REA’s ‘Ghost Projects’ worth ₦2.8 billion could build 2 mini-grids each for Nigeria’s 774 local governments

National Rural Electrification Agency has spent a sum of ₦2.8bn on nameless projects;

Fraudulent spending by MDAs has become the new order of the day;

Nigeria continue to live in the dark age despite huge money disbursed;

Dataphyte analysis shows REA could have more money value if it utilised solar mini-grids.

The Rural Electrification Agency spent ₦2.8 billion in ‘ghost projects’ from January 31 to July 5, 2020. According to the Open Treasury Portal, Umaru Maza Maza, REA Chairperson and Ahmad Salihijo, REA CEO disbursed these funds to 156 contractors. 

At this juncture, the implication of nameless transactions is no longer novel; experts continue to cry foul at these occurrences, as they are often indicative of corruption. Not to mention it contravenes the government’s Open Treasury Portal guidelines. 

REA is responsible for provision and sustenance of affordable electricity to the rural parts of the country. While Nigeria’s power struggles are vast, the bane rests largely on rural communities in Nigeria. This is why the federal government in the year 2006, established the agency to tackle this dire need. To this effect, the Federal Government has disbursed ₦85.1billion to the project in four years. 

But for all its successes, including establishing 99,450 connections  in two years, there seems to be a disconnect with the realities of everyday Nigerians who battle power supply challenges. What is more? Dataphyte revealed that the ₦2.8 billion in question could supply the 774 Local Government Areas with two solar-powered mini gids at an average rate of ₦1.2 million.

Rundown of ‘Ghost Projects’

Once again, these occurrences exemplify a transparency challenge that has become a mainstream problem among government parastatals. Earlier, a Dataphyte analysis revealed how government parastatals spent federal funds in opacity, hindering accountability in governance.

REA refuses to respond 

For clarity, Dataphyte reached out to the Rural Electrification Agency requesting information on the nameless projects. Sadly, the reporter could not reach the Director, despite being on the phone with his secretary for 15 minutes. He did, however, hear background conversations like  “What does he want, don’t mind these people… ” Repeated phone calls also proved abortive, as the Reporter was bounced across different staff, save the Director. 

₦2.8 billion can save the day

While the purpose for the ₦2.8 billion expenditure is unknown, Dataphyte’s analysis shows the REA could power the 774 local governments area (LGA) with one to three solar powered mini grids. 

The World Bank mini-grid costing estimates in 2019 showed the highest‐cost cluster of mini-grid ranges from $4,000 i.e. ₦1,520,000 (at ₦380/1$ exchange rate) to $5,000 (₦1,900,000) per customer serving 70 customers and the firm power output averages 460W per customer. 

Ranging between $2,400 (₦91,200) and $3,300 (₦1,254,000), the middle cluster mostly used in Africa averages a per customer firm power output of 530W, serving 200 customers. On the bottom spectrum is the lowest cost cluster which serves more than 200 customers. It ranges $730 (₦277,400.00) to $2,000 (₦760,000.00) with an output of 320W. 

What does this mean?

The price valuation above implies that with ₦2.8 million, REA could purchase about 1,473 mini-grids (at ₦1.9 million), enough to distribute at least one mini-grid to Nigeria’s 774 LGAs.

Using the median cluster evaluated at ₦1.2 million, the REA could purchase 1,839 mini-grids; the maths then changes to at least two mini-grids for each LGA.

In the same vein, the lowest cluster of mini-grid which costs ₦760,00 per one will be able to provide three mini-grids for each Local Government in the country.

Nigeria’s Power Sector: Mainstream corruption amid a 4 year ₦93 billion expenditure

Apart from contravening the OTP’s transparency policy, the Nigeria power Sector has become infamous with corruption and mismanagement of public funds. An investigation by Premium Times spoke to this. It revealed how the former Minister of Power, Housing and Works Babatunde Raji Fashola violated Section 713 of Nigeria’s financial regulations by paying ₦4.6billion into the account of 21 private individuals with no specific details. 

In truth, this consistent malfeasance unarguably diminishes productivity in the power sector, evidenced by the power challenges Nigeria faces at different levels of operations.

Save the prominent malfeasance in the power sector, Nigeria’s electricity is nothing to write home about. And despite spending over ₦93 billion in 4 years there are no tangible gains. 

According to a Pricewater Waterhouse Cooper (PWC) 2016 roundtable reports, only 40% of Nigerians have connections to power grids while the other 60% face electricity challenges.

More so, the National Bureau of Statistics (NBS) (2016)  also reported that only 26 per cent of households in Nigeria could afford power luxury, the rest have to rely on 3.6 to 6.3 per hours a day of electricity depending on the region. 

Expert frowns at common trends.

While he decried the common trend of lack of transparency in MDAs, Olarenwaju Suraj, a chairman of the Human and Environmental Development Agency, also encourages all governments to be accountable.

“It is a common trend among federal agencies (referring to corruption). Another thing the open portal is exposing is citizens’ involvement in government affairs. Citizens must always ensure they (government agencies) are questioned so that they don’t get away with it; they must continue to push the frontier of dissemination of information at all times.”