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World Bank to oversee underperforming $500m Nigeria electricity loan

World Bank to oversee underperforming $500m Nigeria electricity loan

The World Bank has announced it will conduct a supervision mission next month to address the poor performance of a $500 million loan intended to improve Nigeria’s electricity distribution sector.

As detailed in the latest Implementation Status & Results Report for the project, this mission is set for July 8 to July 12, 2024, and aims to tackle the ongoing challenges and lacklustre progress of the Nigeria Distribution Sector Recovery Program (DISREP).

The DISREP was approved by the World Bank Board on February 4, 2021, and came into effect on February 2, 2023.

The program’s main goal is to boost the financial and technical performance of Nigeria’s electricity distribution companies (DisCos).

The report states: “The project was approved by the Board on February 4, 2021, and it became effective on February 2, 2023. DISREP was included in Nigeria’s external borrowing plan on May 15, 2024.

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“The Objective of the Project is to improve the financial and technical performance of the electricity distribution companies. A World Bank supervision mission will take place from July 8 to 12, 2024,” it added.

The report indicates that the project’s progress towards its goals has been rated “Moderately Unsatisfactory,” both in overall implementation and specific project development outcomes.

Key performance indicators, such as reducing DisCos’ metering gap, semi-annual electricity billing, and the collection of billed electricity, have shown minimal or no progress.

Despite the loan’s approval and activation, the disbursement rate is still at zero percent , with none of the $500 million yet disbursed. The project aims to reduce the metering gap, improve billing and collection efficiency, and enhance corporate governance within DisCos.

However, the latest report shows no significant advancements in these areas. For instance, the target to reduce the metering gap remains unmet, with no reduction achieved to date.

Additionally, the report notes that the Nigerian government has committed to awarding contracts for the supply and installation of 1.25 million smart meters by the end of June 2024.

This initiative is expected to greatly improve metering accuracy and billing efficiency, addressing one of the project’s critical areas.