NIGERIA SECURES $500M WORLD BANK LOAN FOR POWER SECTOR
Nigeria has secured a $500 million World Bank loan for its electricity sector to boost power distribution, after last month’s hike in tariffs for top consumers in Africa’s most populous nation.
The Bureau of Public Enterprise (BPE), the country’s privatisation agency, on Thursday said the loan was approved by the World Bank in 2021 and included the government’s borrowing plan this month after achieving some milestones.
The concessionary loan is aimed at improving the financial and technical performance of distribution companies, which have struggled to increase capacity more than a decade after Nigeria handed over its electricity sector to private companies.
Last month the electricity regulator increased tariffs for better off consumers who use the most power in Nigeria as the government aims to wean the economy off subsidies to ease pressure on public finances.
The World Bank has in the past recommended subsidy cuts to help Nigeria improve the state of its public finances.
Nigeria’s electricity sector faces a myriad of problems including a failing grid, gas shortages, high debt and vandalism.
Nigeria has 12,500 megawatts of installed capacity but produces only about a quarter of that, leaving many Nigerians reliant on expensive diesel-powered generators.
State-controlled power tariffs are too low to attract new investors and allow distribution firms to recoup costs and pay generating companies – leaving the sector with ballooning debt.
The country privatised its electricity sector in 2012, which had been seen as a major hurdle to growth, but funding constraint, gas shortages and challenges with its national grid has limited improvements following the sale.
