—–Embarks on further restructuring of electricity sector
By Johnbosco Agbakwuru
ABUJ – ACTING President, Prof. Yemi Osinbajo on Tuesday stated that government will soon release a second tranche of the N701 billion for Power Assurance Guarantee approved by the Federal Executive Council in March this year for the Bulk Electricity Trading NBET, Plc.
This is as government has said that it was set to embark on a broader restructuring of the electricity sector to achieve a more systematic development in renewable energy.
The Federal Government had through NBET earlier this month released the first tranche of about N12billion to 10 GenCos from the N701billion intervention fund.
Prof. Osinbajo who disclosed this at the inaugural event of the Nigerian Renewable Energy Roundtable organised by the Federal Ministry of Science and Technology in partnership with the Nigerian Economic Summit Group (NESG), at the Banquet Hall of the Presidential Villa, said it was expected that the release of the funds would free up the value chain that had created several problems of its own.
He said government was exploring investment opportunities for revolving funds for solar and other renewable sources of energy to break the deadlock of electricity market structures through competitions and ensure that renewable energy becomes an engine of growth for Nigeria’s economy.
According to him, government will partner with the private sector, to create the framework for real-world business cases by developing standardized (and certified) technology packages, standardised contracts and a toolkit for energy cooperatives (with technical, institutional, financing and legal elements).
Prof Osinbajo said, “We hope that this injection will help. We are also looking at several other reforms in the sector hoping that the market can become self sustaining, independent and run on its own and free up all of the private sector energy that is waiting to come into the market.”
“We want to embark on a broader restructuring of the electricity sector and strive to achievement a more systematic development power market design especially for the renewable energy.”
He further stressed the need for the relevant authorities to come up with a framework that brings together all stakeholders towards ensuring that renewable energy becomes a real engine of growth for the Nigerian economy.
He said, “We have mentioned several of the plans, the power sector plans and so
many of those initiatives. The latest is to break the gridlock in the liquidity of the entire electricity value chain and so our payment assurance system of over N701 billion has been approved by the Federal Executive Council and in fact the first payment has been made we are on to make up the second payment.
“We hope that we free up that value chain which has created several problems of its own and we hope that this injection will help. We are also looking at several other reforms in the sector hoping that the market can become self sustaining, independent and run on its own and free up all of the private sector energy that is waiting to come into the market.
“We also need to explore the opportunities for revolving funds for solar PV/wind projects as well as opportunities for other investment remuneration mechanisms.
“It is also very important that we break the deadlock of electricity market structures by exploring the options to transform the “competition for markets” approach, continue to embark on a broader restructuring of the electricity sector and strive to achieve a more systematic development of the power market design, especially for renewable energy.”
The Acting President also noted that as a multi-stakeholder platform, the Nigerian Renewable Energy Roundtable, has its work cut out for it, which is to champion this new vision for renewable energy and ensure that we can translate theory to practice for the greater good of the people of Nigeria.
He said, “To do that, we need a framework that brings and keeps all stakeholders together towards ensuring that renewable energy becomes an engine of growth for Nigeria’s economy.”
Osinbajo said it was the plan of the administration to expand the Solar Home System program to 1 million households, creating a few more million jobs and that the Muhammadu Buhari’s administration was interested in lighting up more rural communities like Wuna, an agrarian village in the Gwagalada Local Government Council of Abuja, which until two years ago was not on national grid and had no other source of light.
He disclosed that the indigenes relied on an entrepreneur with a small generator to charge their phones for a fee.
He said in collaboration with the Niger Delta Power Holding Company (NDPHC), the government was able to provide a sustainable renewal energy solution solar through end to end solution, including a pay-as-you-go system.
“I was in Wuna to see it for myself. For the first time in their existence, the village now has running water, solar powered. The school has power and the school hall is now used as a community hall in the evenings. Each home has 4 points of light.
“Children can now stay up and do some studying at night. Many of Wuna’s women can now process their millet and yams at night. New jobs have been created, solar installers, maintenance, payment systems and so on.
“One guy has lost his business in Wuna. The phone charger. Every household can now charge their phones. But he now charges phones of residents of other villages. We are doing 20,000 more homes in this first phase of this exercise and a Pay-as-you-go system to 20,000 households to provide access to lighting and electric power for small devices.
“The plan is to expand the Solar Home System program to 1 million households, creating a few more million jobs.”
Earlier in his goodwill message, Chairman, Senate Committee on Science and Technology, Ajayi Boroface expressed the readiness of the National Assembly to partner with the Executive arm and come up with the necessary legislation that will create the enabling environment to exploit these resources effectively for the development of the country.
Senator Boroface attributed the difficulty in implementing government programmes in the energy sector to lack of the necessary policy and institutional framework as well as the political will of the leadership of the country.
The lawmaker however expressed optimism, stating that the presence of the Acting President at the energy roundtable would go a long way to drive the sector for the benefit of the country.
“I have no doubt that we have at the helm of affairs in this country the able leadership that can drive this sector. I am happy that the acting president is here personally.
“I have been around in the system for a very long time. And I know that the difficulty in implementing some of the laudable programmes of government is the lack of political will of the leadership. The presence here of the acting president of the federal republic of Nigeria is a clear demonstration of the political will to support this policy,” he said.
Also in her goodwill, Chairperson, House of Representatives Committee on Science and technology, Beni Lar noted electricity is a basic tool that drives industrialization, technological advancement, engineering transformation and economic growth all over the world.
The lawmaker said without power the country will achieve nothing, even as she acknowledged the situation in the Nigerian power sector which, according to her, is one that seems to have defied every effort to resuscitate it from the state of dilapidation.
“The country in a bid to solve the problems in this sector has applied several methods and exploited many avenues possible. But nothing seems to have yielded the desired result,”
Lar however assured that the House of Representatives was on the verge of legislating on a bill to amend the energy commission act of Nigeria as well as regulate the renewable energy sector among others in the country .
Earlier in his opening remarks, Chairman, Nigerian Economic Summit Group, Kyari Bukar, said that the cost comparison of the electricity generation in Nigeria reveals that renewables are one of the strongest options for Nigeria…i.e. Biomass, hydropower are currently competitive with oil and gas despite there being higher investment risks.
He said renewable energy are at present fully competitive with conventional generation, adding that the debate on the need to diversify the economy cannot be over emphasized.
He noted that the principal challenge amongst a myriad of other constraints is the demand for energy required to positively impact productivity in Nigeria.
According to him, while the energy commission of Nigeria predicts that the energy demand will increase exponentially by 2030. current generating capacity of about 4,000 MW for a population of 170million clearly demonstrates that Nigeria is facing an energy crisis.
He listed six expectations from the Nigeria energy renewal round table to include:
“First is the establishment of regular renewable business dialogue platform with renewal energy experts and rural electrification agencies to fine turn action plans assign tasks, monitor progress against targets.
“Secondly, design and adopt finance instruments to attract high quality solar companies to invest in off grid projects with hopes that in doing so, we can have at least five solar companies for commencement of installations of at least 500 SMEs solutions, in January or February, 2018.
“Three, encourage innovations, research, development for made in Nigeria renewable energy products and applications.
“Four, Scale up donor support for large scale training programs for renewable energy technicians bases on the already existing plans developed by the Nigerian energy support program with the goal to include all vocational training of the 11 existing training facilities by December, 2017.
“Five, agree with the federal ministry of finance for tax rates, Customs facilitations given the roles that renewable energy plays in reviving local economies and thus increasing taxes revenues for the economy. This can be done by reviewing the VAT and tariffs as the Kenyan experience and elsewhere shows that the elimination of that import duties and tariffs significantly boost the growth of renewable energy markets as well as zero percent corporate income tax For say, a period of five years for off grid operations of renewable companies. In this regards, there needs to be further clarifications of the practical implications of the zero duty regulation contained in Nigeria’s renewable.
“Six, work with the Standards organization of Nigeria and other organizations to stop substandard renewable energy products from proliferating in Nigeria by enforcing quality control along practical gains. It is imperative though to state here that this will not be an easy task. As all countries have their own dynamics to consider in term of implementing renewable energy policy and transition.”