Zakari: FG Will Bridge Nigeria’s Six Million Metering Gap

Ahmad Rufa’i Zakari is the Special Adviser to the President on Power and Infrastructure. Before his appointment he built an impressive career at General Electric where he acquired extensive experience, expertise, and knowledge of the electricity as well as the oil and gas sector. From 2012 to 2014 he held the position of the Executive Director & Audit Manager of Sub Saharan Africa & the Middle East division of GE Corporate. In 2019 he was appointed as the Special Adviser to the President on Infrastructure. Ahmad also serves as the Secretary to the Presidential Power Reform Coordination Working Group. In this interview with ARISE NEWS Channel, Zakari spoke on sundry issues besetting the country’s power sector, including the administration’s resolve to close the current six million metering gap before the end of its tenure. Emmanuel Addeh presents the excerpts.

What’s the mechanism in place to sanction Discos that default in the service-based tariff regime?

Service -based tariff as an approach to the power sector really focuses on customers paying for what they get, while the Distribution Companies (Discos) are incentivised to improve service before they are able to achieve higher tariff.

There was always a clamour for cost-reflective tariff, but the view of the administration from a policy perspective and a regulator was that we needed to change the conversation to say that areas that get 20+ hours etc will pay higher rate. But to give effectiveness to that approach, there’s need for penalties.

So, what the regulator has always said is that as we execute the service-based tariff, there will be periodic reviews.

Areas that receive below their band and they receive less than that, there will be a refund for customers and de-banding. For areas that are receiving higher service, Discos can apply to upgrade them. But there’s never been a conversation in Nigeria that has been able to link payment to execution of service which is what the service-based tariff is effectively doing.

Can you throw more light on the unbundling of TCN?

There are many different discussions ongoing. If you look at the requirements of the 2005 Electric Power Sector Reform Act (EPSRA) that governs the power sector currently, it does provide for the unbundling of TCN into an independent system operator that will manage the movement of power, the scheduling of power or almost an administrative role for the grid and secondly transmission service provider that will work on the infrastructure.

So the provision is that at the point where the market has reached a level of maturity, the minister of power alongside the council on privatisation can engage with Mr. President and seek approval to proceed with the unbundling. Unbundling into these two constituent parts will be a precursor to any potential privatisation or concession of the entity. So the conversation is ongoing and the TCN is one of the entities that is on the privatisation schedule of the Bureau of Public Enterprises (BPE). So, they must work together. We are working on step 1 which is to lay the framework for unbundling and step 2 is to find how best to privatise or concession or commercialise the TCN for better and improved service.

Tell us about the full gamut of the Siemens deal?

I’ll continue to say this whenever I have the opportunity to speak. I think we should all be impatient about the power sector because without a growing power sector, we will continue to lose economic opportunities. But at the same time, what we must prevent is to allow that frustration to lead us to policy somersaults that will potentially drag the industry back. In relation to the Siemens transaction, I will talk more broadly about infrastructure investment.

Where we are coming from is that we have been subsidising consumption. We had a situation where we allowed Discos to operate and whatever revenues we received from them, we will then top off from the government and push to the generating company which led us to spending about N1.7 trillion without corresponding results or improvements. That transition from subsidy to infrastructure is what this administration with its current policies led by the Minister of Power, Sale Mamman, is executing. This is not rocket science because many countries have grown their power sectors but you need to actually put the hard infrastructure on the ground. With the suite of investment and infrastructure funding, we are targeting to use between $3 to $5 billion, over the next 24 months, putting it into the infrastructure development of the sector.

Before the year President Buhari came in, the whole budget was about 30 million for the TCN and in an environment where you are growing your generation capacity, you obviously have a mismatch.

But we now have funding from the World Bank through the Transmission Expansion Programme (TREP) of about $1.6 billion and that has been reported and then we have signed this Distribution Expansion Programme and then the CBN has put out emergency fund on the distribution side as well as transmission, distribution interfaces to the tune of about $500 million.

We have the Siemens presidential power initiative and the engineering agreement has been signed and that will bring in about $2billion over time. So, we are taking an approach of any funding that is available in the sector and we look at the improvement plan of the Discos that the regulatory agency holds them accountable for and they receive funds, they will align their activities. I agree we should all be impatient, but where the funds have come in like the mass metering programme, citizens are reporting that they have received their free meters thus reducing suspicion in the sector and in turn increase our revenue in the sustainability of the ecosystem through improvement and liquidity.

Where are we with the national mass metering programme?

The national mass metering programme replaced the MAP which was requiring some private investors to come in and sell meters and recoup their money over time. There were challenges in the structure and there were options for citizens to pay. President Buhari who keeps tabs on what is going on, understands very clearly that arbitrary billing is one of the main challenges in the sector, so he has mandated that we transition into the national mass metering programme and that is fully funded. The estimated 6 million metering gap in the country will be eliminated by the end of the life of this administration. We are in phase 0 which the Central Bank has provided funding for. Thus far, that phase 0 is about a million meters, phase 1 will be 4 million meters. We have mopped up all the available meters. About 600,000 have been delivered to the Discos and about 400,000 plus have already been installed. We track the geo-location and the name of every citizen that has been metered and we are confident that before the life of this administration, we will eliminate the metering gap and put the arbitrary billing as well as the energy theft issues to a significant reduction. In terms of unbundling, the act allows at the maturing stage, the separation of the management of the grid, with a new independent system operator from the transmission service provider who builds the infrastructure. The act requires for you to unbundle first before privatisation or commercialisation or whichever approach we take. So, we are doing both. Currently we are determining how best to unbundle into the two parts. The BPE and NCP are looking at that. Will commercialisation be into sub-regions, as a whole or what? Those are some of the items we are evaluating.

Are we getting to that magical number of generating 100mw before the end of the administration?

For a 100,000 MW, we do have a trajectory, but we will definitely not be there in 18-24 months. But we have continued to have an imbalance between generation and in some estimates, we have the line of sight to about 20,000mw. Where the work is occurring is on transmission and distribution to be able to get those megawatts that we can generate into the homes of citizens. The administration is also looking at this power approach, not only in megawatts but on its impact on people. We have the approach to the 25 million solar home systems, providing financing for development, rolling out minigrids and that was launched in Jigawa recently. We are working to ensure that the value chain is integrated and that energy access is improved. But we think we have a clear line of sight of at least 10,000 mw, during the life of this administration in terms of delivered power to individual end users.

What’s happening with the Mambilla power project?

This administration has shown that it can handle complex infrastructure projects and we have come up with innovative financing mechanism to execute that. We have reached advanced stage with the second Niger Bridge, the Abuja-Kano road, Lagos-Ibadan express is active , rail , the AKK project etc. This administration is pushing with Infraco, the CBN-led body with NSIA and AFC to the tune of N1 trillion. As you know, the Request for Proposal (RFP) is out for the fund managers and that is an infrastructure investment vehicle. In terms of the infrastructure for the future, we need to enhance our roads, integrate transportation with rail, and work on our digital infrastructure which is one of the fastest growing in the economy. We are confident that by the end of this administration, Mr. President will be known as Mr. Infrastructure and we hope that this will create jobs. In terms of Mambilla, it is not uncommon to see infrastructure projects having long gestation period. The pre-work is ongoing. There are some issues that are being clarified between the ministry of power and justice. We will set it on a good trajectory by the end of the life of this administration, but like I said, all complex infrastructure have gestation period. And we will be able to complete Zungeru by the end of the year and we don’t hear so much media about it. It’s 700mw of hydroelectric power. Mambilla is important, but we have others.

The national grid seems to be perpetually collapsing. What are the plans for off-grid options and also renewables?

Even on the national grid, I think the metrics are not out there. In 2016, we had 28 adverse grid events where they had grid collapses, last year it was four and thus far this year, we have had two. It’s not an excuse, but I think that the investment in the system is what has led to that reduction and we desperately need to complete the procurement of the SCADA digital system that helps with automated management of the grid. But there is funding for that and procurement process is ongoing, but we need to accelerate it. Even at the TCN, anytime it happens, it is like it is the end of the world and we should all complain, but the metrics have shown a continuing reduction on those adverse grid events.

On renewables, the government plans to have on the policy side, to have 30 per cent of power to be bio-renewables by 2030. We do on-grid like Mambilla, Zungeru, but we are investing heavily in the areas that impact our rural dwellers. There’s a N140 billion under the Solar naija programme that is being accessed by developers. We expect to have 5 million connections and we have already seen that we are on that trajectory. We are going to continue to push for renewables.

Before now renewables were not used in rural areas at all. In some areas in Turankawa, Rokota, Jangefe, Mokoloki in jigawa, Niger and sokoto, they have more light than urban areas because they have a hybrid of solar, battery and mini-grids which is being driven by the Rural Electricity Agency (REA).