World Bank approves $3billion loan for Nigeria
The World Bank has approved a $3 billion loan for Nigeria to expand its electricity transmission and distribution infrastructure.
Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, disclosed this during a press briefing at the just concluded World Bank/ IMF annual meetings in Washington DC.
She explained that the loan would be used to finance transmission, distribution and offset pending obligations to the sector, adding that it would also facilitate an end to the subsidy regime in the power sector.
According to her, the loan would be disbursed in four tranches of $750m each beginning from April 2020.
She said, “We put a request for financing of the power sector at a range of $1.5 billion dollars to $4billion.
“At the end of the day, it looks like we will be looking at a funding size of three billion U.S. dollars that will be provided in four tranches of $750 million each.
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“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,” she said.
She added, “The $3bn is for financing the power sector. This financing will include, covering right now the cost of the gap between what is provided for in the current tariff, and the cost of the businesses themselves. So, there is a tariff cost differential. But it would also enhance our ability to pay the previous obligations that have crystallized and which we have not yet paid.”
She added, “And if we are able to expand the amount to $4bn, the additional $1bn is for the distribution network. So, it will help us to exit the subsidy that is now inherent in the power sector.”
The minister also explained that the loan would be used “to reform the sector, to restore the distribution business side of the sector especially, on a stronger footing so they are freed up enough to be able to go out and raise financing to invest in expanding the distribution network.”