Talks of a loan for the expansion of the transmission and distribution facilities of the power sector between the Nigerian government and the World Bank has reached final stages as both parties have settled on a loan size of $3 billion.
Zainab Ahmed, the minister of finance, made this known on Sunday while addressing journalists, TheCable inclusive, on the activities of Nigeria at the annual meetings of the International Monetary Fund (IMF) and World Bank Group.
“We made two sets of requests to the bank. The first is technical assistance from the bank to implementing agencies especially the Nigeria Electricity Regulatory Commission (NERC) on the review of the performance improvement plans of the distribution networks,” she said.
“Two, we asked for technical assistance on business continuity regulation as well as to the ministry of finance in the assessment of contingent liabilities in the power sector and options of dealing with them.
“And most importantly, we put a request for the financing of the sector at the range of $1.5 billion to $4 billion. At the end of the day, it is like we would be looking at the funding size of $3 billion that will be provided in four tranches of $750 million each.
“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.
“This financing will cover the gap between the current tariff and the actual cost of generating electricity.
“It will also enhance our ability to pay previous obligations in the sector that has crystallised so that investors in the sector can go on with expanding investments in the sector.”
Speaking further, Ahmed said the loan will be released in four tranches of $750 million each and there is room for the loan to be expanded to $4 billion.
“Some portion of the loan will be for the transmission network and if we are able to expand to $4 billion then the extra $1 billion will be 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.”
According to the minister, a team from Nigeria will visit the World Bank in April 2020 to get approval for the release of the first tranche of the loan. Cable