia

India

▪ Of this amount

in Nigeria, 64%

live in rural

areas

▪ Even those

with access

have limited

availability of

energy

Source: IEA Electricity Access Database 2016 publication (2014 Data)

1 NEARLY 100 MILLION PEOPLE WITHOUT ACCESS TO ELECTRICITY

5

Bayelsa

Rivers

Imo Abia

Akwa Ibom

Kaduna

Abuja

Enugu

Anambra

Delta

Edo

Kogi

Oyo

Ogun

OsunEkiti

Ondo

Lagos

Kwara

Niger

Sokoto

Kebbi

Zamfara

Katsina

Adamawa

BauchiGombe

Nassarawa

Plateau

Taraba

Benue

Cross River

Ebonyi

Kano

YobeJigawa

Borno

≤40

40-60

60-80

>80

% of household

with Electricity

(2010)

Source: Nigerian Energy support programme – preliminary modelling of off-grid PV capacities for Nigeria

1 AVERAGE ELECTRIFICATION RATE ACROSS THE COUNTRY

6

CONTENTS


Rural electrification goals and strategy2




7

The goal of the Federal

Government of Nigeria is to

increase access to electricity to

75% and 90% by 2020 and 2030

respectively and at least 10% of

renewable energy mix by 2025.

Rural Electrification Policy (2005) &

National Electric Power Policy (2001)

2 RURAL ELECTRIFICATION GOAL

8

Shift to a

combination of

centralized and

decentralized

approach

▪ Centrally

coordinated

▪ Demand-driven

▪ Market-oriented

▪ Continuing to push Discos to meet their

grid extension obligations

Mini grids

▪ Encourage the development of mini-grids

by communities and private enterprises

▪ Grids below 100 KW do not require

permit, between 100 kW to 1 MW a

permit is required

Grid

extension

Stand-

alone

systems

▪ Promote the development and roll-out of

stand-alone systems

▪ These systems to help provide critical

services for hardest-to-reach customers

2 THE NEW PARADIGM FOR RURAL ELECTRIFICATION

9

Ensuring right

policies in

place

▪ Rural electrification policy

▪ Tariff policy

▪ Regulatory policy

Making

technology

affordable

▪ Promotion of low-cost operators

▪ Promoting efforts to reduce equipment costs

▪ Capital subsidies

▪ Energy efficiency in RE

Building

capacity for

Nigerian

execution

▪ Participation of non-traditional operators

▪ Capacity and awareness building

▪ Capacity

building in rural electrification

Driving

economic

development

▪ Promoting RE as a catalyst for rural development

▪ Regional equity

▪ Local content and

participation in RE

Managing

challenges

that arise

▪ Dealing with legacy rural electrification projects

▪ Constituency projects

▪ Dealing with network

expansion and ownership

1 2 3 4 5

2 POLICY INSTRUMENTS STRUCTURED AROUND FIVE THEMES

10

REA’s five policy themes

Ensuring right

policies in place

Making

technology

affordable

Building capacity

for Nigerian

execution

Driving economic

development

Managing

challenges that

arise

Rural

electrification

policy

Tariff policy

Regulatory policy

▪ Achieve 60% rural electrification by 2020

▪ Connect 1.1 million rural households yearly

from 2015 through to 2020

▪ Tariffs for rural electricity service will be cost

reflective

▪ Establish rural tariff model that allows for

higher margins than urban tariffs thus

making RE projects attractive

▪ NERC will allow RE tariffs outside of its

approved rural tariff model as long as 60%

of customers agree to the tariff

▪ NERC has overall regulatory powers over

rural electrification in Nigeria

▪ RE schemes with generating capacity at a

single site of 1MW or less, or distribution

capacity of 100KW or less are exempt from

license

1

2

3

4

5

REA policy objectives

2 REA’S POLICY OBJECTIVES (1/5)

11


Ensuring right

policies in place

Making technology

affordable

Building capacity for

Nigerian execution

Driving economic

development

Managing

challenges that

arise

Promotion of low-

cost operators

Promoting efforts to

reduce equipment

costs

Capital subsidies

▪ Demand the use of low-cost and high quality

options in RE projects that apply for grants

▪ Low-cost technology include implementing

renewable technologies, shielded wire

technologies and the use of single phase lines

▪ Reduce cost by stimulating demand of

equipment through raising awareness of their

benefits and availability

▪ Reduce cost by increasing supply through

supporting new entrants and continued

support of local production of required

equipment

▪ Provide grants towards the initial start-up costs

of qualified RE projects


Energy efficiency in

RE

▪ Promote the use of energy efficient appliances

and devices in RE

2

1

2

3

4

5

REA’S POLICY OBJECTIVES (2/5)

12


Ensuring right

policies in place

Making

technology

affordable

Building capacity

for Nigerian

execution

Driving economic

development

Managing

challenges that

arise

Participation of

non-traditional

operators

Capacity and

awareness

building

▪ Modify power market rules to permit a

range of industry and ownership structures

to accommodate public, private and co-

operative entities with the RE space

▪ Raise awareness of opportunities in RE

▪ Offer capacity building for potential RE

partners e.g., private sector to improve

their understanding of and qualification for

developing and running RE projects


2

1

2

3

4

5


13


Ensuring right

policies in place

Making

technology

affordable

Building capacity

for Nigerian

execution

Driving economic

development

Managing

challenges that

arise

Promoting RE as a

catalyst for rural

development

Regional equity

Local content and

participation in RE

▪ Use RE projects to boost economic

development by allowing host communities

to utilize time and effort spent on

generating alternative energy on more

beneficial economic activities

▪ Promote equity in ensuring RE efforts are

evenly distributed across Nigeria’s regions

and population groups

▪ RE projects that will serve populations within

most infrastructure-poor areas are

prioritized to achieve scale and equitable

access to service delivery

▪ Encourage the use of local content and

local participation in RE projects (including

community ownership of stocks)

▪ Empower local industries to play larger role

in the supply chain from materials,

manufacture, construction and operation

of the assets


2

1

2

3

4

5


14


Ensuring right

policies in place

Making

technology

affordable

Building capacity

for Nigerian

execution

Driving economic

development

Managing

challenges that

arise

Dealing with

legacy rural

electrification

projects

Constituency

projects

Dealing with

network expansion

and ownership

▪ Engage relevant stakeholders e.g., FGN

MDAs and local governments through

workshops and consultations to renew

interests in legacy viable projects and

provide funding through grants

▪ Partner with National Assembly in

identifying viable RE projects that could be

implemented as constituency projects with

funds provided through special budgetary

allocations

▪ Protect sponsors of RE projects from unfair

acquisition of assets by DISCOs in the event

that rural electrification frontier meets

advancing urban electrification frontiers


2

1

2

3

4

5


15

CONTENTS


Rural electrification goals and

strategy2




16

RURAL ELECTRIFICATION FUND3

▪ More equitable access to electricity across regions

▪ Maximize the economic, social and environmental benefits of rural electrification subsidiaries

▪ Promote expansion of the grid and development of off-grid electrification

▪ Stimulate innovate approaches to rural electrification.

REF Objectives ▪ Any surplus appropriated pursuant to the EPSR Act 2005 (section 53)

▪ Any fines obtained by NERC pursuant to the EPSR Act 2005

▪ Any donations, gifts, or loans made by international agencies, State Governments, the Federal Government, local communities, businesses, etc

▪ Any contribution that may be made pursuant to the EPSR Act 2005, and interest and other benefits accrued to the Fund (REF)

▪ Monies appropriated by the National Assembly / Special Intervention fund

▪ Such percentage of the annual turnover of the licensee’s as may be determined by the Commission

Source of REF Funds

17

On-grid electrification Isolated mini-grids

Direct Current (DC) Micro/Nano grids

Stand alone systems

Scope of the REF

33 SCOPE OF THE RURAL ELECTRIFICATION FUND

18

Applicant(s)

▪ Eligible entity

▪ Free from conflicts of interest

▪ Compliance with all existing business,

tax, social security and related

regulation

▪ Free from bankruptcy or any analogous

situation

▪ Free from offence conviction regarding

its professional conduct

▪ Not subject of a ‘res judicata’

judgement for any illegality

▪ Financially sound and qualified

▪ Completion of all relevant application

process and documentation

Project(s)

▪ Financial commitment towards the

proposed project

▪ Selection of the right Tier for the proposed

project and request for applicable subsidy

within specific Tier

▪ It shall target rural areas

▪ Ability to demonstrate financial

sustainability and profitability

▪ Not requiring a continuous subsidy covering

for operations cost and/or end-user

consumption

▪ Not requiring a 100% subsidy – partly funded

by the applicant

▪ Compliance with existing legislation and

regulation

▪ Technically viable

▪ Ability to support and improve rural

economic development and productivity

3 REF ELIGIBILITY REQUIREMENTS

19

▪ REA informs the public about the procedures and

rules governing the competitive process through

relevant print/electronic and social media.

Informing potential bidders

about upcoming

competition

▪ REA launches an EoI with a two-week deadline for

entries through relevant print/electronic and social

media.

Call for Expressions of

Interest (EoI)

▪ REA invites bidders with best EoI to prepare & submit

preliminary business plans/proposals.

▪ REA evaluates proposals and selects winners.Call for Proposals (CfP)

▪ REA notifies winning bidders for agreement signing and

agree on payment schedule for project milestones (for

each project).Disbursement of REF Funds

3 SELECTION PROCESS FOR FUNDING ALLOCATION

20

CONTENTS



strategy2




21

Federal Ministry of

Power, Works and

Housing

Nigerian Electricity

Regulatory

Commission

Policy/Legi

slative

setting,

and

regulations

REA

Board

REA

Policy

execution

Federal/state

governmentsPrivate sector Donors

Local

communities

Project

sponsors

4 DIFFERENT INSTITUTIONS TO PLAY DIFFERENT ROLES

National

Assembly

22

Federal

Ministry of

Power, Works

and Housing

▪ Formulate and implement policies on electric supply to rural areas

▪ Facilitate rural electrification initiatives and coordinate national power supply

strategy with all stakeholders

▪ Set and revise targets for rural electrification across the country

▪ Monitor and evaluate the performance and impact of rural electrification program

from a policy perspective

NERC

▪ Provide regulatory oversight over rural electrification in Nigeria

▪ Establish tariff model to make RE projects attractive

▪ Monitoring and enforcing stipulated and agreed tariffs

Roles and responsibilities

4 DIFFERENT ROLES IN POLICY SETTING

National

Assembly

▪ Budgetary provisions for REA and REF

▪ Constituency projects

▪ Budgetary Monitoring and Legislative Oversight

23

Director REF Management

REA Board

Managing Director /

CEO

Director Projects Support

REF Trust Managers

External Auditors

Director Planning Research and Promotion

Director Finance and Administration

Legal AdvisorLegal Adviser

Internal AuditInternal Audit

ProcurementProcurement

4 REA ORGANIZATION STRUCTURE

Executive Director

Technical Services

Executive Director

RE Fund

Executive Director

Corporate Services

24

Develop

project

proposal

Evaluate

proposal

Approve

funding

Disburse

fund

Monitor

project

progress

Project

commissio

n

Post-

project

review

RE Board

RE Fund

management

Trust Manager

Finance and

Administration

Projects

Department

Procurement

Independent

project

sponsors

I

R

C

C

C

I

R

C

C+ recommend

I

I

I

C

R

I

C

A

R

I

I

I

I

A

I

I

R

A(as needed)

I

I

A

I

I

I

R

I

R

C

C

C

C

C

R

A

Responsible

Accountable

C

I

Consult

inform

–

–

–

–

4 LIFE CYCLE OF A RE FUND PROJECT

A

25

REA Board

REF Fund

Management

Trust Manager

▪ Develop policies and guidelines for REA’s operations

▪ Develop policies and procedures for the optimal allocation and use of REF

subsidies and approve allocation of REF subsidies

▪ Requests and receives expression of interests (EOI) proposals for RE projects

▪ Evaluate RE project proposals in-line with REA policies and guidelines

▪ Develop RE projects for potential bidders

▪ …Finance and

Account

RE Projects

Procurement

Independent

Project Sponsor

▪ Ensure funds are managed transparently

▪ Provide oversight to ensure RE project proposals are approved and

disbursed in-line with REA policies and guidelines

▪ Responsible for internal financial and management of the agency

▪ Implement grant disbursement schedule

▪ Identify viable RE projects in-line with REA’s guidance

▪ Build and operate RE projects

▪ Coordinate the procurement of equipment required for RE projects

▪ Ensure sufficient supply of required low-cost technologies for RE projects

▪ Provide technical support to RE projects in accordance to REA policies

▪ Monitor project development and supervise RE project implementation

RE project roles Responsibilities in project delivery

4 RESPONSIBILITIES IN REF PROJECT DELIVERY

26

CONTENTS



strategy2




27

OUR PATHWAY FORWARD5

Key steps to beginning the implementation of the Rural Electrification Strategy

▪ Establishment of Board for REA

▪ Secure minimum operating budget

▪ Conclude with NERC fees and levies

▪ Establish Rural Electrification Fund

▪ Contract a Trust Agent to ensure REF funds are managed transparently

▪ Meet with NERC to discuss regulations for RE schemes >1 MW generation and >100 KW distribution

▪ Establish energy database for REA projects

▪ Secure pledges from donors

▪ Presidential approval of RE strategy and plan

▪ Develop REA masterplan

▪ Create and implement communications strategy for RESIP

FOR MORE INFORMATION PLEASE CONTACT:

DR. SANUSI OHIARE

EXECUTIVE DIRECTOR

RURAL ELECTRIFICATION FUND

[email protected]

www.rea.gov.ng

mailto:[email protected]

http://www.rea.gov.ng/

rural electrification strategy and implementation …

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