THE World Bank has approved a $750 million loan credit for Nigeria’s Power Sector Recovery Operation in a bid to improve electricity supply in the country.
The Bank stated that the approval of the loan was necessary to expand Nigeria’s electricity transmission and distribution infrastructure considering the economic cost of power cuts in the country which has resulted in an estimated $28 billion loss.
“The economic cost of power shortages in Nigeria is estimated at around $28 billion – equivalent to 2% of its Gross Domestic Product, GDP,” the World Bank said in a statement.
“Improving power sector performance, particularly in the non-oil sectors of manufacturing and services, will be central to unlocking economic growth post-COVID-19.”
Bloomberg reported that the loan is the first tranche of a $3 billion to be released in four tranches of $750 million each and could be expanded to $4 billion,quoting Nigeria’s Minister of Finance, Zainab Ahmed.
The first instalment of the loan was scheduled to be received in April but the outbreak of the coronavirus stalled the process.
Shubham Chaudhuri, Nigeria’s World Bank Country Director said fluctuating power supply in the country was choking private investment in the country to lift millions of Nigerians out of poverty.
“The lack of reliable power has stifled economic activity and private investment and job creation, which is ultimately what is needed to lift 100 million Nigerians out of poverty,” he said.
He also stated that access to electricity was a major factor that hinders the private sector involvement in the economic progress in the country according to the 2020 Ease of Doing Business report.
Indicating that the objective of the credit facility was to help turn around the power sector and set it on a fiscally sustainable path.
“This is particularly urgent at a time when the government needs all the financial resources it can marshal to help protect lives and livelihoods amidst the COVID-19 pandemic,” he said.
Established in 1960, the International Development Association, IDA, was set up by World Bank to provide assistance to the world’s poorest countries by grants and low-interest loans for projects that boost economic growth, reduce poverty, and improve poor people’s lives.