NIGERIA POWER SECTOR REFORMS Fact Sheet (June 2021) Despite Nigeria has invested billions of dollars into power generation in expectation of meeting its reform efforts growing demand. However, there has been insufficient investment into the transmission and of the past, distribution infrastructure needed to deliver the generated power to homes and businesses. the Nigerian As a result, only a half of installed power plant capacity is available for generation, and only power sector two thirds of generated power reach Nigerians. One third of all generated electricity is lost still faces in the inefficient networks. Businesses in Nigeria lose about $25 billion annually because of significant unreliable electricity. challenges Nigerian utilities, DISCOs, get paid for only a half of the electricity they receive into their networks. Besides electricity lost in poor distribution networks (technical losses), electricity is also stolen (commercial losses). Moreover, 6 in 10 of registered customers are not metered, and their electricity bills are not transparent and clear, so a lot of consumers refuse to pay. As a result, DISCOs do not make enough money to cover their everyday expenses or invest into improving their services. Those Nigerians that do pay, pay less for electricity than what it costs to supply electricity to them. The Government, for years, has been paying the difference because they wanted to help poor Nigerian families to pay their bills. But with over 40 percent of the Nigerians not connected to the grid, and most of them belonging to the relatively poorer households, this Government support does not reach the poor. Richer families use more electricity, so a big part of Government support ends up going to those who do not really need help with paying bills. What the To improve performance of Nigerian power sector, four challenges need to be addressed: Government empowering policies and regulations need to be in place; financial sustainability of power has been sector needs to be strengthened; operational efficiency of DISCOs needs to be improved; and doing to network infrastructure needs to be enhanced. Government has taken a four-sided approach to address the tackle all of these challenges: it put in place the Power Sector Recovery Programme (PSRP). challenges PSRP has been designed as a comprehensive power sector reset, a fresh start with renewed and why it is focus to boost Nigeria’s economy by rebuilding a functioning and fair power sector. different from what has been The PSRP design is data driven. Actions included in the Programme are based on real sectoral done before data, carefully collected by the Nigerian Electricity Regulatory Commission (NERC) from DISCOs and disclosed on their website. PSRP is fair and pro-poor. Tariffs under PSRP reforms will ensure that those who can afford, pay more. Households consuming less than 50kwh per month and poor unmetered households will not see any tariff changes. There is high-level commitment to successful PSRP implementation from the Government to ensure results and accountability. A Presidential Working Group has been created to coordinate and monitor sector reforms. It is led by the Office of the President, with the Minister of Finance, Budget and National Planning and the Minister of Power closely monitoring implementation progress. Power Sector Recognizing the critical need to improve transmission and distribution networks, the Reform Government has provided = N240 billion to improve services and resolve transmission and Actions & distribution bottlenecks. Achievements Recognizing the need for action outside the grid-connected areas, the Government introduced the Rural Electrification Strategy and Implementation Plan. Power Naija, launched in April 2021, is rolling out 5 million solar connections in unconnected, hard to reach rural communities to ensure they also get electricity. Actions taken by the Federal Government to tackle fiscal sustainability reforms in late 2020 have led to = N80 billion in budget savings. PSRP Financing Plan for 2021 has been approved by the Presidential Working Group to ensure realistic and sustainable support to the power sector. The National Mass Metering Programme aims to increase metering significantly to help DISCOs increase their billing transparency and collection efficiency. NERC determined the Minimum Remittance Obligations for each DISCO and those have been enforced since July 2020. NERC has approved Performance Improvement Plans (PIPs) for each DISCO for 2020-2024. PIPs that have clear and measurable indicators to track improvement in quality of DISCOs services, for example reduction of losses. How the $350 million private-sector driven Nigeria Electrification Project focuses on providing off-grid World Bank access to electricity to underserved rural populations and rural institutions. supports the Power Sector Reform in $486 million Nigeria Electricity Transmission Project is supporting Transmission Company of Nigeria Nigeria to strengthen the transmission network in Nigeria. $465 million (with $27 million for Nigeria) regional North Core/Dorsale Nord Regional Power Interconnector project supports increasing electricity trade between Nigeria, Niger, Benin and Burkina Faso. Between June 2020 and February 2021, the World Bank Board approved $1.25 billion financing POWER SECTOR RECOVERY to support the Government in its efforts to reset power sector. Power Sector Recovery Operation PROGRAMME (PSRO, $750 million) supports policy, regulatory, fiscal and financial sustainability actions under PRSP. Distribution Sector Recovery Programme (DISREP, $500 million) supports PRSP’s reforms on improvements of DISCOs’ operational efficiency and strengthening electricity distribution infrastructure. The World Bank team is working closely with Government counterparts to ensure transparent, transformational, consultative and sustainable implementation of power sector reforms. How the The World Bank support to power sector reforms in Nigeria (PSRO for policy and fiscal World Bank sustainability and DISREP for operational efficiency and infrastructure) are results-based supports projects. In other words, the funding is released only when the agreed results are achieved. transparency, good Communications and stakeholder engagements are a part of the results that are to be achieved governance under PSRO. Sector-wide consultations with public and private sector operatives being and conducted to ensure transparency, consensus building and collaboration. accountability in power A website is under development where PSRP updates will be shared to facilitate access to sector information. reforms Consistent engagement with all of the stakeholders is a critical part of the World Bank support. The first media workshop with power sector reporters has been held to foster dialogue and information sharing. A meaningful engagement with Civil Society Organisations is a part of the World Bank’s external outreach strategy on power sector reforms in Nigeria.