As a fall out of its meeting with the World Bank, the African Development Bank (AfDB) and the Multilateral Investment Guarantee Agency (MIGA) at the Spring Meeting of the IMF/World Bank in Washington DC, USA, Nigeria appears set to secure about $5.2 billion from the World Bank to expand its electricity generation capacity.
The money is also meant to help the nation’s economy recover from its first contraction in 25 years. If discussions proceed as planned the World Bank’s private-sector lending arm, the International Finance Corporation (IFC), may invest about $1.3 billion in power projects and electricity distribution companies, according to Bloomberg reports.
Power, Works and Housing Minister, Babatunde Fashola, who was at the Washington DC meeting said the bank’s political-risk insurer, MIGA, could provide equity and debt of $1.4 billion for gas and solar power programme under the plan.
The fund is in addition to loans of $2.5 billion Nigeria is seeking from the bank to help improve the distribution of power, expand transmission-capacity and to increase access to electricity in rural areas, Fashola explained.
Nigeria’s power generation has been hovering around 4,000MW although regulators claim generation could be above 12,000MW. But the wheeling capacity remains constrained as the national grid can only evacuate about 4,000MW at present leading to outages in parts of the country.
“Disbursements with the World Bank are being worked out to start from around June, July this year,” Fashola said. Nigeria is asking the bank to bring forward the timetables “because next year we want to see results,” Fashola said. The Nigerian economy shrank 1.5 per cent last year, entering its first recession since 1991, occasioned by fall in oil prices and production and dollar shortages. According to the International Monetary Fund (IMF), however, the nation’s Gross Domestic Product (GDP) could expand 0.8 per cent this year and 1.9 per cent in 2018.
Nigeria, Africa’s most populous nation, produces about 4,000MW of power compared with an average peak generation of about 35,000MW in South Africa, with a population that’s less than half of the estimated size of Nigeria’s 180 million people. The lack of power increases production costs for many businesses forced to provide their own electricity, mostly using diesel-run generators.
On Monday, Fashola scolded the nation’s power distribution companies for epileptic services and breach of agreement. Earlier, the power companies had alleged, among other issues, that the nation’s power facilities were obsolete, thus frustrating efforts at optimum power generation.