FG secures $500m W’Bank loan for power distribution

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The World Bank
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The Federal Government has secured a $500m World Bank loan to bolster Nigeria’s electricity distribution sector, the Bureau of Public Enterprises announced on Thursday.

Power distribution companies in Nigeria have been widely criticised as being the weakest link in the country’s power value chain. This is due to many lapses on the part of the Discos.

For instance, about eight million registered power users out of an estimated 13 million electricity consumers are not metered by Discos. Also, there are complaints of poor power supply to many locations by Discos. Consumers on estimated billing also accuse Discos of extortion, among other concerns.

Nigeria got 11 power distribution companies after electricity generation and distribution arms of the industry were privatised in November 2013, and since then the Discos have been struggling to meet the demands of end users.

To help tackle the many challenges confronting the Discos, the BPE announced on Thursday that a $500m World Bank loan has been secured for this.

“In a strategic move to address the identified gaps in the electricity distribution companies, the Federal Government of Nigeria has secured a $500m loan from the World Bank,” BPE stated in a statement issued in Abuja by the Head, Public Communication, Amina Othman.

It added, “Approved on February 4, 2021, by the World Bank board of directors, this funding supports the Nigerian Distribution Sector Recovery Programme aimed at improving the financial and technical performance of the Discos.https://52fcee9c68e56e47e9aa6b87ac22eaeb.safeframe.googlesyndication.com/safeframe/1-0-40/html/container.html

“The DISREP is designed to enhance the financial and technical operations of the Discos through capital investment and the financing of key components of their Performance Improvement Plans, which have been approved by the Nigerian Electricity Regulatory Commission.”

The bureau stated that key areas of improvement include bulk procurement of customer/retail meters and meter data management systems, implementation of a Data Aggregation Platform, and strengthening governance and transparency within the Discos.

On the programme components, BPE said the DISREP comprises two main components. It said the first is the programme for results, with an allocation of $345m, adding that the purpose is to support the implementation of selected PIP components. The Bureau of Public Enterprises is to implement this.

The other component is the Investment Project Financing, with an allocation of $155m and the purpose is to finance the procurement of meters, a data aggregation platform, and technical assistance.

“The DISREP loan, particularly the Investment Project Financing component, is expected to significantly benefit the Nigerian Electricity Supply Industry by closing the metering gap, reducing Aggregate Technical, Collection, and Commercial losses, and improving remittances and liquidity for the Discos.

“Others include to enhance the reliability of power supply, as well as increase transparency and accountability within the Discos,” BPE stated.

It said the $500m DISREP loan from the World Bank offers concessional financing with more favourable terms than commercial bank loans.

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