As the managing director of the Rural Electrification Agency (REA) Damilola Ogunbiyi is responsible for implementing the off-grid electrification plan for Africa’s biggest economy. She tells BusinessDay’s ISAAC ANYAOGU how the organisation is collaborating with the private sector in the Energising Economies Initiative (EEI), to improve energy access for 500,000 shops and over 1 million SMEs.
Congratulations on the great stride that you have made in such a short time. REA has now become a key party in the push to electrify Nigeria. What do you think is accountable for this success?
Thank you. The Federal Government of Nigeria’s commitment to provide electricity access across the country birthed the Rural Electrification Agency. Our mandate as the implementing agency of this government intervention is to increase energy access to unserved and underserved communities in Nigeria.
Our successes are made possible because of the extraordinary collaboration among of the Federal Government, public sector, private sector and development partners. Under the leadership of the immediate past Minister of Power, Works and Housing, we have nurtured strong partnerships and alignment that has facilitated REA’s access to funding, technical assistance, private sector investment as well as policy initiatives that collectively facilitate REA mandate.
To fast pace this work, it will be crucial to get critical stakeholders especially state governments and financial institutions to be fully engaged. How do you think they can all be brought to the table?
Bringing diverse stakeholders together to work towards a common goal is always a challenge. However, I believe access to electricity appeals to our stakeholders for a multitude of reasons. Some are interested in the social benefits of decentralized electricity; while others seek to transform their state with sustainable energy.
REA has been very successful in designing programmes that address their respective needs, this is due to our focus on data. We carry out extensive energy audits and baseline surveys that capture the actual energy demands of the consumers. This, in turn, allows us to highlight the economic and social viability of decentralized power. We see ourselves as facilitators who bring together stakeholders. We arm ourselves with information that speaks to the specific needs of our stakeholders in order for them to realize the benefits of working with us to achieve our common goals.
The REA launched the mini-grid and solar home components of the Nigeria Electrification Project in May. The mini grid component aims to extend electricity services to 300,000 households and 30,000 enterprises in rural areas by 2023. Can you elaborate on the progress so far?
First of all, REA conducted an extensive community engagement exercise across 5 states in 2018. We sensitized the rural communities on solar mini-grids as well as obtained their collective support on the project in collaboration with the state government.
REA has also secured funding for all four components of the Nigeria Electrification Project (NEP). Specifically, from the World Bank ($350m) and the African Development Bank ($200).
A technical workshop was conducted for the Mini Grid and Solar Home Systems components to educate prospective developers on the procurement guidelines as well as to sensitize the public on the opportunities for the private sector to participate in the available funding windows (Minimum Subsidy Tender & Performance-based Grant Programme) of the NEP.
We recently published an Initial Selection Document (ISD) for the Minimum Subsidy Tender. The ISD provided detailed information about the programme and submission requirements for the first stage of prequalification for the Minimum Subsidy Tender. The huge response to the published tender affirmed the robust growth of the Nigerian off-grid market. In addition, the Mini-Grid Performance-Based Grant and Solar Home Systems Output based Funds were published simultaneously. These funding streams have also received high response rates from local and international firms and are all currently in the evaluation stage.
We expect construction of the mini grids to commence by the end of 2019 and in 2020.
The EEI programme seeks a shift to a decentralised approach to electrification that is economically viable, demand-driven, market-oriented and private sector-focused. What are your plans to sustain the programme and build on its success thus far?
The Energizing Economies Initiative (EEI) was launched in September 2017 to increase energy access and economic growth by providing clean, reliable and affordable power to economic clusters; such as markets, shopping complexes and agricultural/industrial clusters. EEI is fully private sector funded, which means the investor can only ensure return on investment by providing adequate power to the SMEs within these economic clusters. Each customer has a dedicated meter installed under a Pay-as-You-Go model. This private sector-led approach ensures the sustainability of the programme.
The Federal Government under the Nigerian Electrification Project successfully secured funding from international developmental organisations, please update us on the application of the funds and what progress have you recorded with projects being funded?
Funding for the REA’s Nigerian Electrification Project (NEP) is comprised of $350m from the World Bank and $200m from the African Development Bank. The funds are to be utilized to support the private sector in embarking on off-grid power solutions for underserved and unserved households, enterprises, universities and teaching hospitals institutions across Nigeria. These will be primarily through mini-grids, deployment of solar home systems and captive power solutions in the case of the Energizing Education Programme (EEP).
How much of it has been secured by Nigerian companies?
The process is still at the early stages of procurement, however about sixty percent of applications we have received are by Nigerian companies.
What is the future of the R.E sector in Nigeria when donor funds/grants dry up?
Through programs like the NEP, which focuses on a private sector-led approach, sustainability and viability of future off-grid projects can be guaranteed, as sole dependence is not on donor or government funds. Private sector investors are given a pilot to realize the potential of the sector and its likelihood for growth.
In Nigeria, electricity is an important resource for development and as such, both urban and rural areas need reliable electricity access to grow. As long as Nigeria maintains the opportunities for significant productive capacity, renewable energy will continue to act as the catalyst for business growth, job creation, and wealth redistribution.
Thirteen markets were slated to be powered under Phase 1 Energizing Economies Initiative (EEI); I understand 6 have been covered, which are the six already covered and what timelines are you looking at to complete the rest?
Under Phase 1 EEI – 6 markets Iponri market – Lagos State; NEPA 1 market – Ondo State; NEPA 2 market – Ondo State; Isikan market – Ondo State; Ita-Osun market – Ogun State and Edaiken market – Edo State are supplying power to customers while the remaining 7 markets are at different stages of construction.
What is the overall cost of implementing the EEI according to the phases?
Total funding needed by the private sector for all phases amounts to approximately $800m. The completion of all phases provides clean, safe, reliable and affordable energy to 500,000 shops and over 1 million SMEs.
Based on the applications received for grants or loans under the REA programmes, how would you rate the technical competence of Nigeria’s off-grid operators to deliver power to rural communities?
The technical competences of Nigerian firms that have participated in the Minimum Subsidy Tender and Performance-based Grant Programme windows have been very impressive. The firms have exhibited an understanding of the projects with backed expertise to deliver. The process of evaluation is still ongoing and is at sensitive points of procurement, however, we are pleased with the responses so far.
In your view, what are the prospects for off-grid investments in Nigeria and how better can the sector be positioned and supported?
The off-grid market in Nigeria is still new but rapidly growing, so investments are still in early stages of funding. REA is pleased to have facilitated (with support from the Central Bank of Nigeria) a five (5) year facility worth N446m to Virtus (a private sector solar developer) from Sterling Bank for the deployment of distributed energy solutions across selected economic clusters in Nigeria.
The opportunities for off-grid are vast given Nigeria’s population and productive use. As part of President Buhari’s administration, off-grid development has become a priority and the necessary funding will follow.
