… As electricity subsidy gulps N633.3bn in three months
By Charles Ebi
World Bank has restructured a $350 million loan to Nigeria to ensure the completion of seven critical power plants in educational institutions, bolstering the nation’s energy infrastructure.
According to the Restructuring Paper on the Nigeria Electrification Project ,NEP, this restructuring involves an extension of the project’s closing date, with the new deadline for the loan project set to December 31, 2024.
The Nigeria Electrification Project ,NEP, initially approved on June 27, 2018, aims to increase access to electricity services for households, public institutions, and underserved micro, small, and medium enterprises ,MSMEs.
Despite progress, the completion of the seven power plants, integral to the project’s success, faced delays due to unforeseen challenges such as geotechnical issues, community disturbances, and COVID-19-related disruptions.
The Restructuring Paper document read: “To ensure the delivery of all 7 power plants as per the original scope of work, including unforeseen but necessary additional tasks, the project closing date would need to be extended by an additional 5 months to December 31, 2024.
“While the revised completion date for all 7 plants is expected by the end of Q3 2024, with the Maiduguri and Calabar sub projects anticipated to close by the end of September 2024, the last quarter will focus on site handover and the commencement of the sustainability plan. During this phase, the EPC contractors are expected to provide a performance guarantee to cover the operational and maintenance period”.
The Nigeria Electrification Project ,NEP, focuses on several components, including the development of private sector mini-grids, expansion of standalone solar systems for poor and vulnerable households, and provision of sustainable power to public universities and associated teaching hospitals.
As of June 2024, the project had connected almost 59,000 households and MSMEs through mini-grid grants and nearly 1.09 million households and MSMEs via standalone solar systems.
Despite these achievements, Component 3, which involves the Energizing Education Program Phase II ,EEP II, has lagged, with completion levels ranging from 35% to 80% across different sites.
Based on the Restructuring Paper document, the total commitment for the Nigeria Electrification Project,NEP, is $350 million. As of the latest update, $265.32 million has been disbursed, leaving an undisbursed balance of $84.68 million.
At the University of Abuja, the power plant project is 65% completed. The challenges faced include rocky ground that requires alternate anchorage methods, an uneven surface causing inter-row shading, and a deteriorated access road. The additional scope of work involves drilling and casting footings for anchorage, building retaining walls, and constructing a 1.4 km access road.
The Michael Okpara University of Agriculture, Umudike project is 85% completed. It encountered challenges with the disparity in materials used for the transmission line, which did not comply with regulatory standards. The additional work required is the replacement of 12.6 km of aluminium conductor with aluminium conductor steel-reinforced line.
The University of Calabar & Teaching Hospital project is also 65% completed. The challenges include a collapsed drainage network causing flooding, a debris collection area from floodwaters, and unsuitable soil for pile-driving. The additional scope of work involves constructing new drainage channels, reclaiming flood-affected areas, and casting footings for anchorage.
The University of Maiduguri & Teaching Hospital project stands at 79% completion. It faced challenges such as a refuse dump site, a military-grade trench, unsuitable soil for civil structures, and the takeover of an 11 kV line. The additional work includes reclaiming and backfilling the refuse dump area, backfilling the military trench, and constructing a double circuit transmission line.
At the Federal University of Agriculture, Abeokuta, the project is 90% completed. The challenges include the removal of a basement igneous rock formation, an extended drainage discharge point, and right-of-way encroachment. The additional scope of work requires extending the drainage channel and diverting and underground cabling of the transmission line.
The Federal University, Gashua project has completed the downstream distribution network 100%. However, rapid expansion of university infrastructure and increased electricity demand posed challenges. The additional work needed is constructing an additional 8.7 km of 11 kV distribution network.
Lastly, at the Nigeria Defence Academy, Kaduna, the project is 15% completed for the upstream distribution network. The challenges include a vandalized transmission line and the need for additional single-circuit infrastructure. The additional scope of work involves replacing the vandalized 33 kV double circuit and constructing 16 km of 33 kV single circuit transmission line.
Meanwhile, In January, February, and March 2024, the Nigerian government spent over N633.30 billion to subsidise electricity for consumers, which was higher than the N252.76 billion used in the last quarter of 2023 by 150.5%.
This information was revealed by the Nigerian Electricity Regulatory Commission ,NERC, in its quarterly report, which noted that the amount was 0.7% higher than N628.61 billion paid from January to December 2023.
Providing further context, NERC data showed that in 2023 subsidy gulped N36.02 billion in the first quarter, N135.23 billion in the second quarter, N204.6 billion in the third quarter and N252.76 billion in the fourth quarter of 2023.
The electricity market regulator blamed the increase on the government’s policy to harmonise exchange rates, as well as the absence of cost-reflective tariffs across all electricity distribution companies.
“It is important to note that due to the absence of cost-reflective tariffs across all DisCos, the Government incurred a subsidy obligation of N633.30 billion in 2024/Q1, an average of N211.10 billion per month”, it stated.
On revenue collection, the report said the DisCos recorded a shortfall, as the total revenue in the period was N291.62bn out of N368.65 billion billed to customers.
Also, the total energy received by all DisCos was 7,171.93GWh while the energy billed to end-use customers was 5,769.52GWh, translating into an overall billing efficiency of 80.45%.
Ikeja DisCo collected the highest revenue among Nigeria’s 11 electricity distribution companies as it received 57.88 billion in the period followed by Eko DisCo at N48.74 billion.
Also, of the total revenue collected in the period, Abuja DisCo collected N48.60 billion, Ibadan DisCo collected N30.35 billion, Benin DisCo collected N22.46 billion, Enugu DisCo collected N21.24 billion, Port Harcourt DisCo collected N20.39 billion.
Others include: Kano DisCo at N13.62 billion, Jos DisCo collected N13.29 billion, Kaduna DisCo collected N9.60 billion while Yola DisCo collected the least revenue at N5.46 billion
