RURAL ELECTRIFICATION STRATEGY AND IMPLEMENTATION PLAN (RESIP)

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RURAL ELECTRIFICATION STRATEGY AND IMPLEMENTATION PLAN (RESIP)

INTRODUCTION TO THE RESIP

November 2017

01

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CONTENTS

Background and starting point 1

Rural electrification goals and strategy 2

Institutional framework for delivery 4

Rural Electrification Fund 3

Our pathway forward 5

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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.

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Population without access to electricity Millions

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

1 NEARLY 100 MILLION PEOPLE WITHOUT ACCESS TO ELECTRICITY

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Bayelsa Rivers

Imo Abia

Akwa Ibom Kaduna

Abuja

Enugu Anambra

Delta Edo

Kogi Oyo

Ogun

Osun Ekiti

Ondo

Lagos

Kwara

Niger Sokoto

Kebbi

Zamfara

Katsina

Adamawa Bauchi

Gombe

Nassarawa

Plateau

Taraba

Benue

Cross River Ebonyi

Kano

Jigawa Yobe

Borno

≤40 40-60 60-80

>80

% of household with Electricity

(2010)

1 AVERAGE ELECTRIFICATION RATE ACROSS THE COUNTRY

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CONTENTS

Background and starting point 1

Rural electrification goals and strategy 2

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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

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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

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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

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2 POLICY INSTRUMENTS STRUCTURED AROUND FIVE THEMES

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REA’s five policy themes

Ensuring right policies in place

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

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5

REA policy objectives

2 REA’S POLICY OBJECTIVES (1/5)

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Making technology affordable

Building capacity for Nigerian execution

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

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1

2

3

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5

REA’S POLICY OBJECTIVES (2/5)

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affordable

execution

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

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affordable

execution

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

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3

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affordable

execution

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 REA policy objectives

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CONTENTS

Rural electrification goals and strategy

2

Rural Electrification Fund 3

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RURAL ELECTRIFICATION FUND 3

▪ 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

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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

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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

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▪ 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

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CONTENTS

2

Institutional framework for delivery 4

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Federal Ministry of Power, Works and

Housing

Nigerian Electricity Regulatory Commission Policy/Legi

slative setting, and

regulations

REA Board

REA Policy

execution

Federal/state

governments Local Private sector Donors

communities Project

sponsors

4 DIFFERENT INSTITUTIONS TO PLAY DIFFERENT ROLES

National Assembly

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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

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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 Advisor

Legal Adviser Internal Audit Internal Audit

Procurement Procurement

4 REA ORGANIZATION STRUCTURE

Executive Director Technical Services Executive Director

RE Fund Executive Director

Corporate Services

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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