The Federal Government is introducing a payment system for public institutions benefiting from its solar power projects.

According to the government, the move will prevent the infrastructure from becoming unusable after huge amounts of public money have been spent on them.

The new arrangement will require beneficiary institutions to pay a sustainability tariff for the electricity they receive from the renewable energy systems. It is understood that the money will be used to support the continued operation, maintenance and eventual replacement of critical equipment.

The initiative was announced by the Rural Electrification Agency (REA) during the unveiling of the Renewable Assets Management Company (RAMCO) on Wednesday.

REA Managing Director, Aliyu Abba Abubakar, said the government was forced to rethink the existing model after discovering that some solar installations had deteriorated because there was no dependable source of funding for their upkeep.

He said the projects had initially provided savings for public institutions by reducing their dependence on diesel generators, but the absence of a long-term maintenance structure threatened those gains.

An assessment of seven facilities delivered under the first phase of the Energising Education Programme, according to Abubakar, showed that only three remained in good or usable condition.

The finding, he said, exposed a major weakness in the way publicly funded renewable energy projects had previously been managed.

Rather than continuing to provide free electricity and later returning to the government for repair funds, the new system will require institutions to contribute towards keeping the installations operational.

Abubakar said RAMCO would manage the assets, engage qualified operators, meter consumption, collect payments and build financial reserves for major replacements.

“In RAMCO, we are building an institution that learns, improves and continues-regardless of who occupies the leadership position. RAMCO is not another government agency, it is a company incorporated under the Companies and Allied Matters Act, with Federal Government interests held through the Ministry of Finance Incorporated and governed by a professional board,” he said.

The REA chief said the company was designed to remove the burden of repeatedly seeking emergency allocations from the Treasury whenever equipment such as batteries or inverters failed.

“If a battery or inverter requires replacement in year eight, we should not return to the treasury in year eight looking for emergency funding. The money should already be there,” he said.

He explained that the new charge should not be regarded simply as another expense for public institutions, arguing that the beneficiaries would effectively be using part of their existing energy budgets to protect infrastructure that provides them with more reliable electricity.

“It is the redirection of part of what an institution would otherwise spend on expensive and unreliable power towards preserving the asset providing reliable electricity,” he said.

“Reliable electricity is not free. The question is whether we pay repeatedly for diesel and failed infrastructure, or pay a predictable tariff that keeps a cleaner, more reliable system operating for twenty years,” Abubakar added.

N263bn invested in solar projects

The scale of the government’s investment has also increased the pressure to establish a system that will protect the infrastructure from premature failure.

Abubakar disclosed that about N263 billion had been committed to solar-hybrid power generation through the Energising Education Programme, which covers 22 federal universities and three teaching hospitals.

Since the programme started in 2017, approximately 82MW of solar-hybrid generation capacity has been installed. A further 150MW-plus is either being constructed or planned through EEP phases and other renewable energy programmes, including DARES, the National Public Sector Solarisation Initiative, TETFund projects and the Desert to Power programme.

The government now wants the financial model supporting those investments to extend beyond construction and commissioning.

RAMCO is expected to provide that structure, with the company designed to accumulate funds that can be used when major components eventually require replacement.

Abubakar said the ultimate objective was to prevent government agencies from returning to public coffers every few years to request money for assets that were supposed to provide electricity for decades.

Power minister explains tariff plan

Minister of Power, Joseph Tegbe, said the tariff would be structured to make the renewable energy projects financially sustainable without placing an unreasonable burden on beneficiary institutions.

He described the initiative as an important link between government-funded infrastructure and the possibility of attracting private capital into the renewable energy sector.

Tegbe also disclosed that the government was conducting technical audits of damaged or malfunctioning power infrastructure as it works to improve the country’s electricity network.

“We will revisit the east and west super grid so that we can build resilience into our grid,” he said.

The minister said Nigeria’s transmission system was currently struggling to wheel about 5,000MW but expressed confidence that the capacity would increase significantly.

“My target is that by the end of this year, we’ll conveniently be wheeling 6,500. By the end of next year, we will be wheeling conveniently 8,000 megawatts,” he said.

The health and education sectors are among the major beneficiaries expected to benefit from the new approach.

Minister of State for Health and Social Welfare, Dr Iziaq Adekunle Salako, said dependable renewable power was particularly important for health institutions because of the unreliable nature of grid electricity.

Education Minister, Dr Maruf Tunji Alausa, said solarisation had already reached no fewer than 15 universities, making the question of maintaining the facilities increasingly important.

He said government could no longer focus only on installing renewable energy systems without putting mechanisms in place to ensure they remain functional.

“The challenge for us today is no longer therefore about building renewable energy infrastructure, it is about ensuring that these assets are properly operated, maintained and preserved so that enormous investments made by the government continue to deliver value for Nigerians…This is where RAMCO becomes important,” Alausa said.

FG shifts focus to sustainable spending

The introduction of the solar sustainability tariff comes against the backdrop of other measures by the Federal Government to reduce what it considers unnecessary public expenditure.

The Education Ministry recently announced the discontinuation of new government-funded overseas scholarships under the Bilateral Education Agreement, with Alausa saying Nigeria should concentrate more resources on strengthening its own tertiary institutions.

The minister said the government could not continue paying to send large numbers of students abroad for programmes that were already available in Nigerian universities, polytechnics and colleges of education.

He recalled being presented with a proposal involving about 100,000 Nigerian students travelling to Morocco to study courses including mass communication and journalism.

Alausa questioned the rationale for the arrangement, noting that the students would first have to spend a year learning French even though similar courses were available in Nigeria.

“Number one, we have all those courses in Nigeria. And yet, number two, they were going to spend the first year learning French before they started the programme,” he said.

The minister argued that government could use significantly fewer resources to support a larger number of students within Nigeria.

“So the Bilateral Education Agreement was not making sense, again, to us in government. It was a way to waste government funds,” he said.

“And this President will not waste any public funds,” Alausa added.

Existing beneficiaries of the bilateral scholarship programme are expected to remain supported until they complete their studies, while foreign governments can still independently sponsor Nigerian students.

Alausa said Nigeria’s capacity had grown substantially since the overseas scholarship arrangements were introduced.

“When those programmes were set up 20 years ago, they were meant to get students to go to the government colleges where we did not have capacity,” he said.

“But in the last 20 years, we’ve built a number of capacities in the tertiary institutions — universities, polytechnics and colleges,” he added.