Yemisi Izuora
The Federal Government has expressed intention to further help Electricity Distribution Companies, DisCos strengthen technical and financial services .
Nigeria has secured the $500 million World Bank loan for its electricity sector to boost power distribution.
The Bureau of Public Enterprise (BPE), said on Thursday that 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 DisCos, which have struggled to increase capacity more than a decade after Nigeria handed over its electricity sector to private companies.
Last month the Nigerian Electricity Regulatory Commission, (NERC), increased tariffs 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.
The country has 12,500 megawatts of installed capacity but produces only about a quarter of that, leaving many Nigerians reliant on expensive diesel-powered generators.
Government considers tariffs too low to attract new investors and allow distribution firms to recoup costs and pay generating companies – leaving the sector with ballooning debt.
The electricity sector was privatized 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.