FG Backs Mini Grid Operators to End Discos’ Monopoly

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Chineme Okafor in Abuja

The federal government yesterday indicated its support for operators in Nigeria’s emerging mini grid electricity sub-sector to break up the monopoly of the 11 electricity distribution companies (Discos) in the country’s privatised power market.

Insisting that the Discos have largely failed to meet the electricity demand of Nigeria’s population as over 50 per cent of the country’s population are not connected to the national grid, according to the Nigerian Electricity Regulatory Commission (NERC), the government explained that it had developed policy frameworks to support the development of mini grid power projects in Nigeria.

The government further urged the operators at a breakfast meeting in Abuja where a new report on financing off-grid energy projects in the country prepared by the Nigerian Renewable Energy Roundtable (NiRER) – an offshoot of the Nigerian Economic Summit Group (NESG), and American-based Rocky Mountain Institute (RMI) was launched, to leverage on the policy supports to provide more electricity to Nigerians.

The breakfast meeting was held yesterday on the side lines of the ongoing 2018 edition of the annual Nigeria Economic Summit.

Speaking at the meeting, the Permanent Secretary in the Ministry of Power, Mr. Louis Edozie, stated that Discos have not met the increasing demands for power by Nigerians and as such should be open to negotiate with operators and investors in mini grid power supplies to provide cheap and stable power.

Edozie, who was responding to a complaint made by an official of Eko Disco, Mr. George Etomi, that mini grid operators were encroaching on the franchise networks of the Discos without due consultations, explained that years into the power privatisation, the government still finds that a good number of Nigerians are yet to be connected to distribution networks.

He also noted that the Discos have not expanded their networks or satisfactorily supplied electricity to consumers who are connected to their networks, adding that some of the Discos customers still spend a lot of money to procure alternative power supply.

“Sadly, you are not serving them to their satisfaction. So, let us give them an option. If independents are willing to come in nobody said you should not benefit from that person coming in, and I think the policy allows for that discussion that you mentioned where the benefits can also be discussed.

“But the important thing is to get the customers satisfied with the service that he is willing to pay for,” Edozie said.

“We have done several transactions to give examples in the ministry or we are in process of doing them. One is the solar embedded mini grid in our own head office building. We did that as a competitively procured mini grid, we drew up the power purchase agreement and concession agreement that a bidder will bid against and we called the distribution company to say: this is what we are going to do self-provision ourselves and want them in the picture.”

Edozie, added that the ministry in this regards offered the distribution company involved the benefit of taking excess generated capacity from the embedded mini grid at a rate cheaper than what the Disco got from the national grid, as well as buy from the Disco at a premium if there was supply shortage from the mini grid.

According to him, the Disco agreed to this agreement and the embedded mini grid would be installed soon.

He equally stated: “We are doing another one at the State House which is equally not connected to the distribution network. They are paying a high price and somebody mentioned that to somebody outside the industry to self provide them with energy.”

“So, let the industry look at the customers, satisfy the customers at the price it is willing to pay, then all the solution providers sit together and see how to divide the benefits because the policy – the mini grid policy, allows that.

“And, I don’t think the policy should be so specific that it prescribes how this discussion should go, no! It is for the developers, the Discos knowing there is a willing customer who wants to be better-provided, to sit down, discuss case by case and come up with a solution that works for them; shares the benefits equitably and satisfies the customer,” he explained.

According to him, the mini grid regulation; import duty waivers on certain power products; as well as other tax relief incentives of the Nigerian Investment Promotions Council (NIPC) are some of the policy instruments the government has developed and would want mini grid operators to explore at all times for their projects.