FG will get $500m World Bank mortgage for energy distribution

The Federal Government has secured a $500m World Bank mortgage to bolster Nigeria’s electrical energy distribution sector, the Bureau of Public Enterprises introduced on Thursday.

The BPE introduced that the mortgage has been secured to assist deal with the various challenges confronting Discos within the nation.

“In a strategic move to address the identified gaps in the electricity distribution companies, the Federal Government of Nigeria has secured a $500m loan from the World Bank,” BPE acknowledged in an announcement issued in Abuja by the Head of Public Communication, Amina Othman.

It added, “Approved on February 4, 2021, by the World Bank board of directors, this funding supports the Nigerian Distribution Sector Recovery Programme aimed at improving the financial and technical performance of the Discos.

“The DISREP 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, which have been approved by the Nigerian Electricity Regulatory Commission.”

The Bureau acknowledged that key areas of enchancment embrace bulk procurement of buyer/retail metres and metre information administration programs, implementation of a Data Aggregation Platform, and strengthening governance and transparency throughout the Discos.

On the programme elements, BPE stated the DISREP contains two important elements.

It stated the primary is the programme for outcomes, with an allocation of $345m, including that the aim is to assist the implementation of chosen PIP elements. The Bureau of Public Enterprises is to implement this.

The different element is the Investment Project Financing, with an allocation of $155m and the aim is to finance the procurement of metres, an information aggregation platform, and technical help.

“The DISREP mortgage, notably the Investment Project Financing element, is predicted to considerably profit the Nigerian Electricity Supply Industry by closing the metering hole, decreasing Aggregate Technical, Collection, and Commercial losses, and enhancing remittances and liquidity for the Discos.

“Others include to enhance the reliability of power supply, as well as increase transparency and accountability within the Discos,” BPE acknowledged.

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It stated the $500m DISREP mortgage from the World Bank provides concessional financing with extra beneficial phrases than industrial financial institution loans.

“This will enable the Discos to invest in critical distribution infrastructure, improve ATC&C losses, increase power supply reliability, achieve financial sustainability in the power sector, and enhance transparency and accountability,” the bureau acknowledged.

It famous that important progress has been made within the preparation of the DISREP programme with a number of key milestones achieved and accredited by the Federal Executive Council on August 3, 2022.

It stated there was the execution of the Financing Agreement by the Federal Ministry of Finance, Budget and National Planning, and the World Bank, and adoption of the Programme Operations Manual by BPE and Transmission Company of Nigeria.

The authorities has additionally obtained a authorized opinion from the Attorney-General of the Federation and executed the Subsidiary Loan Agreement, including that the efficient declaration of the DISREP Programme was carried out on January 31, 2023, whereas the inauguration of the DISREP Technical Committee was on May 6, 2024.

It stated the inclusion within the Federal Government borrowing plan was accredited by the Senate Committee on May 16, 2024.

“To guarantee compensation assurance, the Bureau of Public Enterprises sought and obtained approval from the Nigerian Electricity Regulatory Commission and the National Council on Privatisation for a structured compensation hierarchy.

“This structure prioritises payments as follows: 1. Statutory payments (taxes); 2. Repayment of CBN market loans; 3. Market obligations; 4. Repayment of DISREP loan; 5. Discos’ net revenue. This structured repayment plan aims to mitigate risks associated with repayment uncertainty and defaults, with regulatory sanctions imposed for any defaults,” BPE acknowledged.

Power distribution corporations in Nigeria have been broadly criticised as being the weakest hyperlink within the nation’s energy worth chain. This is because of many lapses on the a part of the Discos.

For occasion, about eight million registered energy customers out of an estimated 13 million electrical energy customers should not metered by Discos. Also, there are complaints of poor energy provide to many areas by Discos. Consumers on estimated billing additionally accuse Discos of extortion, amongst different issues.

Nigeria bought 11 energy distribution corporations after electrical energy technology and distribution arms of the business have been privatised in November 2013, and since then, the Discos have been struggling to satisfy the calls for of finish customers.



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