The board of the World Bank on Wednesday approved Nigeria’s long-standing request for about a billion dollars, releasing the first tranche of $750million credit to support the country’s power sector recovery, throwing a lifeline to the largely illiquid sector.
This fresh cash injection will provide financing to help government repay the Central Bank for loans to the power sector on the condition that Nigeria begins a tariff regime that will guarantee cost recovery and abolish subsidies. This World Bank intervention could reach $3billion in the coming years if the Nigerian government meets the terms.
In a statement by Shubham Chaudhury the World Bank Country Director on Wednesday the Bank said the loan under the Power Sector Recovery Progamme aims to achieve financial and fiscal sustainability and enhance accountability in Nigeria’s power sector.
The PSRP was prepared by the Nigerian Government and the World Bank to increase annual electricity supplied to the distribution grid, enhance power sector financial viability while reducing annual tariff shortfalls and protecting the poor from the impact of tariff adjustments.
Chaudhury said the loan “will enable the turnaround of power sector while helping the Federal Government to redirect large fiscal resources from highly regressive tariff shortfall financing towards critical crisis-responsive and pro-poor expenditures. It will also increase public awareness about ongoing power sector reforms and performance.”
MoneyCentral reported last week that shortfalls of up to N123 billion due to NBET from DisCos was holding the entire power chain hostage.