• Business - Banking & Finance
  • Updated: June 19, 2023

Nigeria's Power Projects Get Boost Of $750 Million From World Bank

Nigeria's Power Projects Get Boost Of $750 Million From Worl

National Power Infrastructure

The World Bank Group has granted Nigeria a $750 million loan to amplify its power sector, marking a significant boost under President Bola Tinubu's new administration.

The loan will serve as additional financing for the Power Sector Recovery Performance-Based Operation, with the parent project set to conclude on June 30, 2023.

Out of the initially approved $750m in 2020, $535.09 million has been disbursed and the remaining balance is expected by the end of June 2023.

The International Bank for Reconstruction and Development will provide $449 million, while the International Development Association will contribute $301m towards the newly approved financing.

“The proposed AF will build on the tangible results achieved and lessons learned under the parent Program.

"The proposed AF will continue supporting the implementation of the FGN’s Power Sector Recovery Plan’s critical actions to address the next set of power sector challenges and facilitate the achievement of the FGN’s ambitious access and energy transition targets.”

The document further disclosed that the new financing would run from 2023 to June 30, 2027.

Justifying the reason for the loan, the document noted that Nigeria has the largest electricity access deficit in the world.

It reads in part, “Nigeria has the world’s largest absolute electricity access deficit.

"Lack of access to the electricity grid affects 45 per cent of the population (90 million people), making Nigeria the country with the largest number of people not connected to electricity.

“As such, Nigeria accounts for 12 percent of the global access deficit.

"Large disparities exist in access to electricity between urban areas (84 per cent) and rural ones (26 percent).

"The net access deficit has increased by over seven million citizens over the last decade, as the pace of population growth has overtaken the pace of electrification.

“Even those Nigerians who are connected to the grid face frequent outages and hence do not get reliable supply.”

The document placed economic loss from poor electricity supply at $25bn annually, with firms saying that it is a major business challenge.

“Economic losses from unreliable electricity supply are estimated to be around N7-10tn (~$25bn equivalent) annually, or 5-7 percent of GDP. Firms cite a lack of reliable electricity as the top constraint to their business.

“Faced with unreliable and insufficient supply, businesses and households fill the gap with expensive petrol and diesel-run generators.

"It is estimated that over 20 GW of gasoline generator capacity is employed by households and small businesses, nearly twice as much as the 12 GW capacity connected to the national grid.

"Over 22 million diesel/gasoline generators power about 26 percent of total households and 30 percent of micro, small, and medium-sized enterprises (MSMEs) in Nigeria,” the document added.

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