The World Bank has announced the approval of a $750 million International Development Association credit for Nigeria’s Power Sector Recovery Operation.
According to the bank’s Country Director for Nigeria, Shubham Chaudhuri, the credit would help “increase annual electricity supplied to the distribution grid, enhance power sector financial viability while reducing annual tariff shortfalls and protecting the poor from the impact of tariff adjustments.”
The bank has expressed worry that about 47 per cent of Nigerians have no access to the national grid electricity and how those who do have access, face regular power cuts.
The economic cost of power shortages in Nigeria is estimated at around $28bn and two per cent of its Nigeria’s GDP, the banks says.
Electricity is one of the major constraints faced by the private sector, according to the Ease of Doing Business report.
The bank highlights this in the statement. It says, “Lack of reliable power has stifled economic activity and private investment and job creation.
“This is ultimately what is needed to lift 100 million Nigerians out of poverty. The objective of this operation is 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 fiscal resources it can marshal to help protect lives and livelihoods amid the COVID-19 pandemic.”
It explained further that the fund would help the Nigerian government to direct large fiscal resources from highly regressive tariff shortfall financing towards critical crisis-responsive and pro-poor expenditures
The PSRO is expected to ensure that 4,500 mwh/hour of electricity is supplied to the distribution grid by 2022 by strengthening the regulatory, policy and financing framework.