*$150m of $350m NEP’s fund heads to mini grid investments
The World Bank is showing a strong support for Nigeria’s rural electrification efforts and should in this regard approve a new five-year Nigeria Electrification Project (NEP) worth $350 million in April 2018.
Documents shared at the just concluded mini grid conference organised by the Rural Electrification Agency (REA) and the Bank, in Abuja, indicated that the NEP would be managed by the REA, and $150 million of its $350 million funding cache would be expended on building mini grid power systems to power 200,000 households and 50,000 local enterprises.
When approved, the NEP though nationwide in scope, would however commence its early activities in four states – Niger, Plateau, Kaduna, and Rivers.
“The World Bank is working with the government of Nigeria to develop a new five-year project: Nigeria Electrification Project (NEP). World Bank project approval is expected in April 2018. The NEP will be implemented by the Rural Electrification Agency,” said the document containing this.
It further explained: “The World Bank’s contribution for NEP is expected to be $350 million, of which about $150 million would be allocated to mini grids. Mini grids developed under NEP are expected to serve 200,000 households and 50,000 local enterprises. The project is nationwide in scope, with early activities expected in Niger, Plateau, Kaduna, and River states.”
At the moment, Nigeria is reported to have about 80 million of its people lacking access to grid electricity. The country also reportedly has a national electrification rate of 58 per cent.
Records also indicate that a good number of Nigeria’s unserved population live in rural areas, and depend on candles and kerosene lamps for lighting.
According to statistics, the country would also need to upscale her electricity generation to circa 25,000 megawatts thereby connecting as much as one million people annually to be able to achieve universal access to electricity by 2030.
Development modalities
According to the document, the component of the NEP would be implemented under a market based approach. Within it, private firms would be expected to develop mini grids, with subsidies from REA.
“It is expected that about 1,200 mini grids will be developed under the project,” it said, adding that the subsidies will be provided in two ways.
The two ways for subsidy consideration, it noted would be, at kick-start level, under which bid for subsidies for selected sites would requested by the REA.
“For a large number – currently set at 200 selected potential sites, REA will invite private firms to bid for minimum subsidies they require to deliver electricity services on a commercial basis. This is intended to kick-start the deployment of mini grid projects by increasing the deal size, aiming to attract some of the international private developers to enter this market in Nigeria,” it explained about this level.
The second level it said would be on expansion, where the REA will pre-set performance-based subsidies for mini grid operators.
It stated in this regards that: “REA will provide performance-based grants to mini grid operators, focusing on installed capacity ($/kW), new connections ($/end user), or a combination of both, to bridge the affordability gap for a large portion of potential end users. The performance-based grants will benefit an estimated 1,000 mini grids and 430,000 end users.”
