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Amaechi Ogbonna and Juliana Taiwo Obalonye, Washington DC
The Federal Government and the World Bank may have concluded talks on a $3billion loan facility to fund the expansion of Nigeria’s troubled transmission and distribution infrastructure seen as the weakest link for uninterrupted power supply value chain.
Minister of Finance and National Planning who head Nigeria’s delegation to the 2019 annual meetings of the International Monetary Fund (IMF) and the World Bank, Zainab Ahmed, confirmed this to newsmen on Sunday, while addressing the nation’s press corps on the outcomes of strategic meetings with multilateral organisations, at the week-long event.
She said her team made two requests to the World Bank Group.
“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 explained.
Ahmed said the loan would be released in four tranches of $750 million each with possibility of being expanded to to $4 billion.
“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.
