31 Describe any market trends with respect to development, financing or operation in the renewables sector or other pertinent matters.
Nigeria Electrification Project (NEP): development of solar hybrid mini grids for rural economic development
The aim of the NEP project is to the make reliable electricity services available to 75 per cent of the population by 2020, and to 90 per cent of the population by 2030, with at least 10 per cent of electricity coming from renewable energy by 2025. Under the project, the REA intends to increase electricity access to rural areas through mini grids and stand-alone off-grid solutions. The NEP has four components, including one on Solar Hybrid Mini Grids for Rural Eligible Technologies (the Mini Grid Component). As part of this Mini Grid Component, the REA will support the development of private sector mini grids to electrify unserved areas that have high economic growth potential. The Mini Grid Component aims to electrify 300,000 households and 30,000 local enterprises through solar hybrid mini grids, as well as kickstart the mini grid market in Nigeria. The first component of the project, which is the development of Solar Hybrid Mini Grids for Rural Economic Development, will be implemented under a market-based, private sector-led approach to construct, operate, and maintain economically viable mini grids, supported by subsidies. This component consists of a minimum subsidy tender for mini grids and a performance-based grant programme. The REA, with support from the World Bank, will provide a subsidy to cover part of the capital expenditure for the preferred bidder.
On 17 June 2019, the REA opened the initial selection document submissions for solar hybrid mini grids. The purpose of the initial selection document is to assess the eligibility, qualifications and technical capabilities of private sector developers to deliver the project.
Mini grid Acceleration Scheme (MAS)
On 11 February 2019, the REA called for proposal for the Mini Grid Acceleration Scheme, which consist of designing, construction, commissioning, operation and maintenance of isolated mini grids up to 1MW across the six geopolitical zones of Nigeria. Each geopolitical zone represents a lot under the scheme. On completion, the project is to be operated on a commercial public-private partnership arrangement. The scheme is set to disburse €6 million for the six lots and to deploy between 20 and 40 mini grids to 21,000 customers with 3,500 to 4,000 connections in each lot.
Interconnected Mini grid Scheme (IMAS)
In tandem with the MAS, IMAS, its twin project, called for proposals on 6 May 2019 for interested solar mini grid developers to submit proposals for interconnected mini grid projects. The project is to develop interconnected mini grids up to 1MW across DisCos franchise regions. Each DisCo region represents a lot under the scheme. It is also to be operated as a PPP arrangement in collaboration with interested electricity distribution companies.
Transmission Company of Nigeria (TCN)
The TCN recently increased its transmission capacity. From 7,000MW, a further 1,000MW were added, rounding upward to a transmission capacity of 8,100MW. It was reported that, by the increase, the TCN has moved past being the weakest link in the electricity power value chain.
32 Describe any notable pending or anticipated legislative proposals.
Regulation on distribution franchising
To satisfactorily meet stakeholders’ expectations in the provision of reliable electricity services to all customers within their coverage areas, the NERC has considered a new regulation to allow third parties to take up and maintain parts of the vast electricity distribution networks currently owned by the DisCos. The NERC has drawn up a consultation paper titled: ‘Distribution Franchising in Nigeria’, which explained that by sub-franchising, the DisCos would authorise third-parties to provide electricity distribution (and other utility services) on behalf of the DisCos, within the DisCo’s coverage areas. This franchising arrangement can either be initiated by the DisCos or customer groups within the DisCos’ coverage areas.
The proposed models are:
- metering, billing and collection - the outsourcing of the distribution function of metering, billing and collection to the franchisee;
- total management of electricity distribution function - where the franchisee is responsible for maintaining the electricity distribution system; and
- distributed generation-based electricity distribution franchisee - where the franchisee undertakes to procure more energy either through bilateral arrangements over the transmission network or through embedded generation at local distribution networks.
The public consultation for the proposed regulation was held from 23 May 2019 to 4 July 2019 in various locations in Nigeria.
Electric Power Reform Act(amendment) Bill 2018
In January 2019, the House of Representatives initiated the process to pass the Electric Power Reform Act (Amendment) Bill 2018 that prohibits and criminalises estimated billing. The proposed law, which was to be transmitted to the senate for concurrence and subsequently to the President for his assent, compels all electricity distribution companies to give prepaid meters to applicants within 30 days. The law also provides a punishment of a one-year jail term and a fine of 1 million Nigerian naira for defaulters. Currently, a new tenure for the 9th House of Representatives has begun and it is expected that the Bill will be re-introduced to the House as the previous Bill did not scale through the process before the end of tenure of the 8th House.
Regulation to cap estimated billing
In Nigeria, unmetered customers are billed based on an estimated billing, which is still prevalent among DisCos. The proposed regulation seeks to cap monthly estimated bills issued to consumers by the DisCos. Under the proposed regulation, NERC is considering the option of putting a cap on estimated billing based on the projected average monthly consumption of each tariff class in the MYTO model; applying the average consumption of each tariff within a franchise are as the cap for estimated billing of unmetered customers and capping the estimated bill of consumers within a business unit to the average vending of the same tariff class within the area. The public consultations for the proposed regulation were held from 23 May 2019 to 4 July 2019 in various locations in Nigeria.
Bill to criminalise electricity theft
On average, 30 per cent to 35 per cent of energy loss in the country is as a result of electricity theft. NERC had presented a Bill to the senate titled ‘A Bill for an Act to prohibit and prevent electricity theft, power infrastructure vandalisation and power company protection 2017’. The Bill intends to amend section 94(3) of the Electric Power Reform Act, 2005 by deterring the illegal and unauthorised use of regulated electricity supply as well as to protect electricity infrastructure. It further intends to impose imprisonment for a period of not less than six months and not more than two years or a fine of 100,000 Nigerian naira or both if found guilty of wilfully tapping, making or causing to be made any connection with overhead, underground or under water lines or cables or service wires, or service facilities of a licensee.
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