The World Bank has agreed to give Nigeria a $3 billion loan for the expansion of the transmission and distribution facilities of the power sector, Minister of Finance, Zainab Ahmed, has revealed The Cable News NG reports.
According to her, the loan would be disbursed in four tranches of $750m each beginning from next year and it 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.
“It will also enhance our ability to pay previous obligations in the sector that has crystallized so that investors in the sector can go on with expanding investments in the sector,” she added.
She noted that some portion of the loan will be for the transmission network, adding that if the government can expand the facility to $4bn, then the additional $1bn will be used 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 concluded.
When TheCable inquired about the likely modalities of the loan, David Malpass, the World Bank president said: “I don’t have a comment on the specifics with Nigeria. We are involved in a lot of countries trying to have improvements in the structure of their state-owned enterprises or of their electricity systems so that they work. Particularly in West Africa, I think there can be a lot of progress made in terms of connecting more people and having more dependable power.
“We put a lot of emphasis on trying to have 24/7 electricity in as many places as possible, more people connected to grids than are currently connected. And this is one of those where some progress has been made and yet lots more need to be done.”
However, the World Bank chief said it could be difficult to make new investments when there is already a lot of debt whether legacy debts or leftovers from past projects.