Minister of Finance, Mrs Zainab Ahmed, The Federal Government has secured a $3bn loan from the World Bank for reforming the nation’s power sector, the Minister of Finance Mrs. Zainab Ahmed has said.
The minister announced the approval of the loan at a news conference to wrap up the World Bank/IMF annual meetings in Washington DC.
She said the loan, which is expected to improve power supply in the country, would be disbursed in four tranches of $750m each beginning from April 2020.
The loan, according to her would cover the funding gap as well as the current tariff which investors in the sector had described as very low compared to what is obtainable in other countries.
She said her team made two requests to the World Bank Group.
According to her, “We made two sets of requests to the bank. The first was for technical assistance from the bank to implement agencies, especially the Nigeria Electricity Regulatory Commission (NERC), on the review of the performance improvement plans of the distribution networks. “The second was for technical assistance on business continuity regulation for the Ministry of Finance in the assessment of contingent liabilities in the power sector and options for dealing with them.
“And most importantly, we put a request for the financing of the sector at the range of $1.5 billion to $4 billion. At the end of the day, it is like we would be looking at the funding size of $3 billion that would be provided in four tranches of $750 million each.
“Our plan is that the team will be able to go to the World Bank for the approval of the first tranche in April 2020.
“This financing will cover the gap between the current tariff and the actual cost of generating electricity.
“It will also enhance our ability to pay previous obligations in the sector that have crystallised so that investors in the sector can go on with expanding their investments.”
She explainwed further that “Some portion of the loan will be for the transmission network and if we are able to expand to $4 billion then the extra $1 billion will be for the distribution network.”
“The distribution sector will be at the backend when the other reforms have been carried out. It will be a loan to the distribution companies because they are owned by the private sector, ” she stated.
According to the minister, a team from Nigeria will visit the World Bank in April 2020 to get approval for the release of the first tranche of the loan.
Nigeria is rated as Africa’s largest economy, but poor power supply has hobbled its ability to create sufficient jobs and activate a productive base that can support an estimated 200million population, leading to insufficient power access for over 90million citizens in both rural and urban areas.