In the first part of these investigative series, The New Diplomat chronicled how derelict power projects have continued to postpone prosperity in rural Nigeria with its deleterious effects on the socio-economic activities of the rural households who account for almost half of the Nigeria’s ballooning demography. This concluding part further exposes the culpability of the Rural Electrification Agency, project contractors and federal lawmakers in the electrification menace which often makes locals go from hope to despair.
“The song we sing here is: ‘Burial comes, NEPA comes! Burial goes, NEPA goes!!’
“That means, light only comes on during burials by very important persons in this Local Government, but after the occasion, light goes into extinction. We have always been in darkness here,” said HRH Eze G.U. Okoro, traditional ruler of Ihie autonomous community in Isiagu, Ivo Local Government Area, Ebonyi State.
NEPA, an acronym which ironically became popular among Nigerians not for delivering on its mandates of providing electricity, but for the pervading darkness, was derived from the defunct National Electric Power Authority, sold to the Power Holding Company of Nigeria (PHCN). This follows the enactment of the Electric Power Sector Reform (EPSR) Act in 2005, paving the way for the deregulation of the power sector—-still seen as the biggest elephant in Nigeria’s economic room years after privatization.
The monarch continued: “there is no rural electrification project by the Federal Government in Ivo. Neither is there any attempt to expand the grid here, I should know if there’s any.” Surprisingly, in spite of his denial of the project’s execution, the project has been marked as a completed work with letter of completion already issued to Cewopi (the firm which got the contract) by the Rural Electrification Agency (REA), duely certifying its completion of the project.
Sundry matters arising from the “Rural Electrification Project at Ohaozara/Onicha/Ivo Communities, Ebonyi State,” leaves a sour taste in the mouth. Firstly awarded to Carlin Concept Int’l Limited in 2014 for the sum of N15 million, the project was also awarded to Cewopi in 2018 for N44 million as a constituency project mobilized by Mr. Linus Okorie, House of Representative Member, representing Ohaozara/Onicha/Ivo federal constituency at the 8th Assembly, documents revealed.
While indigents doubted whether Carlin Concept went to site at all in any of the three LGAs marked for the project, REA Zonal Coordinator, Southeast, Mr. Uba Patrick, argued that the project was 100% completed by the company in 2015 as awarded. He claimed the project was not repeated in the budget as insinuated. But it was awarded to Cewopi in 2018 as an ongoing project, adding that “there can be continuous extension till the project will be completed and the community electrified.”
But Cewopi only showed up in Ogbueze, a community in Onicha LGA where it erected high tension poles. No cables were fixed to the poles as witnessed, yet a staffer at Cewopi, Mr. Chukwu Silvanus, who agreed to speak on the project claimed it has been executed as awarded. “We did the job to the satisfaction of REA who has given us completion letter for the project. About 60 poles were installed there. The distance is two kilometres plus.
“The job scope was high tension pole and accessories. There’s no wire in the scope. Maybe in the next budgetary allocation, the project will get more funding to be completed,” said Silvanus.
Corroborating the contractor’s claim, federal lawmaker, Okorie averred that the project had been completed in line with contract terms between REA and the contractor, stressing that electrification projects are always long term and budgetary funding do frustrate completion. “If you start electrification project now, you may not get to commission it in another three years. With the way budgetary funding is being done (in Nigeria), you may have to break down the completion stages.”
HRH Godwin Akpandu, monarch of Uburu kingdom, Ohaozara LGA confirmed that the project was not executed in Ohaozara and Ivo: “I have no knowledge of the project at all. And I ought to have the knowledge of it if such thing exists within this community. Every electrification project that’s being done here is by the state government. There’s nothing from the federal government, either here in Ohaozara or at Ivo that I know of.”
Also, in Ivo, one of the local governments pencilled down for the project, The New Diplomat‘s investigation revealed that there was no such electrification project there, save for the ones being handled by the Ebonyi state government.
“With all this noise being made about contract of electricity project, none has reached us,” said HRH Eze Okoro. “We managed to connect part of the community to Mpu, that’s Ike Ekweremadu’s (Deputy Senate President, Nigerian Senate) village and we seldom have light.”
According to the monarch, the community is only lit by Enugu Electricity Distribution Company when a very important personality is coming to town for a special occasion.
“The song we sing here is: ‘Burial comes, NEPA comes! Burial goes, NEPA goes!!’
“That means, light only comes on during burials by very important persons in this Local Government, but after the occasion, light goes into extinction.”
To get further clarification on the project completion among other litany of enquiries from independent findings, The New Diplomat for weeks, reached out to REA Headquarters, Abuja, but the agency was not forthcoming with any response. Mails sent to REA MD/CEO, Mrs. Damilola Ogunbiyi and her Special Adviser, Mr. Femi Akinyelure were not replied. And when Akinyelure promised many times on phone to react to certain findings, he fell short of his many promises before our time-bound publication. Director of Promotions, Mr. Ayang Ogbe ignored calls and text messages sent to his phone for days, while the agency’s legal adviser, Mr. Francis Ben simply declined comments saying: “I’m not going to give you any further reaction. I have given you the documents… the ones we have.”
Often dogged by controversies, many rural electrification projects assume the status of completion with letter issued to contractors attesting to project completion, despite installations not beaming a ray of light to homes in beneficial villages and towns.
As if to complicate things for community members interested in tracking progress made on projects, REA, which is at the center of it all attributes different meaning to project completion, something which breeds confusion among locals. A project can be certified completed but not connected to the grid—of which there are 482 of such projects since 2006 when the agency was created. Meanwhile, the longer it takes for installations to be energized, the larger the scale of the attending ruins becomes. This atimes, can return communities and their electrification plans to the ground zero.
Meanwhile, document papers exclusively obtained by The New Diplomat revealed that there are 74 projects whose sources cannot be traced again by the agency, yet they have been certified as completed. It goes to say that the locations where projects were supposedly completed by the contractors remain unknown to the REA officials. And worse enough, the apparent lack of project details will not stop the agency from marking such untraceable projects as completed.
Documents further showed that between 2006 and 2017, the agency contracted out 2,586 electrification projects to contractors. Only 1,195 of the projects have been completed with communities connected. The rest of the projects fit different profiles as the agency would want them categorized. Regardless, they smack of shoddy implementation.
Rural Electrification Fund And Opacity
Though, the total amount contributed so far to the Rural Electrification Fund (REF) set up by the ESPR Act 2005 has been taken off the public glare, yet its essence was clear—-to address shortfall in the funding of rural electrification projects by subsidizing project cost for private rural power developers, NGOs and communities up to the tune of 75%.
The manager of the fund, REA has not been forthcoming on the amount remitted to it and on whether any disbursement has been made to power developers. But in pursuant to the EPSR 2005 (Section 53), the fund derives its remittances from any surplus appropriated for the power ministry; fines obtained by NERC; donations, gifts, or loans made by international agencies, state governments, the federal government, local communities, businesses etal.
Whilst efforts to get REA speak on its management of the REF was repeatedly met with brick wall, the Acting Chairman, Nigerian Electricity Regulatory Commission (NERC), Prof. James Momoh told The New Diplomat in an interview session that his agency had over the years, consistently remitted all fines received from defaulting DISCOs and GENCOs to the REF.
In Momoh’s words: “Everytime we receive fine, it goes to the REF that promotes all the support for rural electrification like the minigrid, energizing the economy, markets and university campuses. So it’s already being paid back to support the social good and the growth of the country. I don’t know the exact amount, but it’s being remitted. Monies that come to us do go back to support the rural electrification projects.”
However, it was gathered that in 2018, N2 billion ($6 million) capital grant was contributed to the fund to embark on off-grid projects. Also, findings revealed that REA in 2018 secured a N123 billion ($350 million) loan from the World Bank to support the Nigerian Electrification Project (NEP).
The World Bank fund is intended to support the electrification of 300,000 households and 30,000 local enterprises and institutions across Nigeria within the next five years (2018–2023). As at the time of publishing this report, it was difficult to ascertain whether the first set of grants have been disbursed — or not — to power developers, courtesy of the agency’s knack for a media blackout in its operations.
Mini Grids — New Frontier For Rural Power?
The introduction of Mini Grid Regulation by the power industry regulator—NERC in 2017 which seeks to regulate off-grid developments from 1MW downwards raises hope for some forms of organization in the minigrid sub-sector, however, mini grids and solar home systems have not fully penetrated the rural market despite its huge potential of bringing power to rural dwellers.
According to Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) estimates, presently, Nigeria has 30 solar mini grids, with a total installed capacity of 1 MW, serving 6,000 customers. Only a few of the developments are in the rural areas. Yet there are forecasts that if scaled up to 3,000 MW by 2023, it would power 14% of the population and create a N7 trillion (or $20 billion) investment opportunity.
In plugging energy gaps in rural and underserved communities, Country lead Strategist and Head of Communications, Power For All Nigeria, Mr. Mark Amaza argued that the government should have a shift in focus from the grid-extension model to Decentralized Renewable Energy (DRE) which according to him proves to be more cleaner, faster, cheaper to deploy and cost reflective to consumers. “Studies have shown that the cost of grid extension to rural areas, far outweighs the possible revenue streams that can be obtained from consumers. However, through DRE solutions such as mini grids and solar home systems, the costs are brought down significantly lower, making projects commercially viable.”
At an average of N200 per every kilowatt of electricity (or $0.57/kWh) consumed, minigrid tariffs are relatively higher than what the DISCOs are charging, albeit it is way below the cost of generating power from the noisy generators and tariffs are expected to fall by 60% in 2020 with increased penetration.
For instance, despite paying a monthly tariff of N3000 for DISCO power that is barely available for four hours in a day in his area in Ikorodu-Lagos, Biola, who runs a laundry business spends an average of N580 on fuel daily to generate an equivalent of 2kWh from his generator (derisively dubbed ‘I beta pass my neighbor’).
In spite of the stifling expenses he claimed he incurs on maintenance and other ancillaries, Biola spends nearly N16,240 to fuel his generator monthly.
“It’s killing because asides other things I spend money on to run my business, much of the little money I make goes into fuelling my generator.
“Most times, I wonder why I still need to spend that much on fuel. What’s the essence of paying N3000 for DISCO power then?” He queried. He went on to canvass for a stable mini grid power with a cost reflective tariff. “I will be interested in any solution that would stop me from sticking to two alternatives to stay in business, if the mini grid can stop that with a tariff that justifies what one consumes, I’m sure many Nigerians will consider it.”
Unlike Biola, there are concerns over the ability of rural dwellers to pay—-like their urban counterparts—-having seen electricity as more of a social dividend than actual service that must be tarrif-sustained, something that is of a huge threat to investors interested in rural power.
“Nigeria’s minigrid sector is still at a nascent stage and there’s still reluctance by lenders to give financing to developers.
“Considering the large potential of the sector, the sum of N2.8 trillion can grow the economy and transform the country. Grants from REF will go a long way in not just lowering the costs for developers and the consumers, but it will also boost the sector with successful minigrid, which will provide lenders with the assurance that mini grid projects are commercially viable.” Amaza added.
At different fora, the DISCOs have claimed that some of the projects contracted out as mini grid projects, especially in rural locales are misguided projects, urging the Federal Government to instead channel its funding towards strengthening the grid capacity to aid power distribution which stands at 5,222MW in 2018.
And as many minigrid investors are mapping out various models to invest in rural power, it appears their shared optimism constitutes a futuristic threat to DISCOs’ investors who are afraid that they could lose critical customers to mini grid operators, just before the conventional large-scale grid gets to a preponderance of rural Nigeria that have not been lit.
But on the contrary, the Acting Chairman, NERC, believes the demand for power in the country is attractive enough to accommodate a mixed bag of solutions to address the nation’s energy needs. He said government should juxtapose the givings and misgivings of both the mini grid power and central generation to know how to effectively deploy the right alternative.
“To what extent should it (minigrid) be compared with central generation? In terms of reliability; in terms of security; in terms of affordability. Those are the indices that we have to use to compare the ratio for which we should push it and more or less, in comparison with the central power generation.”
Speaking on the mini grid prospects, Momoh said: “There are two questions to ask: Where is it necessary? Where is it profitable? And also whether meaningful mini grids should be provided where we have limited number of customers. But at the same time we don’t want to wait before a large scale transmission grid will get to those customers and also we don’t want to account for a lot of losses in the process. So by having this off-grid or mini grid that can easily be accessible with the required less-wiring infrastructures to build, then it’s something to be considered.”