As part of the Federal Government bids to begin the implementation of the Energy Transition Plan (ETP), the Rural Electrification Agency (REA) is now set to demonstrate its capacity to implement the $300million renewable energy component of the $1.9trillion plan.
Presently, it is handling the $550million and $350million World Bank and African Development Bank respectively interventions for the Nigerian Electrification Project (NEP).
REA Managing Director, Engr. Ahmad Salihijo Ahmad, broke the news at a media interaction with some energy correspondents in Abuja.
He said $1.9trillion is the financial implication for Nigeria to attain net zero by 2060
The Managing Director revealed that the Federal Government will use various REA renewable projects to demonstrate that the country is ready for energy transition.
On the financial implication, he said “what we have for net zero is $1.9trillion. We need $10billion annually.
“According to that plan, we need about $300million for renewables while that is cascaded down to about $82million for the decentralized power.
“What we are going to demonstrate is that we are in a position to accept this sort of funding.
“We already have a commitment of about $10million, which is what we are going to go there and showcase that we are ready to implement projects of this magnitude.”
Also speaking, the Former Head Project Management Unit, Anita Otubu, noted that out of the 3$550million World Bank funding for the NEF, $64.8million has so far been disbursed for implementation.
According to her, $92million has been committed to 267 projects agreements which is each per a community.
Otubu added that out of the 267 mini-grid projects, only 67 have been completed.
She explained that it is not all the projects that have reached funding stages, stressing that the first phase of disbursement is released when the developers have brought their equipment to the project site.
Her words: “Out of the entire financing of $550million dollars, we have spent about $64.8m.
Our commitment to draft an agreement is $92m. When I speak of agreement it is inclusive of that we have already signed.
“We have signed 267 agreements. It is an agreement per community. It is not all the companies that have reached the stage where they need to secure finance.
Only 67 mini-grids have been completed out of 267 agreements.”
Meanwhile, Ahmad explained that through a tripartite arrangement, the private sector brought their money through commercial banks and development financiers to take the risk to deliver the projects.
His words: “They (private sector) now took the risk to deliver these projects while the government will subsidize their intervention as a resource based financing after they now finish.”
According to him, the projects are testimonies that private developers can partner with the Federal Government to yield meaningful results.
Ahmad said there are already 267 grants signed with developers, stressing that there is room for more developers to participate in the project.
“It is not only the government. We are calling on the private sector to come and give us this light. So, if you have the capacity, come and join us”, he urged developers.
Ahmad noted that it is not just about spending government money but it is about using it to attract more investments.
Commenting on the modality of payment, Otubu said “once the equipment are on ground, we can pay 40%, and another 40% when the Mini-grid has been meaningfully commissioned and 20% after 90 days of commissioning.”
Asked whether the REA is positioned to cope with the scope of mini-grid that has been increased from 1Mw to 5Mw, the Chief Executive Officer said the agency was part of the plan to raise the cap to 5Mw.
He allayed fears over land for the project implementation, stressing “land is not our challenge in Nigeria.”
Ahmad explained that one hectare is required for the generation of 1Mw of solar energy.
According to him, it is not compulsory to site the solar on land as some countries mount theirs even on Rivers and roof tops.
The MD said “Now if you are going to do anything from 1Mw or 5Mw, there are particular licenses you have to get.
“Now the regulation has been updated we are able to do between 0Mw and 5mw without getting those licenses.
“I don’t think that land will be a problem in Nigeria. There are some variations. It doesn’t have to all be on ground. They even deploy them on the river, like a lake. One hectare per mw is the rule of thumb.”