Rural electrification not an industry for financial windfall – World Bank

The World Bank has described investments in providing electricity for rural communities and people yet to be connected to electricity grids as a painstakingly patient effort, adding that the industry isn’t known for financial windfalls.

Johannes Exel, the World Bank’s Task Team Lead for the Nigeria Electrification Project (NEP) – a $765 million portfolio-worth programme backed by the Bank with $350 million to increase access to electricity services for households, public educational institutions, and underserved micro, small, and medium enterprises (MSMEs), stated this at a recent workshop organized by the Bank and Nigeria’s Rural Electrification Agency (REA) on the NEP in Abuja.

“Rural electrification is not an industry to make a quick buck. Perseverance and service delivery is key,” said Exel, to an audience of over 600 investors, financiers and private developers.

According to the NEP term sheet obtained by OGN from the World Bank, the project’s schedule comprises of four components, with the first being solar hybrid mini grids for rural economic development which will be implemented under a market-based private sector led approach to construct, operate, and maintain economically viable mini grids, supported by subsidies that reduce initial capital outlays.

The term sheet added that the solar hybrid mini grids scheme will consists of minimum subsidy tender for mini grids and performance-based grants program.

The second component of the NEP according to the Bank also include stand-alone solar systems for homes and MSMEs, with the intention to significantly increase the market for stand-alone solar systems in Nigeria in order to provide access to electricity to more than one million Nigerian households and MSMEs at lower cost than their current means of service such as small diesel generator sets.

This part of the NEP, it added consists of market scale-up challenge grants and performance-based grants.

Equally, the third component of the NEP, the Bank noted is the energizing education scheme planned to provide reliable, affordable, and sustainable power to public universities and associated teaching hospitals, while the fourth component is technical assistance designed to build a framework for rural electrification upscaling, support project implementation as well as broad capacity building in the REA; Nigerian Electricity Regulatory Commission (NERC), and other key stakeholders in the industry.

Exel, at the workshop explained that: “the Nigerian government is focusing on long-term sustainability, and, “we are happy and proud to be part of these steps being taken by the government.”

He further said on the progress of the country in the sector: “When it comes to creating an enabling environment for off grid development, Nigeria has really moved forward.”

“There’s a lot of involvement not just from Nigerian companies but companies from around the globe. This encourages inclusiveness. The scale of the market and the willingness to tackle electricity issues is what we see in Nigeria.

“We hope to see many of these systems in Nigeria, especially the mini grids. Also, there must be adequate training for the end-users. This will really help the developers,” added Exel.

In her remarks at the workshop, REA’s Managing Director, Damilola Ogunbiyi, reiterated the potentials of Nigeria’s off grid electricity market.

She explained to the audience the country had a $10 billion annual market opportunity in power supply to off-grid and underserved customers with mini grids and solar home systems, adding that with eight per cent economic growth through 2030, there was an additional $670 billion value proposition in the market.

This estimates, Ogunbiyi noted were based on current expenditures, which customers may pay more for superior service.