The Federal Government is seeking $5.2 billion from the World Bank to expand the country’s electricity generation, the Minister of Power Works and Housing, Mr. Babatunde Fashola, has said.
Fashola who made this disclosure to Bloomberg, said the fund is expected to help the country recover from its first recession in 25 years. According to him, the World Bank’s private-sector lending arm, the International Finance Corporation (IFC), is set to invest about $1.3 billion in power projects and electricity Distribution Companies, DISCOs.
Moreover, the Multilateral Investment Guarantee Agency (MIGA) will provide $1.4 billion in the form of equity and debt for gas and solar power programmes. These would be in addition to the $2.5 billion loan the country is seeking from the World Bank to help improve the distribution of power, expand transmission-capacity as well as increase access to electricity in rural areas. These bring the sector international facility quest to a total of $5.2 billion.
Earlier a credible source in the sector had told a national daily about plans by the government to go for a loan of $7.6 billion from the global lender. But a scale down may have happened at the backdrop of stringent conditions including inauguration of all the boards of parastatals in the power sector which included Nigeria Electricity Regulation Commission, NERC, BULK Traders, and Bureau of Public Enterprise, BPE as well as the implementation of the power plan.
Fashola stated that disbursement of the fund will commence next month. “Disbursements with the World Bank are being worked out to start from around June, July this year.” The minister was reported to have asked the lender to bring forward the timetables “because next year we want to see results.” The World Bank had in a statement last month expressed interest in supporting the government’s power-sector recovery plan, days after President Muhammadu Buhari introduced an economic plan which proposed cost-reflective electricity tariffs.
The new plan is believed to have been initiated by the World Bank partly to attract investment in the sector and help the economy recover.
According to the bank’s statement, Nigeria’s power sector is characterized by poor service and lack of liquidity which causes macroeconomic imbalances and a binding constraint to economic recovery.