The World Bank has approved the request of the Federal Government for a $3bn loan for the expansion of the transmission and distribution networks in the power sector.
The approval was given after a series of meetings held between the officials of the Federal Government led by the Minister of Finance, Zainab Ahmed and officials of the World Bank.
During the media briefing on Sunday, October 20, during the annual meetings of the World Bank/International Monetary Fund in Washington DC, the minister confirmed the approval of the loan.
She said the loan would be disbursed in four tranches of $750m each beginning from next year.
The loan, according to her would cover the funding gap as well as the current tariff which investors in the sector had described as very low compared to what is obtainable in other countries.
The minister said, “This financing will cover the gap between the current tariff and the actual cost of generating electricity
“It will also enhance our ability to pay previous obligations in the sector that has crystallised so that investors in the sector can go on with expanding investments in the sector.”
She said some portion of the loan will be for the transmission network, adding that if the government can expand the facility to $4bn; then the additional $1bn will be used for the distribution network.
“The distribution sector will be at the backend when the other reforms have been carried out.
“It will be a loan to the distribution companies because they are owned by the private sector,” she added.
Meanwhile, the Federal Government; in collaboration with international donor agencies has earmarked over $1.61bn for steady power supply across the country.
Briefing newsmen at the Kumbotso power substation, the Managing-Director/Chief Executive Officer of the Transmission Company of Nigeria, Alhaji Usman Gur; disclosed that the project would be executed under the Transmission Rehabilitation Expansion Programme, adding, “We are rehabilitating and expanding to degree 20,000 megawatts by 2022 across the country.”
Already, he noted the Federal Government had set aside about N32bn to compensate Nigerians, whose lands houses and farmlands would be affected by the right of way to establish power lines for the execution of the projects.
“The total amount that we are going to pay for compensation across the country is about N32bn, while the total project cost is $1.61bn.”