FG Secures $500M Loan from World Bank to Boost Electricity Supply

The World Bank
The World BankGoogle

The Nigerian federal government has secured a $500 million loan from the World Bank to support the Nigerian Distribution Sector Recovery Program (DISREP). The loan aims to improve the financial and technical performance of Electricity Distribution Companies (DisCos) in the country.

According to the Bureau of Public Enterprises (BPE), the loan will fill financing gaps in the distribution segment, which is considered the most problematic in the industry.

The DISREP program 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).

The loan offers concessional financing with more favorable terms than commercial bank loans. DisCos are expected to invest the funds in critical distribution infrastructure, improve Aggregate Technical, Collection, and Commercial (ATC&C) losses, increase power supply reliability, achieve financial sustainability in the power sector, and enhance transparency and accountability.

Key areas of improvement under the DISREP program 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 program components.

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

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