1
NIGERIA
Power Sector Recovery Performance Based Loan (PBL)
Pre-Appraisal Mission
January 21-January 26, 2018
AIDE MEMOIRE
A. INTRODUCTION
1. A World Bank (WB) energy mission1 visited Abuja, Nigeria from January 21-January 26,
2018 for the pre-appraisal of the Performance Based Loan (PBL) in support of the Power Sector
Recovery Program (PSRP). The key objectives of the mission were to: (i) finalize the Results
Framework and the monitoring and evaluation arrangements; (ii) finalize the Disbursement Linked
Indicators and their verification protocols; (iii) finalize the funds flow arrangements for the PBL
credit proceeds; (iv) discuss the draft findings and recommendations of the Bank’s Environmental
and Social Systems Assessment (ESSA) during the consultations held during the mission; (v) agree
on the Program Action Plan to enhance the Program’s systems and performance; (vi) finalize the
scope of the technical assistance and the procurement plan for the TA component on that basis;
(vii) agree on the structure and capacity building needs of the Implementation Monitoring Team;
(viii) review the implementation status of “prior results” supported under the Program; (ix) review
the status of the communication campaign being designed and discuss the next steps for launching
the campaign nationally; (x) review the status of the procurement of the key consultancy services
for the Nigerian Electricity Regulatory Commission (NERC).
2. The mission met with the senior officials and technical staff of the Ministry of Power,
Works, and Housing (MoPWH); the Nigerian Electricity Regulatory Commission (NERC); the
Budget Office of the Federation; the Central Bank of Nigeria (CBN); the Nigerian Bulk Electricity
Trading Company (NBET); the Multi-Agency Financing Team; and the PSRP Implementation
Monitoring Team (IMT). The mission is thankful to the Nigerian counterparts for strong
cooperation. The list of agencies met is included in Annex 1. This Aide Memoire summarizes the
key findings and recommendations of the mission.
B. SUMMARY
3. Implementation of the PSRP has continued to progress since the World Bank’s last mission
in December 2017. Specifically, the Medium-Term Expenditure Framework (MTEF)/Fiscal
Strategy Paper (FSP) for 2018-2020, containing the Financing Plan, was approved by the National
Assembly in December 2017; progress has been made in defining governance arrangements for
institutionalizing the Least Cost Development Plan (LCDP); draft Guidelines have been developed
by NERC for the preparation of Performance Improvement Plans (PIPs) by the distribution
companies (DISCOs); and communication activities have further progressed. Several actions of
1 The mission comprised Ani Balabanyan (Lead Energy Specialist and Task Team Leader); Kyran O’Sullivan (Lead
Energy Specialist and Coordinator of the PSRP for the World Bank); Pedro Antmann (Lead Energy Specialist);
Jaeyoung Jin (Senior Energy Specialist); Muhammad Wakil (Energy Specialist); Yue Man Lee (Senior Economist);
Tu Chi Nguyen (Young Professional); Akinrinmola Akinyele (Senior Financial Management Specialist); Amos Abu
(Senior Environmental Specialist); Edda Mwakaselo Ivan Smith (Senior Social Development Specialist); Carolyn
Warren and Chinazo Ifeanyi-Nwaoha (Energy Consultants); Clara Alvarez (financial consultant); Andres Detomasi
and Mario Pizzaro (regulatory consultants); and Joy Medani and Leonard Wolloh (logistical support).
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the PSRP, that are also prior results of the PBL, have been delayed, as highlighted in the table of
Section C.
4. It is necessary that remaining actions (Section C) are implemented expeditiously so that
the World Bank can complete the appraisal of the PBL and invite the Federal Government of
Nigeria (FGN) to the negotiations. The most critical actions include the official sign-off on the
Financing Plan; the issuance of Guidelines for PIPs to initiate the Reset process; the adjustment of
DISCOs’ invoices payable to NBET for 2018; publication of the generation database, audit reports
of sector companies and key operational and financial data of the sector; provision of the NBET
comprehensive budget reflecting the Financing Plan; formalization of the two multi-agency teams
for updating of the Financing Plan and institutionalizing the LCDP; and publication of the public
PSRP document.
5. The PBL’s processing timeline is as follows:
Appraisal completion: February 20, 2018, subject to implementation of critical actions
Negotiations and Board Approval: April 30, 2018.
C. NEXT STEPS
6. The table below summarizes the actions that are necessary to progress further with the
implementation of the PSRP and to meet the prior results of the PBL (detailed further in Annex
2). Critical actions that need to be carried out by the completion of the PBL appraisal, are
highlighted in bold.
2 Key operational and financial data includes: (a) energy sent-out by each GENCO (in kWh), the resulting invoices to NBET, and
NBET payments against these invoices; (b) the electricity delivered to each DISCO (in kWh), the resulting DISCO bill (invoice
amount), and DISCO payment against these invoices; (c) scheduled electricity supply hours for service areas of by each DISCO;
and (d) amount of funding disbursed to cover the revenue shortfall of the sector.
Decisions and documents Responsible
Agency
Timeline
1. Obtain a letter from the MoPWH formally
designating the multi-agency financing team
responsible for preparing and updating the Financing
Plan, accompanied with a Terms of Reference to
outline responsibilities and timeline for the team
PSRP IMT December
22, 2017
February
6, 2018
2. Obtain a letter from the MoPWH establishing a
multi-agency team to institutionalize the LCDP,
accompanied with a Terms of Reference to outline
responsibilities and timeline for the team
PSRM IMT December
22, 2017
February
6, 2018
3. Publish a database of generation plants and
their contractual arrangements
NERC,
PSRP IMT
January
10, 2017
February
10, 2018
4. Prepare Project Procurement Strategy
Document for the TA component
REA PMU January
15, 2018
February
12, 2018
5. Publish the audited financial statements of
power sector companies (GENCOs and DISCOs) for
years 2015 and 2016, and key operational and financial
data2 for 2017
NERC,
PSRP IMT
January
22, 2017
February
15, 2018
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Actions carried forward from the previous Aide Memoire Previous
Deadline
New
Deadline
6. Publish the PSRP document and ensure that it
contains the full Financing Plan and its fiscal costs
FGN, PSRP
IMT
January 8,
2018
February
15, 2018
7. Provide to the World Bank revised Guidelines
(including its supplements) for preparation of DISCOs’
Performance Improvement Plans
NERC January
30, 2018
February
15, 2018
8. Share the comprehensive NBET 2018 budget
submitted to the Budget Office with the Bank, with the
explanation of the budget line items related to the
Financing Plan
NBET,
PSRP IMT
December
22, 2017
February
18, 2018
9. Issue an order for adjusting NBET invoices to
each of the eleven DISCOs to allow DISCOs retaining
their revenue requirement and paying service
providers their revenue requirement
NERC,
NBET
December
20, 2018
February
20, 2018
10. Appoint the Boards of NBET and TCN FGN January
22, 2018
February
28, 2018
11. Activate the Vesting Contracts of DISCOs to
the adjusted invoice amount
NBET January
15, 2018
February
28, 2018
New actions
12. Review Program Action Plan, DLIs, and Results
Framework (Annexes 2, 3 and 4)
PSRP IMT February 4, 2018
13. Assess 2018 revenue requirement of DISCOs
based on existing MYTO and TCN and share resulting
calculations and underlying model with the World
Bank
NERC February 8, 2018
14. Publish a communique about the launching of
the Reset that will outline the immediate next steps of
the Reset
NERC,
PSRP IMT
February 8, 2018
15. Document detailed invoicing and settlement
procedures for CBN and NBET and provide to the
Bank
PSRP IMT,
CBN, NBET
February 10, 2018
16. NERC to obtain the list of Federal, State, and local
MDAs served by each DISCO (from DISCOs)
NERC February 15, 2018
17. Obtain from respective branches of Government
(Federal, State, and local) the list of disconnectable and
non-disconnectable MDAs
NERC,
Federal,
State, and
local
Governments
February 15, 2018
18. Receive sign-off on the latest version of the
Financing Plan by the Minister of Finance, Director
General of the Budget Office, and the PSRP
Coordinator
PSRP IMT,
DG Budget,
MOF
February 20, 2018
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D. DESCRIPTION OF KEY ISSUES
Financing Plan
7. As indicated by its designation as a Global Disbursement Linked Indicator (DLI), the
Financing Plan is a critical component of the PBL. The full execution of the Financing Plan is
necessary to ensure that sector companies receive their required revenues until tariffs reach cost
recovery level and that historical deficits are eliminated, so as to enforce key contractual and
regulatory obligations of sector companies.
8. The multi-agency financing team has finalized the Financing Plan, including the base case
Plan and contingency plans for risk scenarios. The finalized Financing Plan includes three sources
of financing: the Payment Assurance Facility financed by the Central Bank of Nigeria (36 percent
of the total financing needs); the proceeds of the PBL (16 percent) and the annual budget
appropriations of the FGN (48 percent). The sales proceeds of the Government-owned NIPP plants
are no longer earmarked for the Financing Plan. Instead, the historical shortfall for 2015-16 will
be settled in three installments in 2018, 2019 and 2020.
New actions
19. Develop funds flow protocol that applies to all
sources of financing in the Financing Plan
PSRP IMT
(WB
support)
February 20, 2018
20. Complete the shortlist for Reset support and issue
Request for Proposal to the shortlisted companies
NERC February 20, 2018
21. Amend CBN Payment Assurance Facility
agreement with NBET to allow for disbursement of funds
identified in the Financing Plan through a single CBN
collection account
CBN, NBET February 20, 2018
22. Issue the draft Guidelines, after discussing it
with each of DISCOs and with CSOs in separate
meetings, for public consultations and public hearing
NERC February 28, 2018
23. Finalize the governance arrangements for
institutionalizing the Least Cost Development Plan
MoPWH,
multi-agency
team, PSRP
IMT
February 28, 2018
24. Define a mechanism to clean-up the tariff shortfall
for 2015, 2016 and 2017 from DISCOs’ Balance Sheets
(payables to NBET)
NERC February 28, 2018
25. Present to the Bank the (i) draft mechanism by
which the non-disconnectable MDAs (Federal, State and
local) will make direct payments to DISCOs from their
respective budgets to cover electricity bills
NERC March 1, 2018
26. Approve the funds flow protocol MOF, CBN,
NBET
March 1, 2018
27. Issue an Order (including the finalized Guidelines)
for preparation of tariff applications by DISCOs and TCN
NERC March 15, 2018
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9. Given the importance of Federal Government budget appropriations to the Financing Plan,
it is important to mitigate the risk associated with temporal fluctuations in their availability. Any
delay in the availability of this funding could result in late payments from NBET to GENCOs and
undermine the implementation of the overall PSRP and PBL. To mitigate this risk, it was agreed
with the Director General (DG) of the Budget Office that NBET can receive the FGN budgetary
contributions through quarterly advances once the FGN budget is approved to reduce the risk of
revenue shortfalls in the budget.
10. For the purposes of the achievement of Global DLI 2 of the PBL, the multi-agency
financing team and the World Bank agreed that the Financing Plan projections and the execution
of the Financing Plan will be determined on an accrual (rather than cash) basis. The deadline for
settling the shortfall of each year will be April 1 of the following year.
11. Consistent with the agreement reached with the DG Budget, the Financing Plan - the use
of funds/expenditures and the sources of funds/financing - should be on-budget. To that end, the
Financing Plan should be fully reflected in NBET’s comprehensive budget for 2018, which has
not yet been submitted to the Budget Office. NBET will submit a first draft of its comprehensive
budget to the Budget Office for review by February 5.
12. The key steps that should be completed by February 20, include: (i) the detailed Financing
Plan signed-off by the Minister of Finance, DG Budget, and PSRP Coordinator; (ii) sharing the
comprehensive NBET budget submitted to the Budget Office with the World Bank, fully reflecting
the inflows and outflows of the Financing Plan for 2018; and (iii) inclusion of the Financing Plan
summary in the public version of the PSRP document.
Critical Actions to Initiate the Reset
13. The implementation of the Reset for the eleven DISCOs and the transmission company
(TCN) is another critical action of the PBL; it is also designated as a Global DLI. To launch the
Reset, NERC should initiate a number of steps, as detailed below.
14. Performance Improvement Plans, which will be prepared by DISCOs on the basis of
detailed Guidelines provided by NERC, are an important component of the Reset. To support
NERC in the finalization of these Guidelines by supplementing some of its components, the World
Bank hired two international consultants with extensive experience in this area. The supplemental
contributions will focus on the following: implementation of Management Information Systems;
implementation of network and customer infrastructure mapping, supported by GIS; massive
phased deployment of consumption meters following the concept of “market or consumer
segmentation”; implementation of arrangements to optimize billing and collection and customer
service using the functionalities of the Commercial Management Systems; identification of high-
priority investments in network rehabilitation and upgrade, as well as other priority investments
needed to improve efficiency in operations in electricity supply. A complete list of measures is
included in Annex 5.
15. The launching and implementation of all the Reset steps should be carried out within a
framework of extensive consultation and full transparency. To that end, NERC should
publish a communique about its intentions of implementing the Reset and outline the immediate
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next steps it will undertake with launching of the Reset. Once the revised Guidelines, incorporating
the supplements are ready, NERC will hold separate meetings with each DISCO and with the civil
society organizations (CSOs) active in the service area of each DISCO, to discuss the draft
Guidelines (during the month of February). Following these meetings, NERC will publish the draft
Guidelines on its website for public consultations and subsequently hold a public hearing to discuss
the Guidelines. NERC will finalize the Guidelines after the public hearing and issue it as part of
the Order for DISCOs and TCN to prepare their tariff applications for the new multi-year tariff
period (mid-March).
16. Another critical step in launching the Reset and partially-activating contracts is the
adjustment of NBET’s invoices to DISCOs, such that DISCOs retain their revenue requirement
and pay to service providers their respective revenue requirements. NERC is finalizing discussions
with Bureau of Public Enterprise, NBET and DISCOs on the issue of invoice adjustment. Vesting
Contracts of DISCOs will be activated (Letters of Credit posted) based on the adjusted invoice
amounts.
17. To facilitate DISCOs’ access to financing from commercial banks and enforce their
Vesting Contracts, the payables related to the historical shortfall (2015-2017), which are fully
budgeted in the Financing Plan, should be cleaned up from their balance sheets. Given the
accounting complexities associated with this process, the World Bank team offered to provide
NERC with technical assistance required for identifying the most appropriate and definitive
solution for addressing this issue.
18. As part of the Program Preparation Advance that the World Bank has recently extended to
the Government, NERC will receive extensive technical assistance in carrying out the Reset. The
Expressions of Interest for the consultancy service to support NERC in the twelve Reset processes
(eleven DISCOs and TCN) have been issued. NERC will begin preparing the Request for
Proposals for the Reset so that the Proposals can be approved by the World Bank by the time the
short list of companies is completed (February 20).
19. The actions that should be completed for the successful launch of the Reset by March 15,
include: (i) NERC issuance of communique about its intention of carrying out the Reset; (ii) NERC
assessment of the 2018 revenue requirement of DISCOs and TCN, and provision of the resulting
calculations and underlying model to the World Bank; (iii) NERC issuance of an instruction
(Order) to NBET for adjustment of DISCOs’ invoices; (iv) NERC revision of the Guidelines for
PIPs by supplementing the existing draft with details; (v) NERC holding of separate discussions
with DISCOs and CSOs on the draft Guidelines; (vi) NBET activation of Vesting Contracts for
the adjusted invoice amount; (vii) NERC publication of the draft Guidelines for public
consultations and conducting of a public hearing; and (viii) NERC issuance of an Order (including
the Guideline) to DISCOs and TCN to prepare their tariff application for the new tariff period.
Funds Flow Arrangement
20. A single Funds Flow Arrangement will be applied to all three sources of financing
identified for the Financing Plan: the CBN PAF, the proceeds of the PBL and the FGN budgetary
contributions. All three funding sources will be accumulated into a single account at the CBN. On
a monthly basis, the CBN will transfer the portion of GENCOs’ invoices that should be settled
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from the Financing Plan to NBET’s account in the CBN. The share of the payment that should be
met by each financing source is currently under discussion. However, cumulative disbursements
from the PBL at any point in time may not exceed sixteen percent (PBL’s pro-rate share in the
Financing Plan). To enable the execution of this arrangement, the PAF Agreement between the
CBN and NBET must be amended. A more detailed description of the draft Funds Flow
Arrangement is in Annex 6.
21. To finalize and approve the Funds Flow Arrangement, the following steps should be
completed by March 1: (i) Implementation Monitoring Team (IMT) documentation of the detailed
invoicing and settlement procedures for CBN and NBET; (ii) with the support of the World Bank,
IMT development of a funds flow protocol that applies to all sources of financing in the Financing
Plan; (iii) NBET amendment of the PAF Agreement with the CBN; (iv) Ministry of Finance,
NBET and CBN approval of the funds flow protocol.
Sustainable Mechanism for Timely MDA Payment
22. NERC will apply a differentiated approach in ensuring timely payments of Ministries,
Departments and Agencies (MDAs). For the majority of the MDAs, whose electricity supply may
be disconnected, NERC will issue a requirement (as part of the Guidelines for PIPs) for the
installation of prepaid meters, starting with MDAs with larger consumption. For MDAs that
require an uninterruptible electricity supply, NERC will work with the different branches of
Government (Federal, State and local) to establish a sustainable mechanism for ensuring timely
payment of electricity bills.
23. The following steps should be completed by March 1: (i) NERC presentation of list of the
MDAs supplied by each DISCO (and whether they are branches of the Federal, State or local
government); (ii) Government identification of the MDAs whose electricity supply cannot be
disconnected; (iii) NERC presentation to the Bank of the draft directive to DISCOs for installation
of prepaid meters at MDAs that can be disconnected; and (iv) NERC development of a draft
mechanism for ensuring electricity bill payment by the respective branch of Government (Federal,
State and local).
ESSA Consultations
24. The consultation for the Environmental and Social Systems Assessment (ESSA) was held
on Thursday, January 25th at 2pm at the NERC Headquarters in Abuja. The consultation was
attended by approximately sixty individuals, representing a wide range of organizations, including
DISCOs, GENCOs, gas companies, development finance institutions, and non-governmental
organizations. The consultation was structured in two parts: (i) discussion of the Government
program (PSRP) and World Bank PBL, and (ii) review of the ESSA.
25. Important aspects of the discussion of the World Bank PBL include:
It was stressed that the PBL requires no infrastructure investment, and that it instead aims
to improve the sector’s financial viability, the enforcement of contracts and regulations,
and transparency and accountability.
In numerous questions and comments, sector companies (gas companies, GENCOs, and
DISCOs) highlighted the current dysfunction in the sector as a result of non-payment and
requested expeditious World Bank support in improving sector conditions.
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Additional questions pertained to gas supply contracts (and enforcement of contracts more
generally); the utilization of the Program-for Results-instrument elsewhere in Africa;
competitive procurement procedures; and off-grid electrification (though investments in
electrification are not supported by the PBL).
26. Noteworthy aspects of the discussion of the Environmental and Social Systems Assessment
included:
The ESSA revealed that, in the areas of both environmental and social protection, Nigerian
regulations and laws are well-developed and consistent with international good standards.
However, enforcement is limited.
The enhance environmental and social performance of the PBL, the Proposed Action Plan
of the ESSA includes: strengthening the mandate of the gender focal point in the Ministry
of Power; building on the current system for stakeholder and citizen engagement;
strengthening the capacity and representatives of consumers and organizations and
developing an “outreach” program/strategy for these groups; formulating guidelines and
manuals for mainstreaming stakeholder engagement and environmental, health and safety
issues into the implementation of the Program; and conducting annual monitoring of
progress on environmental and social issues, particularly regarding the compliance of
Program activities.
Questions pertained to the implications of future tariff adjustment and existing protections
for the poor; capacity building for sector institutions; and protection of the environment. It
was frequently reiterated that the achievement of the Program Development Objective
requires no infrastructure investment; as such, environmental impacts are expected to be
negligible.
27. The Bank team will finalize the ESSA based on the useful feedback received during the
consultation and disclose it by the completion of the PBL appraisal.
Communications
28. The mission had several meetings with the PSRP communication team, as well as a creative
presentation by the communications firm (Noah’s Ark). The PSRP IMT and the World Bank team
agreed that some of the creative materials produced so far did not reflect the messaging strategy
or the findings from the national survey. The remainder of the consulting firm’s contract will be
implemented under the direct supervision of the firm’s CEO and consistent with the campaign
concepts as agreed in November. The firm prepared a 1-page action plan explaining how it intends
to execute the campaign moving forward.
29. A key priority for the PSRP communication team in the next month should be face-to-face
engagement with the key stakeholders of the sector, starting with DISCOs and GENCOs, as the
market Reset is being launched. To that end, the communications team will closely work with
NERC that has a leading role in the Reset, as well as other relevant agencies (e.g. NBET and BPE).
An immediate support will be provided to NERC for the preparation of a communique about its
intentions of implementing the Reset as detailed earlier. The communications team will also give
priority to supporting NERC in organizing discussions with the sector companies, public
consultations and public hearings that will be part of the Reset launching and implementation.
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Disclosure
30. The bank and Ministry of Finance confirm their understanding and agreement that this
aide-memoire will be disclosed in accordance with the World Bank Policy.
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Annex 1: List of Ministries and Agencies Met
Agency Key Attendees
PSRP Implementation
Monitoring Team (IMT)
- Kenny Anuwe
- Simeon Atakulu
- Awele Okigbo
- Abubakar Musa Budget Office - Ben Akabueze
- Alfred Okoh
Nigerian Electricity
Regulatory Commission
(NERC)
- Vice Chairman Sanusi Garba
- Comm. Oseni Musiliu
- Comm. Frank Okafor
- Comm. Moses Arigu
- Comm. Nathan Shatti
Technical representatives from:
- Engineering, Performance and Monitoring Division
- Market Competition and Rates
- Planning, Research and Strategy
- Communications and Public Relations
Federal Ministry of
Finance
- Aliyu Ahmed
- Abdulfatah Abdulsalam
- Stephen Ohaeri
- Tolulope Jaji
PSRP Finance Team Representatives from:
- Central Bank of Nigeria (CBN)
- Nigerian Bulk Electricity Trading Company (NBET)
- Nigerian Electricity Regulatory Commission (NERC)
- Budget Office of the Federation (BOF)
- Debt Management Office (DMO)
- PSRP IMT Nigerian Bulk Electricity
Trading Company
(NBET)
- Ibrahim S. Otoru
- Yesufu Alonge
- Nnaemeka Ewelukwa
- Abba Aliyu
PSRP Communication
Team
- Awele Okigbo
- Funlola Osinupebi
- Noah’s Ark
ESSA Consultation Representatives from:
- Civil Service Organizations (CSOs)
- Generating Companies (Gencos)
- Distribution Companies (Discos)
- Ministry of Power, Works and Housing (MoPWH)
- Ministry of Environment (MoE)
- Nigerian National Petroleum Corporation (NNPC)
- Nigerian Electricity Management Service Agency (NEMSA)
- Ministry of Finance (MoF)
- Ministry of Women Affairs and Social Development (MoWASD)
- Nigerian Bulk Electricity Trading Company (NBET)
- Transmission Company of Nigeria (TCN)
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Annex 2: Disbursement Linked Indicators
Total
Financing
Allocated to
DLI
As % of
Total
Financing
Amount
DLI
Baseline
(as of July
1, 2017)
Prior DLIs (since
July 1, 2017)
Indicative timeline for DLI achievement
2018 (completion of
Reset) 2019 2020 2021
Global DLI 1: TCN and DISCOs
receive their
revenue
requirement based
on MYTO major
review
The
revenue
require-
ments of
TCN and
DISCOs
based on
the existing
MYTO do
not reflect
current
conditions
of the
sector
G1.1 NERC
determines revenue
requirements of
DISCOs and TCN
for 2018 based on
the existing MYTO
G1.2 NERC
approves: (i)
MYTO
methodology for
setting revenue
requirement of
DISCOs and
methodology for
setting revenue
requirement of
TCN, preceded by
public hearings on
each; (ii) new
MYTO order
(following a MYTO
major review) for
each DISCO and for
TCN preceded by a
public consultation
process (including
at least one public
hearing) for each
company, and resets
the revenue
requirement of
DISCOs and TCN
based on pass-
through of
generation costs
(DLI 1); new
performance targets
of DISCOs; and
funding
requirements of
G1.3 Revenue
requirements for
TCN and DISCOs
are set based on the
effective MYTO
order and automatic
adjustments, and the
full pass-through of
the generation costs
consistent with
contracts’ activation
arrangements for
GENCOs (DLI 1)
G1.4 Revenue
requirements for
TCN and DISCOs
are set based on the
new MYTO and
automatic
adjustments, and the
full pass-through of
the generation costs
consistent with
contracts’ activation
arrangements for
GENCOs (DLI 1)
G1.5 Revenue
requirements for
TCN and DISCOs
are set based on the
new MYTO and
automatic
adjustments, and the
full pass-through of
the generation costs
consistent with
contracts’ activation
arrangements for
GENCOs (DLI 1)
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Total
Financing
Allocated to
DLI
As % of
Total
Financing
Amount
DLI
Baseline
(as of July
1, 2017)
Prior DLIs (since
July 1, 2017)
Indicative timeline for DLI achievement
2018 (completion of
Reset) 2019 2020 2021
DISCOs’
Performance
Improvement Plans
(DLI 3)
The Reset should
be completed for
TCN and all
DISCOs by
December 2019. All
disbursements of
2019-2021
(regardless of
achievement of
other DLIs) will be
cancelled if this
action is not met.
This action is a
regular DLI and
does not affect
other DLIs
This action is a
regular DLI and
does not affect other
DLIs
This action is a
regular DLI and
does not affect
other DLIs
Allocated amount: 180 million 18% 10 million 120 million (10
million for each
DISCO and 10
million for TCN)
20 million 15 million 15 million
Global DLI 2: A
credible and
fiscally
transparent
Financing Plan to
fully cover the
tariff shortfall of
the sector and
settle the
historical shortfall
is prepared and
executed
Revenue
shortfall of
the sector is
not funded
G2.1 (i) FGN
issues a letter
formally
designating the
multi-agency
financing team
responsible for
preparing and
updating the
Financing Plan;
(ii) the multi-
agency financing
team finalizes and
officially shares the
Financing Plan
G2.2 (i) The multi-
agency financing
team updates the
Financing Plan on a
quarterly basis; (ii)
the 2019 FGN
annual budget
submitted to the
NASS includes the
additional FGN
budgetary
contribution in 2019
needed as specified
in the up-to-date
Financing Plan;
G2.3 (i) The multi-
agency financing
team updates the
Financing Plan on a
quarterly basis; (ii)
the 2020 FGN
annual budget
submitted to the
NASS includes the
additional FGN
budgetary
contribution in 2020
needed as specified
in the up-to-date
Financing Plan;
G2.4 (i) The multi-
agency financing
team updates the
Financing Plan on a
quarterly basis; (ii)
the 2021 FGN
annual budget
submitted to the
NASS includes the
additional FGN
budgetary
contribution in 2021
needed as specified
in the up-to-date
Financing Plan; (iii)
G2.5 (i) The multi-
agency financing
team updates the
Financing Plan on a
quarterly basis; (ii)
the PSRP document
and the FSP/MTEF
2022-2024 include
the up-to-date
Financing Plan and
its full fiscal costs;
and (iii) 100 percent
of the 2015-2021
tariff shortfall and
CBN debt service
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Total
Financing
Allocated to
DLI
As % of
Total
Financing
Amount
DLI
Baseline
(as of July
1, 2017)
Prior DLIs (since
July 1, 2017)
Indicative timeline for DLI achievement
2018 (completion of
Reset) 2019 2020 2021
with associated
assessments; (iii)
the 2018 FGN
annual budget
submitted to the
NASS includes the
additional FGN
budgetary
contribution
needed as specified
in the Financing
Plan; (iv) the PSRP
document, and the
FSP/MTEF 2018-
2020 include the
full Financing Plan
and its fiscal costs;
and (v) at least 80
percent of the 2017
tariff shortfall
indicated in the
Financing Plan is
funded
(iii) the PSRP
document and the
FSP/MTEF 2019-
2021 include the up-
to-date Financing
Plan and its full
fiscal cost; and (iv)
a percentage of the
2018 tariff shortfall
and CBN debt
service costs
indicated in the up-
to-date Financing
Plan is funded by
April 1, 2019
Basic target: 90
percent is funded
Stretch target: 100
percent is funded
Disbursements of
2018 (regardless of
achievement of
other DLIs) will be
put on hold until
the basic target of
this DLI is met
(iii) the PSRP
document and the
FSP/MTEF 2020-
2022 include the up-
to-date Financing
Plan and its full
fiscal costs; and (iv)
a percentage of the
2019 tariff shortfall
and CBN debt
service costs
indicated in the up-
to-date Financing
Plan is funded by
April 1, 2020
Basic target: 90
percent is funded
Stretch target: 100
percent is funded
Disbursements of
2019 (regardless of
achievement of
other DLIs) will be
put on hold until
the basic target of
this DLI is met
the PSRP document
and the FSP/MTEF
2021-2023 include
the up-to-date
Financing Plan and
its full fiscal costs;
(iv) 50 percent of
the historical
shortfall is funded;
and (v) a percentage
of the 2020 shortfall
and CBN debt
service costs
indicated in the up-
to-date Financing
Plan is funded by
April 1, 2021
Basic target: 90
percent is funded
Stretch target: 100
percent is funded
Disbursements of
2020 (regardless of
achievement of
other DLIs) will be
put on hold until
the basic target of
this DLI is met
costs indicated in
the up-to-date
Financing Plan are
funded
Disbursements of
2021 (regardless of
achievement of
other DLIs) will be
put on hold until
this DLI is met
Allocated amount: 160 million 16%
40 million 20 million (basic
target)
20 million (basic
target)
20 million (basic
target)
30 million + up to
30 million rollover
from previous years
if only basic target
is met in those years
30 million (stretch
target)
30 million (stretch
target)
30 million (stretch
target)
14
Total
Financing
Allocated to
DLI
As % of
Total
Financing
Amount
DLI
Baseline
(as of July
1, 2017)
Prior DLIs (since
July 1, 2017)
Indicative timeline for DLI achievement
2018 (completion of
Reset) 2019 2020 2021
DLI 1:
Contractual
arrangements
ensure availability
of generation
capacity needed to
meet demand
There is no
operational
plan, and
contractual
arrange-
ments
(GSAs/PP
As) do not
ensure
availability
of
generation
capacity
1.1 NERC creates a
public database of
generation plants
and their
contractual
arrangements
1.2 (i) System
Operator prepares
an operational plan
of generation;
(ii) NERC issues an
order outlining the
milestones for
increasing
activation of
GSAs/PPAs and
refining contractual
arrangements for
NIPP plants; and
(iii) GENCOs’
invoices to NBET
are adjusted
consistent with the
NERC order
1.3 (i) System
Operator updates
the operational plan;
and (ii) GENCOs’
invoices to NBET
are adjusted
consistent with the
NERC order
1.4 (i) System
Operator updates the
operational plan;
and (ii) GENCOs’
invoices to NBET
are based on full
enforcement of
contractual
arrangements
1.5 (i) System
Operator updates the
operational plan;
and (ii) GENCOs’
invoices to NBET
are based on full
enforcement of
contractual
arrangements
Allocated amount: 50 million 5% 10 million 10 million 10 million 10 million 10 million
DLI 2:
Generation
capacity is
procured
competitively
following an
updated LCDP
Generation
investment
planning
framework
is
incomplete
and
generation
capacity is
procured
based on
unsolicited
proposals
2.1 (i) FGN issues
a letter establishing
a multi-agency
team to prepare the
policy for
institutionalizing
the LCDP; and (ii)
the Ministry of
Power designates a
Ministry/agency
responsible for
preparation of the
LCDP and
establishes
governance
arrangements for
2.2 The Ministry of
Power approves the
LCDP prepared by
the designated
Ministry/agency
2.3 (i) The
designated
Ministry/agency
updates the LCDP;
and (ii) NERC and
NBET ensure that
new generation
capacity is procured
competitively and
consistent with the
LCDP
2.4 (i) The
designated
Ministry/agency
updates the LCDP;
and (ii) NERC and
NBET ensure that
new generation
capacity is procured
competitively and
consistent with the
LCDP
2.5 (i) The
designated
Ministry/agency
updates the LCDP;
and (ii) NERC and
NBET ensure that
new generation
capacity is procured
competitively and
consistent with the
LCDP
15
Total
Financing
Allocated to
DLI
As % of
Total
Financing
Amount
DLI
Baseline
(as of July
1, 2017)
Prior DLIs (since
July 1, 2017)
Indicative timeline for DLI achievement
2018 (completion of
Reset) 2019 2020 2021
LCDP
implementation
Allocated amount: 50 million 5% 10 million 10 million 10 million 10 million 10 million
DLI 3:
Implementation of
Performance
Improvement
Plans (PIPs) for
DISCOs is
enforced
Lack of
regulatory
oversight
over
DISCOs’
performan-
ce and
associated
investments
3.1 NERC issues
detailed guidelines
for preparation and
implementation of
DISCOs’ PIPs
3.2 In consultation
with DISCOs,
NERC approves: (i)
PIPs for DISCOs;
and (ii) performance
standards (baseline
and targets)
3.3 NERC monitors
and enforces
implementation of
PIPs and
performance
standards
3.4 NERC monitors
and enforces
implementation of
PIPs and
performance
standards
3.5 NERC monitors
and enforces
implementation of
PIPs and
performance
standards
Allocated amount: 55 million 5.5% 15 million 10 million 10 million 10 million 10 million
DLI 4:
End-user tariffs
are adjusted to
fully recover
revenue
requirement of the
sector as
determined by the
new MYTO
End-user
tariffs do
not recover
full revenue
require-
ment of the
sector
4.1 End user
electricity tariffs
recover at least 75
percent of the
sector’s revenue
requirement as
determined by the
new MYTO and
MYTO minor
reviews
4.2 End-user
electricity tariffs
recover 90 percent
of the sector’s
revenue requirement
as determined by the
new MYTO and
MYTO minor
reviews
4.3 End-user
electricity tariffs
recover 100 percent
of the sector’s
revenue requirement
as determined by the
new MYTO and
MYTO minor
reviews
Allocated amount: 140 million 14% 50 million 50 million 40 million
DLI 5:
Sustainable
mechanism to
ensure timely
payment of
MDAs’ electricity
bills is in place
and implemented
Lack of a
mechanism
to enforce
payments
of
electricity
bills from
MDAs
5.1 NERC issues a
directive specifying
the mechanism to
ensure timely
payment of
electricity bills by
all MDAs (Federal,
State, and local)
and its
implementation
timetable
5.2 20 percent of
MDAs (with largest
consumption) have
the payment
mechanism
established
5.3 60 percent of
MDAs (with largest
consumption) have
the payment
mechanism
established
5.4 90 percent of
MDAs (with largest
consumption) the
payment mechanism
established
16
Total
Financing
Allocated to
DLI
As % of
Total
Financing
Amount
DLI
Baseline
(as of July
1, 2017)
Prior DLIs (since
July 1, 2017)
Indicative timeline for DLI achievement
2018 (completion of
Reset) 2019 2020 2021
Allocated amount: 40 million 4% 10 million 10 million 10 million 10 million
DLI 6: GENCOs
receive payments
in a timely
manner
GENCOs
do not
receive
sufficient
payment
for their
invoices,
resulting in
accumulate
d arrears
6.1 MOF approves
a transparent and
rule-based funds
flow mechanism
for the Financing
Plan
6.2 NBET payments
to GENCOs cover a
percentage of
GENCOs’
aggregate invoices
annually
Basic target: 80
percent
Stretch target: 100
percent
6.3 NBET payments
to GENCOs cover a
percentage of
GENCOs’
aggregate invoices
annually
Basic target: 80
percent
Stretch target: 100
percent
6.4 NBET payments
to GENCOs cover a
percentage of
GENCOs’ aggregate
invoices annually
Basic target: 80
percent
Stretch target: 100
percent
6.5 NBET payments
to GENCOs cover a
percentage of
GENCOs’ aggregate
invoices annually
Basic target: 80
percent
Stretch target: 100
percent
Allocated amount: 57 million
(basic target)
5.7% 25 million
8 million (basic
target) and 0.1
million for each
percentage of
invoice amount
settled above 80
percent
8 million (basic
target) and 0.1
million for each
percentage of
invoice amount
settled above 80
percent
8 million (basic
target) and 0.1
million for each
percentage of
invoice amount
settled above 80
percent
8 million (basic
target) and 0.1
million for each
percentage of
invoice amount
settled above 80
percent
65 million
(stretch
target)
6.5% 10 million (stretch
target)
10 million (stretch
target) and a
proportion of 10
million rollover
from previous year
corresponding to the
percentage of
invoice amount
settled (with a
minimum of 80
percent)
10 million (stretch
target) and a
proportion of 20
million rollover
from 2 previous
years corresponding
to the percentage of
invoice amount
settled (with a
minimum of 80
percent each year)
10 million (stretch
target) and a
proportion of 30
million rollover
from 3 previous
years corresponding
to the percentage of
invoice amount
settled (with a
minimum of 80
percent each year)
DLI 7: Payment
discipline of
invoices for
energy purchases
Arrears of
US$420
billion
accumulate
d to NBET
in 2016 and
7.1 (i) NERC in
agreement with
NBET and
DISCOs issues an
order on how
NBET invoices to
7.2 NERC instructs
NBET to adjust the
2018 invoices of
DISCOs to reflect
the full revenue
requirement of
7.3 A percentage of
NBET’s annual
invoices to DISCOs
are settled; or
evidence that NBET
has withdrawn on
7.4 A percentage of
NBET’s annual
invoices to DISCOs
are settled; or
evidence that NBET
has withdrawn on
7.5 A percentage of
NBET’s annual
invoices to DISCOs
are settled; or
evidence that NBET
has withdrawn on
17
Total
Financing
Allocated to
DLI
As % of
Total
Financing
Amount
DLI
Baseline
(as of July
1, 2017)
Prior DLIs (since
July 1, 2017)
Indicative timeline for DLI achievement
2018 (completion of
Reset) 2019 2020 2021
is enforced on
DISCOs
Vesting
Contracts
are not
enforced
DISCOs should be
adjusted (until the
Reset) to allow
DISCOs retain
their revenue
requirement; (ii)
Vesting Contracts
(to the extent of
invoice amount)
are partially
activated and all
LCs are posted
DISCOs based on
the MYTO major
review and to fully
activate the Vesting
Contracts
LCs and NERC, if
required, has
undertaken
disciplinary action
Basic target: 80%
Stretch target:
100%
LCs and NERC, if
required, has
undertaken
disciplinary action
Basic target: 80%
Stretch target:
100%
LCs and NERC, if
required, has
undertaken
disciplinary action
Basic target: 80%
Stretch target:
100%
Allocated amount: 103 million
(basic target)
10% 40 million
15 million 16 million (basic
target) and 0.2
million for each
percentage of
invoice amount
settled above 80
percent
16 million (basic
target) and 0.2
million for each
percentage of
invoice amount
settled above 80
percent
16 million (basic
target) and 0.2
million for each
percentage of
invoice amount
settled above 80
percent
115 million
(stretch
target)
11.5% 20 million (stretch
target)
20 million (stretch
target) and a
proportion of 20
million rolled-over
from previous year
corresponding to the
percentage of
invoice amount
settled (with a
minimum of 80
percent each year)
20 million (stretch
target) and a
proportion of 40
million rolled-over
from 2 previous
years corresponding
to the percentage of
invoice amount
settled (with a
minimum of 80
percent each year)
DLI 8: Corporate
governance of
sector agencies
(NBET and TCN)
is strengthened
Board
members of
sector
agencies
are not
appointed
8.1 FGN appoints
the Boards of
NBET and TCN
8.2 The Boards of
NBET and TCN are
functional per
NERC’s Code of
Corporate
Governance
8.3 The Boards of
NBET and TCN are
functional per
NERC’s Code of
Corporate
Governance
8.4 The Boards of
NBET and TCN are
functional per
NERC’s Code of
Corporate
Governance
8.5 The Boards of
NBET and TCN are
functional per
NERC’s Code of
Corporate
Governance
18
Total
Financing
Allocated to
DLI
As % of
Total
Financing
Amount
DLI
Baseline
(as of July
1, 2017)
Prior DLIs (since
July 1, 2017)
Indicative timeline for DLI achievement
2018 (completion of
Reset) 2019 2020 2021
Guidelines; and
NERC publishes
annual report on its
compliance
monitoring of
NBET’s, TCN’s and
DISCOs’ Boards of
Directors with the
Guidelines
Guidelines; and
NERC publishes
annual report on its
compliance
monitoring of
NBET’s, TCN’s and
DISCOs’ Boards of
Directors with the
Guidelines
Guidelines; and
NERC publishes
annual report on its
compliance
monitoring of
NBET’s, TCN’s and
DISCOs’ Boards of
Directors with the
Guidelines
Guidelines; and
NERC publishes
annual report on its
compliance
monitoring of
NBET’s, TCN’s and
DISCOs’ Boards of
Directors with the
Guidelines
Allocated amount: 30 million 3% 10 million 5 million 5 million 5 million 5 million
DLI 9: Financial
and operational
transparency of
the sector is
improved
Lack of
transparen-
cy about
financial
situation
and
operational
performan-
ce of power
sector
companies
9.1 NERC
publishes on its
website: (i) 2015
and 2016 audited
financial
statements of the
power sector
companies
(GENCOs and
DISCOs); and (ii)
key operational and
financial data of
2017
9.2 NERC publishes
on its website: (i)
2017 audited
financial statements
of GENCOs and
DISCOs; (ii) 2015-
17 audited financial
statements of NBET
and TCN; and (iii)
key operational and
financial data of
2018 on a quarterly
basis
9.3 NERC publishes
on its website: (i)
2018 audited
financial statements
of power sector
companies
(GENCOs,
DISCOs, TCN and
NBET); and (ii) key
operational and
financial data of
2019 on a quarterly
basis
9.4 NERC publishes
on its website: (i)
2019 audited
financial statements
of power sector
companies
(GENCOs, DISCOs,
TCN and NBET)
and (ii) key
operational and
financial data of
2020 on a quarterly
basis
9.5 NERC publishes
on its website: (i)
2020 audited
financial statements
of power sector
companies
(GENCOs, DISCOs,
TCN and NBET);
and (ii) key
operational and
financial data of
2021 on a quarterly
basis
Allocated amount: 55 million 5.5% 15 million 10 million 10 million 10 million 10 million
DLI 10:
Stakeholder
engagement and
communication
about PSRP are
improved
There is
limited
knowledge
about the
PSRP
10.1 PSRP IMT: (i)
develops a draft
common script
about the PSRP for
key stakeholders to
provide consistent
messaging about
technical issues
and agrees on the
script with the key
10.2 NERC holds
consultations and
outreach activities
as part of the
MYTO major
review, including:
(i) bimonthly
consultations with
DISCOs on the
revenue
10.3 PSRP IMT
carries out: (i)
quarterly public
consultations and
discloses summaries
of feedback on the
mypower.ng
website (some
consultations are
held with only
10.4 PSRP IMT
Team carries out: (i)
quarterly public
consultations and
discloses summaries
of feedback on the
mypower.ng website
(some consultations
are held with only
women); (ii) at least
10.5 PSRP IMT
carries out: (i)
quarterly public
consultations and
discloses summaries
of feedback on the
mypower.ng website
(some consultations
are held with only
women); (ii) at least
19
Total
Financing
Allocated to
DLI
As % of
Total
Financing
Amount
DLI
Baseline
(as of July
1, 2017)
Prior DLIs (since
July 1, 2017)
Indicative timeline for DLI achievement
2018 (completion of
Reset) 2019 2020 2021
MDAs (NERC,
BPE, NBET); (ii)
engages in a series
of meetings with
key stakeholders
(DISCOs,
GENCOs, National
Assembly,
judiciary, media
and civil society
groups), together
with MDAs, to
convey the
messages agreed in
the common script
and to seek their
feedback; (iii)
ensures that a
nationally
representative
baseline survey is
completed,
awareness-raising
materials are
produced; and (iv)
initiates public
outreach activities
through PSRP
website and the
media
requirement; (ii) at
least one press
conference each
quarter; and (iii) bi-
monthly public
consultations with
specific audience
groups (general
public and private
sector
representatives) to
explain the Reset
process and the
expected outcomes
(including
performance
improvement
requirements)
women); (ii) at least
one workshop with
journalists annually
and subsequent
media monitoring;
and (iii) at least
three consultations
within FGN
annually
one workshop with
journalists annually
and subsequent
media monitoring;
and (iii) at least
three consultations
within FGN
annually
one workshop with
journalists annually
and subsequent
media monitoring;
and (iii) at least
three consultations
within FGN
annually
Allocated amount: 40 million 4% 15 million 10 million 5 million 5 million 5 million
Total Financing
Allocated:
980 million
(960 million
if only basic
targets are
200 million 240 million (228
million if only basic
targets are met for
190 million (174
million if only basic
targets are met for
185 million (169
million if only basic
targets are met for
165 million (189
million if only basic
targets are met for
Global DLI 2 in
20
Total
Financing
Allocated to
DLI
As % of
Total
Financing
Amount
DLI
Baseline
(as of July
1, 2017)
Prior DLIs (since
July 1, 2017)
Indicative timeline for DLI achievement
2018 (completion of
Reset) 2019 2020 2021
met for DLIs
6-7)
Global DLI 2 and
DLI 6)
DLIs 6-7 and
Global DLI 2)
DLIs 6-7 and Global
DLI 2)
previous years and
basic targets are met
for DLIs 6-7)
21
Annex 3: Results Framework Matrix
3 The extent of end-user electricity tariff recovering the revenue requirement would be clarified only after the Reset when the performance parameters will be
redefined. The baseline indicator is assessed based on the current MYTO of NERC.
Results Areas
Supported by
the PforR
PDO/Outcome Indicators
Intermediate Results (IR) Indicators DLI # Unit of
Measurement
Baseline
(2016)
End
Target
(2021)
Results Area 1:
Improve
reliability of
electricity
supply
PDO Indicator 1: Annual
electricity supplied to the
distribution grid is increased
GWh 23,722 39,420
IR Indicator 1.1: Generation capacity required to meet demand is
available through contractual agreements
1/2 Yes/No No Yes
IR Indicator 1.2: PIP implementation progress of DISCOs to remove
the constraints to supply in their networks
3 Percentage of
implementation
0 50
Results Area 2:
Achieve
financial
sustainability
PDO Indicator 2: Power
sector companies receive
their required revenue
G1 Yes/No No Yes
IR Indicator 2.1: Extent to which end-user electricity tariffs cover
required revenue of the sector
4 Percentage 64.83 100
IR Indicator 2.2: Share of GENCO invoice amount settled by NBET 6 Percentage 26 90
IR Indicator 2.3: Share of NBET invoice amount settled by DISCOs 7 Percentage 27.4 90
IR Indicator 2.4: Share of MDAs adopting a sustainable mechanism
for electricity payment per NERC guidelines
5 Percentage 0 90
IR Indicator 2.5: Historical shortfall accumulated from January 2015
to December 2016 is settled
G2 Naira 420
billion
0
IR Indicator 2.6: Federal MDA arrears to DISCOs accumulated until
December 2016 are settled
G2 Naira 25.9
billion
0
Results Area 3:
Strengthen
governance
and
transparency
PDO Indicator 3: Cash
recovery index improves
Percentage 45.4 67.9
IR Indicator 3.1: Audited financial statements of market participants
(GENCOs, DISCOs, TCN and NBET) are published annually on
NERC website
9 Yes/No No Yes
IR Indicator 3.2: Key operational and financial data for the power
sector are published quarterly on NERC website
9 Yes/No No Yes
IR Indicator 3.3: Public awareness about ongoing reforms in the
power sector
10 Percentage 29 60
22
Annex 4 Program Action Plan
Action Description DLI* Due Date Responsible
Party
Completion
Measurement**
Technical aspects
Conducting MYTO major review
(RESET):
Determination of revenue
requirements of DISCOs and TCN
for 2018 based on the existing
MYTO
Approval of new MYTO
methodology for setting revenue
requirements for DISCOs and
TCN, preceded by at least one
public hearing for each company
Development of new MYTO order
for each DISCO and for TCN,
preceded by at least one public
hearing for each company
Adjustment of end-user tariffs to
fully recover revenue requirement
of the sector as determined by the
new MYTO
June 30,
2018
December
31, 2018
December
31, 2019
Continuous
NERC
NERC
NERC
NERC
NERC directive
A new approved
MYTO
methodology
New MYTO Order
Adjustment of
tariff
DISCOs’ turnaround:
Issuance of a guideline for
preparation of PIPs
Preparation of PIPs
Review and approval of DISCOS’
PIPs
Monitoring and enforcement of
PIPs for DISCOs
Strengthening and monitoring of
business continuity arrangements
for DISCOs
Preparing plan for cleaning up
DISCO’s balance sheet
April 30,
2018
June 30,
2018
September
30, 2018
Continuous
Continuous
December
31, 2018
NERC
NERC/
DISCOs
NERC
NERC
NERC
NERC
A guideline for
PIPs
Completion of PIPs
Records regarding
approval of PIPs
Report on the
adequacy of
NERC’s
monitoring and
enforcement
Directive/Order on
the business
continuity
arrangements
Plan on DISCOs’
balance sheet
clean-up
23
Action Description DLI* Due Date Responsible
Party
Completion
Measurement**
Monitoring and enforcement of the
plan for cleaning up DISCO’s
balance sheet
Continuous
NERC Report on the
adequacy of
NERC’s
monitoring and
enforcement
Activating contractual arrangements:
Issuance of an Order outlining the
milestones for increasing activation
of GSAs/PPAs and refining
contractual arrangements for NIPP
plants
Issuance of an order by NERC, in
agreement with NBET and
DISCOs, on how (i) NBET
invoices to DISCOs should be
adjusted (until the Reset) to allow
DISCOs retain their revenue
requirement; (ii) Vesting Contracts
(to the extent of invoice amount)
are partially activated and all LCs
are posted
December
31, 2018
December
31, 2018
NERC
NERC
An Order
An Order
Assessment and management of fiscal
risks of the Financing Plan:
Establishment of a multi-agency
team to review and update the
Financing Plan on a quarterly basis
Assessment of the fiscal and debt
sustainability and fiscal risks of the
Financing Plan and formulation of
policy measures to manage fiscal
risks and their impact on
sustainability
May 30,
2018
Continuous
The office of
the Vice
President
Multi-agency
financing
team
A letter formally
designating the
multi-agency
financing team
Updated Financing
Plan
Assessment and management of
contingent liabilities (CLs):
Endowment of the Debt
Management Office (DMO) with
the mandate of monitoring and
managing contingent liabilities
(CLs), and strengthening its
capacity to perform this role
effectively
Assessment of CLs emanating from
the energy-sector through
examination of a universe of
contracts agreed with DISCOs and
Continuous
Continuous
The office of
the Vice
President
Multi-agency
financing
team
A letter formally
designating the
DMO
Updated Financing
Plan
24
Action Description DLI* Due Date Responsible
Party
Completion
Measurement**
GENCOs; assessment of risks of
CLs (based on their likelihood of
materializing) and formulation of
policy measures to address these
CLs should they materialize
Institutionalization of the Least Cost
Development Plan (LCDP):
Establishment of a multi-agency
team to institutionalize the
governance arrangements (roles and
responsibilities of Ministry of
Power, System Operator, NERC
and NBET) for preparing, updating
and implementing the LCDP
Review of system planning
capacity of System Operator and
identification of gaps
Designation of an agency to prepare
the LCDP
Capacity building of the agency
responsible for system planning
Preparation and approval of LCDP
May 30,
2018
May 30,
2018
June 30,
2018
September
30, 2018
December
30, 2018
FMOPWH
Multi-agency
LCDP team
FMOPWH
Designated
agency
Designated
agency/
FMOPWH
A letter formally
designating the
multi-agency
LCDP team
Report on the
review
A letter designating
the role
Progress report on
the capacity
building
Approval of the
LCDP
Stakeholder and citizen engagement
and communication:
Development of a draft common
script about the PSRP for key
stakeholders to ensure consistent
messaging about technical issues,
and agreement with the key MDAs
(NERC, BPE, NBET) on a final
approved version
Engagement between the IMT and
key MDAs in a series of meetings
with relevant stakeholders
(DISCOs, GENCOs, National
Assembly, judiciary, media and
civil society groups) to convey the
messages agreed in the common
script and to seek their feedback
March 30,
2018
Continuous
Continuous
PSRP IMT
PSRP IMT
PSRP IMT
The draft common
script
A series of
meetings with the
key stakeholders
25
Action Description DLI* Due Date Responsible
Party
Completion
Measurement**
Establishment of stakeholder
feedback mechanism
Development of clear targets and
monitoring criteria for NERC’s
customer complaints system
Improvement of capacity and
representation of consumer
organizations and development of
outreach program/strategy for these
groups
June 30,
2018
December
30, 2018
PSRP
IMT/NERC
PSRP
IMT/NERC
Stakeholder
feedback
mechanism
Monitoring plan
Specific
engagement plan
for consumer
organizations to
include capacity
building objectives
and minutes/report
of launch workshop
Strengthening the governance of sector
agencies:
Strengthening of corporate
governance of sector agencies
(NBET and TCN)
Monitoring and enforcement of
compliance of sector companies
with NERC’s Code of Corporate
Governance Guidelines
Continuous
Continuous
NERC
NERC
Appointed Board
of Directors
Report on
compliance
Strengthening NBET’s audit function:
Preparation of NBET IFRS audit
for 2015-2021 financial statements
Capacity building in ex-post
systemic and risk-based internal
audits for NBET
Continuous
December
31, 2018
NBET
PSRP IMT
Completion of the
review and
disclosure of the
annual reports
Training of staff
Strengthening PSRP implementation,
monitoring and coordination:
Procurement of experts on DISCO
turnaround and monitoring and
evaluation
Continuous
PSRP IMT
Procurement of
experts
Fiduciary aspects
Procurement arrangement:
Employment of an additional
procurement consultant with
experience in implementing
procurement under World Bank-
funded projects to strengthen the
procurement operations in the REA
PMU
June 30,
2018
PSRP IMT
PSRP IMT
Employment of the
consultant in REA
PMU
26
Action Description DLI* Due Date Responsible
Party
Completion
Measurement**
Improvement of the management of
procurement files and documents
December
30, 2018
Implementation of
an electronic
procurement filing
and document
management
system or
alternative
measures to
address this issue
Funds flow arrangement:
Establishment of funds flow
arrangements for historical and
recurrent shortfall
June 30,
2018
PSRP IMT
Document on the
funds flow
arrangements
Environmental and Social aspects
Strengthening environmental
regulation and enforcement:
Formulation of Guidelines and
manual for mainstreaming
stakeholder engagement process
and integrating environmental,
health and safety issues into the
implementation of the Program
Annual monitoring of progress on
environmental and social issues,
especially regarding the compliance
of the Program activities with the
environmental standards and
regulations
Gender:
Strengthening of the mandate of the
gender focal point in the FMOPWH
by developing a work plan and
clear lines of responsibility for the
gender desk/focal point
Build on NERC’s current data
collection plans that should be
disaggregated by income level and
gender, commencing by assessing
data gaps and developing terms of
reference for a pilot study
June 30,
2018
Continuous
June 30,
2018
June 30,
2018
NERC,
FMOPWH
NERC,
FMOPWH,
NESREA
PSRP IMT,
FMOPWH
NERC
Completed
guidelines in
booklet form
disseminated to
stakeholders,
training provided,
and guidelines
operationalized
Completed report
with
recommendations
about
environmental and
social issues and
associated follow-
up measures
Work plan with
budget
Terms of Reference
for data gap
assessment and
pilot study
27
Annex 5: Guidelines for DISCOs’ PIPs
28
Annex 6: Draft Funds Flow Arrangement
The following steps should be implemented before the funds flow arrangement is effective:
NERC’s determination of the 2018 revenue requirement for DISCOs and service providers
based on the existing Multi-Year Tariff Order;
Adjustment of NBET’s invoices to DISCOs such that DISCOs retain their revenue
requirement and pay to service providers their respective revenue requirement. (The
invoice amount will be determined as the difference between DISCOs’ tariff revenue and
the sum of their revenue requirement and the revenue requirement payable to the service
providers.) Once this is achieved, NBET will be able to identify each month the amount of
GENCOs’ invoices that will be covered by the DISCOs’ payments, and simultaneously
determine the amount of GENCOs’ invoices (the difference between the aggregate amount
of GENCOs’ invoices and DISCOs’ payments) that will be paid with proceeds from the
Financing Plan (the “tariff shortfall” or “GENCOs’ Invoice Gap”).
Once these initial steps are completed, the basic structure of the FFA will comprise the following
steps:
1. NBET, as the bulk trader of electricity, will issue two invoices for its electricity supply to
each DISCO in each invoicing cycle. One invoice will be the adjusted invoice due and
payable by each DISCO, i.e. the amount due for the volume of electricity effectively
purchased during the respective period. The second invoice will be issued to the Ministry
of Finance (MOF) and will reflect GENCOs’ Invoice Gap.
2. The MOF will send funds from the committed budgetary contribution to the CBN to pay a
portion of the GENCOs’ Invoice Gap (the “MOF Portion”). The CBN will also contribute
funds from the Payment Assurance Facility.
3. Subject to the fulfillment of the applicable Disbursement Linked Indicators, the WB will
disburse funds under the PBL to pay a portion of the GENCOs’ Invoice Gap (the “WB
Portion”). These funds will be disbursed to the CBN per the instruction of the MOF. The
share of the MOF Portion, the WB Portion and the PAF in each payment is currently under
discussion. However, at no point in time, shall the WB cumulative disbursements exceed
the WB’s pro-rata share of financing in the overall Financing Plan (i.e. 16%).
4. The CBN will pay NBET the amount corresponding to 100 percent of the GENCOs’
Invoice Gap for the relevant payment cycle.
5. NBET will pay GENCOs any amounts due to them for the respective payment cycle.
GENCOs shall in turn pay gas companies any amounts due.
29
Table 1: Diagram of Funds Flow Arrangement