By Olamilekan Alani
Despite spending N1.5trillion on the country’s power sector in the last two years, the Federal Government yesterday said it is in the process of investing a fresh $3 billion (N915bn) World Bank loan into the sector.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, disclosed this during an interview with journalists on the sidelines of the World Bank/International Monetary Fund (IMF) meetings holding in Washington DC, United States.
Vice President Yemi Osinbajo had in September said the federal government invested about N1.5 trillion in intervention fund in the Nigeria’s power sector in the last two years. Osinbajo said this at a power sector roundtable hosted by Mainstream Energy Solutions Limited (MESL) at its Kainji Hydropower Plant in Niger State last month.
The Vice President, who was represented by the Minister of Power, Sale Mamman, said “the Federal Executive Council (FEC) approved the third round of intervention funding for the sector, with a total of about N1.5 trillion in the last two years.
But on Thursday in Washington DC, the Finance Minister said she would be holding further discussions with the management of the World Bank to explain how the fresh $3.5bn loan it is seeking would be disbursed for the country’s power project.
She said based on the plan of the Federal Government for the power sector, the loan would be used for the development of transmission and distribution networks to enhance the delivery of electricity. The minister also said the loan would be used in addressing some of the challenges that the country is currently facing in the power sector.
“There is a proposed $2.5bn to $3bn facility for the power sector development programme in Nigeria and this will include development of the transmission and distribution networks as well as removing the challenges that we currently have now in the electricity sector,’she said
‘ “We are going to have a full meeting to discuss the power sector recovery programme and back home we have been working a great deal with the World Bank to design how this programme will be implemented. “So we have an opportunity now to have a direct meeting with the leadership of the bank and to tell them the plan we have and how much we need from one to five years,”the minister said, disclosing that the government would be disbursing the $3bn facility in two tranches of $1.5bn each.
An analysis has shown that the federal government took steps to borrow $3.311 billion (about N900bn) externally since 2015 to finance power sector projects.
The analysis of external funding for the Transmission Company of Nigeria (TCN) being the sole public utility in the power sector value chain indicates that the Company sought loans and grants to raise the transmission wheeling capacity from 8,100 megawatts (MW) to 20,000MW. TCN is obtaining $1.661bn (N601.3bn) multilateral loans from five agencies which it said, it is using for the procurement and installation of projects under its Transmission Rehabilitation and Expansion Programme (TREP).
The breakdown of the fund obtained by this paper indicates that the World Bank is the highest donor with $486m for a fresh Nigeria Electricity Transmission Project (NETAP), and $27m for transmission project tagged, North Core. The African Development Bank (AfDB) gave $410m loan for transmission expansion projects; the French Development Agency -AFD and European Union (EU) gave $330m for the northern corridor transmission project.
While the Japanese International Corporation Agency pegged $238m for Lagos/Ogun transmission project, AFD gave another N170m for the Abuja transmission ring scheme. Between 2017 and 2018, the federal government collected a $1 billion (about N362bn) Performance Based Loan from the World Bank to fix the power sector in what it called the Power Sector Recovery Programme (PSRP). The World Bank is also processing another $350 million (N127bn) loan for the Rural Electrification Agency (REA).
The Central Bank of Nigeria (CBN) in May also announced the disbursement of N120.2bn to different electricity distribution companies (DISCOs), power generating companies (GENCOs), service providers and gas companies, in order to address the liquidity and funding challenges facing the power sector.
But the power Distribution Companies (DisCos) had recently reacted to the borrowing by TCN which it said is not yielding results in the sector.
In a statement by the Executive Director, Research and Advocacy of the Association of Nigerian Electricity Distributors (ANED), Chief Sunday Oduntan said even with the TCN multilateral funding, its poor equipment caused over 100 electricity grid collapses since privatization in 2013, and nine collapses this year.
ANED said TCN analogue system caused 5,311 interface disruptions in a single DisCo within 18 days of September 2019 and that it was despite the $1.6 billion investment TCN said it has made. The DisCos which said they have invested $1.4 billion in their networks, said despite TCN saying it is implementing a Transmission Rehabilitation Expansion Programme (TREP) with the $1.6bn fund, “the reality is otherwise.
TCN finds it difficult to move away from analogue-based and informal communications systems and frequent explosions and burnings of transmission sub-stations and transformers.” Nigeria records rise in public debt to N25.7trn ,
