EU votes 150m Euros to fund electricity projects in Nigeria

The European Union (EU) has opened a 150million Euros funding window to enhance access to electricity in Nigeria.

In a related development, the Nigerian Electricity Regulatory Commission (NERC) has appointed 14 technical inspectors for the electricity sector.

Similarly, NERC has asked the European Union to consider providing for projects by investors who are interested in venturing into embedded generation to boost electricity.

NERC Chairman, Dr. Sam Amadi, who made the appeal at a meeting with the EU team in Abuja, described the embedded generation concept as an urgent strategy to immediately procure electricity for customers, while waiting for national grid power to improve significantly.

The NERC’s embedded generation regulation, he said, allows an independent power producer to embed power within the network of the local distribution company without going through the trouble of connecting to the transmission network.

“In reality, the prospect of improving revenue for the Discos, and of improving power supply, lies with embedded generation, with distribution companies procuring power outside the grid. We have an embedded generation regulation, which has become revolutionary now. Many of the Discos have started setting this up.

“ Ikeja Electricity Distribution Company has almost come to contract award for 474MWs embedded power. Other Discos are working hard at this. That is the place that a lot of work can go in because it helps to remove the need for bulk trader guarantee. It also removes the process for transmission. It enables the Discos to procure premium power for customer clusters that can afford it and then frees more power from the grid for those who want to stay with grid power. That is one area that we are putting a lot of efforts into,” Amadi said.

Representative of European Union at the meeting, Peter Cameron, noted that the EU is interested in boosting access to energy in Nigeria. “The two main focus of this meeting is to discuss issues relating to the problems towards providing energy to Nigeria. The second one is to see if we can start to identify potential projects that would be of interest to you where the European Union supports the energy sector.

“The European Union has a 150 million Euros support to the power sector. This initiative concentrates on Nigeria, looking at the areas where this 150 million Euros could be spent,” he said.

According to Cameron, the funding window is under the Sustainable Energy for All initiative of the EU. His team, he added, is investigating possible projects to boost access to electricity, and how best the EU could make impact and help Nigeria get better access to electricity. “We are looking at bottlenecks and also coming up with potential projects that the European Union can support.”

Meanwhile, NERC has assured that issues around gas-to-power initiative are being addressed by the Nigerian National Petroleum Corporation (NNPC). “The obvious bottleneck is supply. As you know, we now have average of 3800MWs. Two months before then, we were very low because of combined issues of vandalism as well as lack of supply from gas suppliers because of facility repair and slightly, some drop in hydro. Essentially, it is a problem of supply. Of course, we are about 80-85 percent gas-based.

“Primarily, we talk about supply of gas and available capacity. Much of the vandalism are in the gas side. The gas problem is being tackled. We had meeting with the GED of gas at NNPC and he told us of improvements coming up. We hope that by the end of July, with the repair work going on, we might be able to do maybe above 5500MWs. The assurance we have is the East-West Gas Pipeline that is projected for completion sometime towards the end of 2016. The idea is that we should be able to do slightly above 6000MWs. The problem is that it depends also on increase in capacity. We are looking at 4700MWs. If we add this to the distribution companies, we can go above 9000MWs. Right now, we don’t have enough gas to do above that,” the NERC chairman said. According to Amadi, “We are looking at 2016-2017. With the gas that will come from the new and existing pipelines, the operators think that we can get enough to get us the available capacity that we have, and the recoverable capacity that the generators would have. So, gas is a challenge, but it is being addressed. Hopefully, the new government would do more on vandalism. The reports we have from them is that there is containment and vandalism has dropped as well.

“Supply constraints feed into revenue constraints. Essentially, this means that the revenue projections of the distribution companies are also affected, irrespective of what the tariff is, because the total revenue would be based on the quantity that you are able to put into the market.”

The NERC boss stressed that “Before you even come to the tariff question, the lack of availability affects both the revenue side of it and the retail side in terms of available power, and available power has a problem with propensity to pay. This is because as consumers get ruffled by lack of supply, the tendency to tamper, the tendency to bypass meter, and not to pay is there. We have moved to 5500MWs transmission wheeling capacity.”