Sanusi Ohiare is the immediate past and pioneer Director of Rural Electrification Fund (REF). In this interview with KINGSLEY JEREMIAH, Ohiare, discusses critical issues in the Nigerian power sector, especially in the underserved communities as well as the plan by the government to remove petrol subsidies.
With regards to project execution by the Nigerian government, we have seen a lot of abandoned projects and government funds go into projects that do not get completed. Do you think the current government which you are a key part of has done anything differently, especially in the aspect of rural electrification?
The government of President Muhammadu Buhari has done a lot in terms of continuity and sustainability of projects. One of the major issues when he assumed office was the issue of abandoned projects. In the power sector, we had over 2000 abandoned projects when we came on board.
The directive from the President was that the government is continuous therefore, every abandoned project will be completed as the benefactors are Nigerians. Also, to put a sustainability plan to ensure that the projects are not vandalized or fail to work due to lack of maintenance.
Not only did we complete these projects, we did more for less funds. Our predecessor had done about 2567 projects for N150 billion between the year 1992 and 2016 but when we came on board, based on statistics from the year 2017 to 2021, with N50 billion, we completed about 1700 of those projects which is 65 per cent of the total projects between 1992 to 2021. 2000 out of 2567 projects were abandoned despite spending about N150 billion by the previous government.
Another thing that this government has done is ensure value for money. Prudence in terms of spending resources, and they make these resources available unlike the previous government, where every year they released only 50 per cent to 60 per cent of the budget. With this current government, once a budget is signed, there’s assurance that 100 per cent of the budget will be released especially for critical agencies like ours that provide electricity to rural communities. So this is something that the President (Muhammadu Buhari) was very deliberate about.
What will you point to as your achievement as the Director of Rural Electrification Fund?
I had one single task when I was appointed in 2017. I was the youngest appointee then; just a very passionate problem solver with a lot of ideas. Fortunately for me, I was the pioneer as executive director of the Rural Electrification Fund. So it gave me the leeway and the leverage to set up funds in line with international best practices. What I was able to do was to look at what was being done in other countries that were doing well.
I looked at Southeast Asia, Bangladesh, Kenya and adopted some of the things that they were doing. East Africa was far ahead when we started, but by the time we finished developing our model, of course, starting from international best practices and getting support from international development agencies like GIZ and the then DFID, which is now FCU, World Bank, Africa Development Bank; they all looked into the documents.
We also got approval from the board and from the agency, which is what has formed the guideline for accessing funding for the rural electrification fund today. And it is a very simple model which was not in existence.
Before we came, it was just about implementing capital projects, no other sources of funds, and no other model to promote rural electrification.
Well, my idea was that the government cannot continue to fund rural electrification without partnership from the private sector, especially as more funds are needed to sustain projects and the private sector is more inclined to business sense; they go to rural areas, engage in this programme, invest in it and stay there.
I must admit however that the model was initially difficult to implement, especially bringing the private sector to rural communities as investors for obvious reasons such as security and profit margin.
The margin of profit is not much, unlike other bigger projects that they will be interested in. But we succeeded in incentivizing them to see that there is a business long-term gain; that was my job. My job was to come here and bring these private sector players by letting them see the business sense in the rural areas. We convinced them to commit their money, and the government is expected to partner with them through some grants.
The private sector is to go out, create, develop and maintain these projects. Agreements will be signed which should last for at least about 20 years and then rural people will have electricity for almost 24/7. We piloted this while I was at my former job. When I came here, I also started with a government fund in 2017 with about 12 mini-grids, which are still working very well today (six years later).
And then, on the strength of that, when international development agencies like the World Bank saw that this model was really working, as demonstrated, we were able to convince them to bring in $350 million, which we are using now to do a lot more of similar projects where we go to isolated communities that have never had electricity and we distribute and install solar mini-grid systems with panels, batteries and inverters to generate electricity on-site to those communities and which now have 24 hours electricity.
It was very important for us to demonstrate this model given the little funds that we had. But we have been able to complement what the World Bank brought alongside the $200 million that came from AfDB. All of them now believe in the process.
In Nigeria and Africa generally, the issue of electricity is still very, very critical. How do we upscale your kind of model moving towards energy transition to ensure that we’re able to actually have a sustainable solution to the electricity issue, and particularly in the rural area, where we need more rural dwellers to contribute to the GDP?
We have piloted, all we are doing now is scaling up. For you to scale up, you need to build capacity to have more hands, more developers that understand the business and that are able to develop the local market.
There is a need for the government to continue to support, banks are also needed to be able to bring in more money. It is a whole value chain. Our job is to prove that these things are working and to encourage people to put money where their interest is.
We’re scaling up as more money brings opportunities.
This model has the tendency of developing the world of mobile money banking for rural communities and for those within the banking sector. With the trending cashless economy, what rural people usually do is that they pay our developers in rural communities with cash by buying tokens mostly because they don’t know what a cashless system is.
It is important to see how they can migrate gradually, even if they are not in the formal banking sector because most of these banks are not in those rural areas. They can go through mobile banking like Opay and other similar platforms, gradually they can even use the USSD code. However, for this short period that this cashless policy has come into effect, it has really affected our developers because they’re struggling to get money, not just to eat, they have to have a scale of preference in terms of priority, what they need because they need to transact.
The cashless system transition has really hit them hard because they’ve grown used to cash. This is part of the reason why you see that some of our leaders are complaining about this policy. Though it is a fantastic policy.
Left for us, it is even helpful to our developers, it makes it easy for them to monitor their money and to secure their money when they get paid, however, the period that was given for compliance, I think it wasn’t well thought through.
Maybe they didn’t envisage this kind of backlash, but it’s an opportunity for us to move on because as leaders, we are there to serve our people, we’re public servants, and if we have good intentions, and maybe it’s not coming off well or it’s becoming a burden on the people, we definitely need to review.
We’re currently talking about removing subsidies by mid-year. This year about N3.4 trillion has been budgeted for fuel subsidies for six months. What’s your take on this?
Most of our projects align with net-zero plans. We have been promoting renewable energy because we have abundance of sunlight in Africa, specifically in Nigeria. We are prolific when it comes to solar electricity.
There is no part of the country that does not have enough sunlight to power homes. We have long adopted this before the challenges became obvious. These rural communities used to use small diesel generators in their homes and businesses.
But when we brought renewable energy into their communities, it displaced diesel so they don’t need to queue to suffer to get diesel because they have renewable energy. We have also done this in other sectors such as our schools and health sectors. Most schools are powered by diesel but now it is no longer so as we’re now providing universities with solar power to power campuses. So when students are in school, they don’t need to bother about power supply. These initiatives directly reduced reliance on fossil fuel and also subsidies.
Fuel is a commodity, very important, just like electricity, but people need to be able to pay for it so long as it is available everywhere. And this has always been my model. Now, our government will at some point remove subsidies, because it’s not sustainable.
We have demonstrated in our pilot projects which we call energizing transportation, where we’ve provided a pilot of a couple of tricycles for Federal University Lokoja and the tricycle riders do not need to buy fuel because it is powered by solar. It has batteries and it can commute for about 200 kilometres before they need to recharge. You’ve heard of Tesla electric buses and so many electric companies are coming up.
The APC candidate, Bola Asiwaju Ahmed Tinubu has talked about how to sustain some of these policies under President Muhammadu Buhari as it affects subsidies. But what is our plan? We have already started by replacing all these services that require fuel with renewable energy which also helps us to meet our obligations in line with energy transition.
This is how to transit gradually and this is something we started six years ago. Now we’re getting to a stage where we need to scale up especially as it is becoming more apparent that subsidy has to go.
Do you think it is the right time for us to jump on the race for net zero? We require about $3.2 trillion, $1.9 for the Energy Transition Plan and about $1.3 trillion for Nigeria’s renewable energy roadmap which was launched in UAE earlier in January. What’s your take?
We have the opportunity to leapfrog our path when it comes to net zero. The impact has been on developed countries. If they had the option during the time of their industrialization, I think they would rather use renewable energy and have a better, cleaner environment.
We haven’t reached that stage where we have developed our economy using coal. So I mean, Nigeria is a signatory to all of these protocols, and agreements on climate change, so we are a part of the International Committee. I see no reason why we should not join as what is affecting other countries is affecting us as well.
However, we have also stated clearly that we have gas which is our transition fuel. Most of the developed countries are going backwards in light of what’s happening: COVID, the war in Ukraine and Russia and also the sustainability protest in Germany.
But that’s not to say we have to start looking at coal resources, however, there’s what they also call clean coal. The money they promised to countries that are coal-dependent like South Africa for instance, has not come.
The problem with this is the distrust between the developed and the developing countries in terms of money that are supposed to come in to support the less developed countries, to help them move towards energy transition and net zero.
I don’t see a reason why we cannot join, however, if you look at our peculiarity, we’ve already made it clear that we have a lot of things to transition from while we are still looking at renewable energy, there’s the infrastructure which we are currently working on.