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World Bank Boosts Nigeria’s Power Sector With $750m Loan

  • Jun 25, 2020
  • 561 views
Source: 
Daily Independent

 

LAGOS – The World Bank has approved $750 million International Development Association (IDA) credit for Nigeria’s Power Sector Recovery Operation (PSRO), to improve electricity supply in the country.

The Bank explained yesterday that the facility would help Nigeria achieve financial and fiscal sustainability and enhance accountability in the power sector.

It said about 47 per cent of Nigerians do not have access to grid electricity and those who had access, faced regular power cuts.

 

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It added that the economic cost of power shortages in Nigeria is estimated at around $28 billion, which is equivalent to two per cent of Nigeria’s Gross Domestic Product (GDP).

It stated that getting access to electricity is one of the major constraints for the private sector, agreeing to the Ease of Doing Business report.

It added that improving power sector performance, particularly in the non-oil sectors of manufacturing and services would be central to unlocking economic growth post COVID-19.

Shubham Chaudhuri, World Bank Country Director for Nigeria, speaking on the gesture, observed that lack of reliable power has stifled economic activity and private investment and job creation.

”This is ultimately what is needed to lift 100 million Nigerians out of poverty. The objective of this operation is to help turn around the power sector and set it on a fiscally sustainable path. This is particularly urgent at a time when the government needs all the fiscal resources it can marshal to help protect lives and livelihoods amid the COVID-19 pandemic”, he said

He explained that the PSRO would provide results-based financing to support the implementation of the Government’s Power Sector Recovery Programme (PSRP).

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According to him: “The PSRO is expected to increase annual electricity supplied to the distribution grid, enhance power sector financial viability while reducing annual tariff shortfalls and protecting the poor from the impact of tariff adjustments. This will enable the turnaround of power sector while helping the Federal Government to redirect large fiscal resources from highly regressive tariff shortfall financing towards critical crisis-responsive and pro-poor expenditures. It will also increase public awareness about ongoing power sector reforms and performance.

“Specifically, the PSRO will ensure that 4,500 mwh/hour of electricity is supplied to the distribution grid by 2022 by strengthening the regulatory, policy and financing framework. It will also enhance the accountability and financial viability of the sector, helping the sector create a track record of sustainable operation necessary for unlocking much needed private investments in the future”

Meanwhile, Chiedu Chigbo, the Managing Director of Niger Delta Power Holding Company (NDPHC), has disclosed that total debts profile of Nigeria’s electricity has hit N190 billion.

Ugbo, who revealed this during a presentation at the Senate hearing on power, said the development is hampering the growth of the power market.

He said NDPHC is still working assiduously to deliver on its mandate inspire of the debt.

He said that the firm’s output is also being hampered by generation and operational challenges.

He noted that these include the transmission constraints the company is faced with on a daily basis.

He added: “The NDPHC’s available capacity is over 3000MW, but it is dispatched at 800MW and below by the System Operator because of load rejection by DISCOs. This inadequate dispatch grossly affects the company’s revenue generation capacity”

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