FG secures $500m World Bank loan to bolster electricity distribution
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The Bureau of Public Enterprises (BPE) has disclosed that the Federal Government has secured a $500 million loan from the World Bank in a strategic move to address the identified gaps in the Electricity Distribution Companies (DisCos).
According to the BPE, approved on February 4, 2021, by the World Bank Board of Directors, this funding supports the Nigerian Distribution Sector Recovery Programme (DISREP) aimed at improving the financial and technical
performance of the DisCos.
The BPE explained that the Distribution Sector Recovery Programme (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 (PIPs), which have been approved by the Nigerian Electricity Regulatory Commission (NERC).
Amina Tukur Othman, Head, Public Communication of the Bureau of Public Enterprises (BPE) said in a statement on Thursday that “Key areas of improvement include: Bulk procurement of customer/retail meters and meter data management systems; implementation of a Data Aggregation Platform (DAP); strengthening governance and transparency within the DisCos; Programme Components, and the DISREP comprises two main components; programme for Results (PforR).”
Othman added explained that $345 million has been allocated to, “Support the implementation of selected PIP components; implementation by Bureau of Public Enterprises (BPE) and $155 million allocated for Investment Project Financing (IPF) for the purpose of financing the procurement of meters, a Data Aggregation Platform, and Technical Assistance”.
She added that “the DISREP loan, particularly the Investment Project Financing (IPF) component, is expected to significantly benefit the Nigerian Electricity Supply Industry (NESI) by closing the metering gap; reducing Aggregate Technical, Collection, and Commercial (ATC&C) losses; Improving remittances and liquidity for the DisCos; Enhancing the reliability of power supply, and increasing transparency and accountability within the DisCos”.
The BPE e further explained that the $500 million DISREP loan from the World Bank offers concessional financing with more favourable terms than commercial bank loans.
The privatization agency said, “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.”
According to the BPE, significant progress has been made in the preparation of the DISREP Programme, with several key milestones achieved, and “approval by the Federal Executive Council (FEC) on August 3, 2022; execution of the Financing Agreement by the Federal Ministry of Finance, Budget and National Planning, and the World Bank, adoption of the Programme Operations Manual (POM) by BPE and TCN, obtained Legal Opinion from the Attorney-General of the Federation, Execution of the Subsidiary Loan Agreement, effective declaration of the DISREP Programme on January 31, 2023, inauguration of the DISREP Technical Committee on May 6, 2024, inclusion in the Federal Government Borrowing Plan, approved by the Senate Committee on May 16, 2024.”
It added that to ensure repayment assurance, “the Bureau of Public Enterprises sought and obtained approval from the Nigerian Electricity Regulatory Commission (NERC) and the National Council on Privatisation (NCP) for a structured repayment hierarchy.
“This structure prioritizes payments as follows: Statutory Payments (Taxes); Repayment of CBN market loans; Market obligations; Repayment of DISREP loan; DisCos’ net revenue.