The Federal Government is reportedly seeking a loan of $5bn from the World Bank Group to boost power availability in Nigeria.
The World Bank had in April stated that a powerful delegation from Nigeria was in Washington DC to discuss assistance for the nation’s power sector, but did not disclose the details of the talks.
However, the investigation by a local media showed that the Federal Government was actually seeking a loan of $5bn to be channelled into the power sector in order to boost electricity availability in the country.
Present at the April 25, 2017, meeting in Washington DC were the Minister for Power, Works and Housing, Mr. Babatunde Fashola; Minister of Finance, Mrs. Kemi Adeosun; Chairman, Senate Committee on Power, Steel and Metallurgy, Senator Enyinnaya Abaribe; and Chairman, House of Representatives Committee on Power, Hon. Dan Asuquo.
At the end of the meeting, the World Bank Group had said that it would deploy a full range of instruments to mobilise investments to resolve Nigeria’s energy crisis.
The Director of Operations at the Multilateral Investment Guarantee Agency, an arm of the World Bank Group, Sarvesh Suri, said a full range of instruments would be deployed to help the government mobilise investments directly from the private sector and through private sector guarantees.
According to the Debt Management Office, out of Nigeria’s external debt of $13.81bn as of March 31, 2017, the World Bank Group had a portfolio of $6.93bn.
This means that the World Bank holds more than 50 percent of the country’s external debt portfolio.
Should the loan being sought by the Federal Government be approved, Nigeria’s indebtedness to the World Bank would rise to about $11bn, excluding other smaller loans that have been approved after the March 31 accounting date.
The bank had in 2014 announced $1.19bn guarantees meant to lift the nation’s electricity sector.
The Board of Executive Directors of three arms of the World Bank approved the package of loans and guarantees supporting a series of energy projects to help boost independent power generation and ease crippling energy shortages in Nigeria.
It said the projects were critical elements of the World Bank Group Energy Business Plan for Nigeria.
The World Bank, International Finance Corporation and Multilateral Investment Guarantee Agency’s World Bank partial risk guarantees approved included $245m for the 459 Megawatt Azura-Edo Power Plant near Benin City, Edo State; and $150m for the 533MW Qua Iboe plant in Ibeno, Akwa Ibom State. Both plants are gas-fired.
The Boards of the IFC and MIGA approved loans and hedging instruments worth $135m and guarantees of up to $659m for the Azura Edo project.
The IBRD guarantees included forward-looking mitigation and risk-sharing arrangements designed to augment the country’s power sector reforms while building market confidence and setting industry benchmarks.
The IFC investment and MIGA’s guarantee for the Azura-Edo power plant were to support a trailblazing project at the centre of Nigeria’s power sector programme, while setting a replicable model for future power projects.
The bank said addressing energy needs in Nigeria required investment from the public and private sectors, adding that working with the World Bank Group could help catalyse significant private investment in an environment that best assured successful delivery of increased power supply.