The African Development Bank (AfDB) has revealed its plans to invest a $1billion policy-based operation fund with a significant energy component aimed at supporting the ongoing power sector reforms triggered by the new Electricity Act.
Kevin Kariuki, the vice president on power, energy, climate change at the AfDB, stated this at the 8th edition of the Africa Energy Market Place held in Abuja on Thursday.
According to him, the Bank is aware of the extent of the challenges in the Nigerian power sector, ranging from addressing the electricity access deficit to rehabilitating and upgrading the power system to meeting a load of 20GW, which is believed, to be the true demand, for Nigeria’s 200 million people.
He said, “Hence, we must have all our hands (i.e. all stakeholders) on the deck empowered by the new Electricity Act, 2023. At AfDB we put our money where our mouth is, as is clearly manifested by the fact we will be shortly seeking board approval for a $1 billion policy-based operation (PBO) with significant energy component aimed at supporting the ongoing power sector reforms triggered by the new Electricity Act.
“The timing of the AEMP and the proposed policy-based lending focused on the energy sector is therefore not coincidental. We will finance the policy recommendations to actualize the expected outcomes from the National Integrated Electricity Policy and Strategic Implementation Plan.”
Kariuki speaking further on AfDB”s plans, said that good policies attract sustainable investments, adding that with the existence of an enabling environment to least resistance, the Bank’s focus is on supporting the engendering of the least resistance.
According to him, the enabling environment will maximize the value of ongoing investments, including the $256.2 million Nigeria Transmission Expansion Project that entails the construction of 500km of transmission lines and four substations with capacity of over 1000MVA; and the $200 million Nigeria Electrification Project, which will build 150 mini-grids.
He noted that the Bank would be financing a study for the Transmission Company of Nigeria to explore deployment of Battery Energy Storage Systems to enhance grid stability and facilitate greater uptake of renewable energy generation.
“Nigeria is part of our flagship USD 20 Billion Desert to Power Initiative, which aims to generate 10,000 MW of solar power across 11 countries in the Sahel region to provide power to 250 million Africans. This portends great promise for increasing the proportion of renewable energy is Nigeria’s energy mix.
“Through this multi-prong approach of supporting policy development, financing critical power sector infrastructure, and providing technical assistance and capacity building, we strongly believe that our partnership with the Federal Government will ensure a viable and sustainable power sector will yield the desired result,” he said.
Earlier, Sanusi Garba, the chairman of Nigerian Electricity Regulatory Commission (NERC), said that the major challenge with the Nigerian power sector is the insolvent state of the distribution companies.
He stressed that the implementation of power sector policy (electricity Act) would require a strong political will and decisions that impact on the wider public.
“And the challenge we have today is the ability of major stakeholders to feed the nation and state exactly what the challenge is, so that we can collectively address the issue”, he added.
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