Federal Government Secures $500 Million World Bank Loan to Boost Nigeria's Electricity Distribution Sector

The Bureau of Public Enterprises (BPE) announced that the Nigerian Federal Government secured a $500 million loan from the World Bank to address deficiencies in Electricity Distribution Companies (DisCos). Approved on February 4, 2021, this funding supports the Nigerian Distribution Sector Recovery Programme (DISREP), aimed at enhancing the financial and technical performance of the DisCos through capital investment and financing key components of their Performance Improvement Plans (PIPs) approved by the Nigerian Electricity Regulatory Commission (NERC).

Amina Tukur Othman, BPE's Head of Public Communication, outlined the key improvement areas, including bulk procurement of meters, implementation of a Data Aggregation Platform (DAP), and strengthening governance and transparency. The loan includes $345 million for implementing selected PIP components and $155 million for Investment Project Financing (IPF) to procure meters, a DAP, and technical assistance.

The DISREP loan is expected to 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 DisCos, enhancing power supply reliability, and increasing transparency and accountability.

The loan offers concessional financing with better terms than commercial bank loans, enabling DisCos to invest in critical infrastructure, improve ATC&C losses, increase power reliability, achieve financial sustainability, and enhance transparency. Key milestones in the DISREP Programme include Federal Executive Council approval, execution of the Financing Agreement, adoption of the Programme Operations Manual, and establishment of a structured repayment hierarchy approved by the Nigerian Electricity Regulatory Commission (NERC) and the National Council on Privatisation (NCP) to mitigate repayment risks and defaults.