Nigeria secures $500m World Bank loan to boost electricity distribution

…Earmarks $155m for procurement of meters, others

In a bid to address identified gaps in power distribution by the Electricity Distribution Companies (DisCos), the Federal Government has secured a $500 million loan from the World Bank. This follows the recent approval by the Senate.

According to Amina Tukur Othman, head of public communication at the Bureau of Public Enterprise (BPE), the loan which was approved by the World Bank Board of Directors on February 4, 2021, is in support of the Nigerian Distribution Sector Recovery Programme (DISREP) and aimed at improving the financial and technical performance of the DisCos.

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The DISREP is made up of two main components: Programme for Results (PforR), with an allocation of $345 million, aimed to support the implementation of selected PIP components, while the other component of the programme is the Investment Project Financing (IPF), with a total allocation of $155 million, targeted to finance the procurement of meters, a data aggregation platform, and technical assistance.

The DISREP, according to Othman, is designed to enhance the financial and technical operations of the DisCos through capital investment and the financing of key components of their Performance Improvement Plans (PIPs), which have been approved by the Nigerian Electricity Regulatory Commission (NERC).

“Key areas of improvement include bulk procurement of customer/retail meters and meter data management systems, implementation of a Data Aggregation Platform (DAP), strengthening governance and transparency within the DisCos, and programme components,” Othman said in a statement on Thursday.

He further explained that to ensure repayment assurance, the BPE sought and obtained approval from the Nigerian Electricity Regulatory Commission (NERC) and the National Council on Privatisation (NCP) for a structured repayment hierarchy.

This structure, according to him, prioritises payments as statutory payments (taxes), repayment of CBN market loans, market obligations, repayment of DISREP loan, DisCos’ net revenue. “This structured repayment plan aims to mitigate risks associated with repayment uncertainty and defaults, with regulatory sanctions imposed for any defaults.

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“The DISREP loan, particularly the Investment Project Financing (IPF) component, is expected to significantly benefit the Nigerian Electricity Supply Industry (NESI) by closing the metering gap, reducing Aggregate Technical, Collection, and Commercial (ATC&C) losses, improving remittances and liquidity for the DisCos, enhance the reliability of power supply and increasing transparency and accountability within the DisCos,” he added.