13 June 2021
In this interview with EVEREST AMAEFULE, the Managing Director of Rural Electrification Agency, Ahmad Salihijo, speaks on the electricity gap in Nigeria and the efforts being made to bridge it
What is the gap in electricity coverage of rural communities in Nigeria and maybe some urban communities? Does it justify a separate agency to handle the electrification of those communities?
The gap is something that has been occurring for quite a while historically in the country and what you find is that we have good infrastructure for ‘on grid’ electricity supply.
With the privatisation process, that infrastructure has been undergoing a lot of improvement. While that infrastructure is being improved, we have our rural dwellers who have not had the privilege of having that sort of infrastructure in their areas yet.
The idea is that while we await the improvement of the on-grid space, Nigerians that are in the rural areas still deserve to have clean, safe, reliable energy.
This is why the agency was created to cater for the un-served and underserved Nigerians that are in areas where the national grid has not been able to reach.
The idea is that whenever the national grid reaches that area, those technologies can integrate with the grid and continue to provide power so that we can have those communities improve on their socioeconomic activities, and will encourage sustainability of those projects as well.
Is it possible to estimate the size of the gap we have in the rural communities?
Right now, the figure out there is 80 million Nigerians. Within the agency, we are currently working with various government and international development partners to revalidate that figure now with the work that we have been doing to see how much of an improvement we have been able to do to with that 80 million people.
When you say 80 m Nigerians, are you talking about the rural population or the population of rural communities without electricity?
I am talking about Nigerians that do not have grid power: Nigerians that do not have infrastructure at all for power so they are not connected to the national grid. It can be mixed, in rural areas or semi-urban areas.
You were talking about off-grid technologies being deployed in rural communities. Some people think that off-grid is really something that Nigeria needs to deploy in order to cut the deficit in electricity supply. How do you look at it?
I think off-grid technology is a very good option for a few reasons. One, it’s clean, it’s reliable and it’s safe. Secondly, it is so much easier to deploy.
You can imagine how remote some of these areas are. The beauty with it is that with a mini grid for instance, you are able to generate within a community that needs that particular power.
So you generate that power within that community and consume it within the same community with limited infrastructure for distributing the power and limited losses that come with usually taking the power across various kilometers.
What you find is that the space has been growing at a very impressive pace. Various stakeholders now within the government rely on off-grid technology to deploy for their power needs. Some people even deploy some of these technologies in their homes. At the REA, for instance, we ensure that we have been using that technology for rural electrification.
One of our mandates is that we administer the Rural Electrification Fund. With the REF funds, what we try to is to see how deploying this technology could also appeal to the private sector.
We know that government money will not be enough to cater for all the unelectrified Nigerians in the country. We have to come up with other ways to have additional funding within that particular space.
So with the REF funds, for instance, we have been able to do 12 mini grids and 19,000 solar home systems so far, where private developers have come in; they have put in their own money to provide for the infrastructure.
They have gone into bilateral agreement as licensed by NERC with the communities and the government is paying them a grant to encourage them continue with this sort of arrangement.
In a similar vein, the Nigerian Electrification Project is currently sponsored by the World Bank and the African Development Bank where we have deployed over 170,000 solar home systems. In this, we have been able to have additional 200,000 connections to the solar home system. These are some of the projects we have been using some of the off-grid technology to demonstrate that it actually works.
Also, the fact that we partner with the private sector means that the private sector continues to operate with the infrastructure and bilateral agreement with the communities for power.
What is the nature of the bilateral agreement you have with the private sector?
We provide them with guides in terms of areas where there is no power. The guide ensures that where they are taking the power is viable, people within that community engage in economic activities.
We have some of these data available to us. So the private sector proponent has a choice to either nominate its own community to us under the performance-based grants or we nominate under the minimum subsidy tender. These are the two types of projects we have under the World Bank NEP project
The idea is that the agreement comes as a form of a grant agreement. We have some measures that if the private sector proponents meet those measures, then that is what trickles down the money to be paid to them. For instance, for REF, the first milestones of payment would be when the proponent has gone to do all the statutory documents, they have been able to secure a land, they have been able to do ESIA, do the Environment Socio Impact Assessment.
When they bring that evidence, we verify with the various agencies of government that usually issue those permits and then we can release their first milestone of the grant.
They are not in a position to get any of the subsidy until they have a connection for up to three months. So after three months, the REA would verify that those connections have been made, then they would now submit their claims for us to release the grant to them. That is how it works. The idea is that this is the only way the government can encourage the private sector to come in.
How do you determine the viability of a community?
You know you carry out a willingness to pay survey within the community. These are usually common exercises that you would do when you are providing power as a service. It is about engaging the communities, understanding the economic situation and how willing they are to pay for that power if made available to them. This is how they go about it.
Is it the private sector that determines that?
No, it is done in conjunction with our team; it is a joint effort.
You spoke about the REF funds; please, explain it?
REF stands for the Rural Electrification Fund. The Electricity Sector Power Reform Act gave the REA the power to administer the REF funds. The REF funds are funds that have been made available to enhance rural electrification.
We are able to get money for the funds via various means; for instance, through the national budgets, or through fines and surpluses from the NERC. The Act permits that if there is any fine carried out within the sector, it comes to us, and if there is any surpluses after they do their audited account, it comes to us.
In addition, there is also an opportunity to have funding from the market. So any time there is a sale within the power sector, part of it is supposed to come to the REF. We also get donations and gifts from international organisations.
What is the size of the funds do donor agencies contribute to the Rural Electrification Projects in the country?
The size of the funds we have right now is $550m from the World Bank and AfDB – the World Bank is $350m and AfDB is $200m. However, those funds are broken down into various uses. For instance, from the World Bank, about $100m has been put down for energising education. We have universities that those funds are going to power.
These donor funds, are they grants or loans?
They are loans to the Federal Government, through the Ministry of Finance. But they are grants to REA. They come to REA as grants. REA is not liable to pay back the loans as they are coming to us as grants from the Federal government.
Since you mentioned the universities, are you in partnerships with these universities to deploy unique technologies. I know, for instance, the University of Nigeria announced that it had a developed a unique technology to power the school. They had done pilots and now want to scale up so that they could get off the grid. Are you in such partnerships?
Yes, in fact we just launched a programme called the Research and Innovation Hub. So, this is an opportunity for us to look at what they have done in that university.
You know I talked about a few technologies that we currently use for rural electrification. It is primarily solar. We have the solar home system and the solar mini grid.
However, we believe that other technologies and other means can be used to power the rural communities, biomass, for instance.
We have engaged a few universities such as the University of Abuja, the Kaduna State University, Ahmadu Bello University, and the University of Lagos, I think. We are able to work together to see how we can come up with two or three newer technologies that we can also deploy for rural electrification.
From what you have been saying, it appears there is an emphasis on research and innovation in this place. Do you have a research department? How much data do you have and how do you gather your data on rural electrification?
Yes we do. We have two lecturers currently on sabbatical to help in that particular aspect. I think one is coming from the University of Ilorin and I am not sure of the other. But I have two lecturers here on sabbatical to support the research you are speaking of.
In terms of data, there is a lot of effort we have currently made in trying to ensure that we have the data for rural electrification or the areas that need rural electrification.
Where we are now, at the REA, is looking to see how we can continue to improve the quality of data by ensuring that they being validated and also to see how some of the data can deliberating support some of our existing programmes like the solar power as part of economic sustainability plan.
There is a continuous debate about fossil fuel and renewable energy, what is your contribution to this?
I don’t know why there is a debate because each one of the technologies has its own purpose to serve. You know within the renewable energy space, this is clean, reliable power and this helps Nigeria achieve its national determined contribution to help cut down emissions and control climate change.
However, it is also understandable that the renewable energy space has not grown to the extent of serving huge industries.
So this is why there is still a balance in terms of the usage of other means of generating electricity just so that we don’t also try to be overreliant on renewables alone.
Fossil fuels also have their own role to play, but I know the government is deliberately also trying to see how we can continue to cut down and use more LNG so that the carbon emissions coming from fossil fuels are not doing too much harm to the environment.
What is the total budget of rural electrification in Nigeria and how far can it go?
What has become very clear is that it is not enough because the task of electrifying over 80 million Nigerians is enormous but if you notice, this is why I kept on emphasising on private sector participation because what you need to do is to be able to make certain investments that would catalyse the market.
If you say, for instance, you spend maybe N200m, the idea is that that N200m should bring investment of up to N1bn. So, if you try and create the market where private sector can come in, put down their own money as part of the investment and give them an opportunity to recoup their money while providing the service that government needs, I think it is the model to go.
So, we don’t have one budget per se. The budget is the budget that we receive from the National Assembly, which this year is about N20bn.
The other ones are monies being put down to stimulate the sector to encourage private sector participation.