FG secures $500m loan to boost electricity distribution

In a strategic move to address the identified gaps in Electricity Distribution Companies (DisCos), the Federal Government of Nigeria has secured a $500 million loan from the World Bank.

In a statement signed by Head, Public Communication, Bureau of Public Enterprises (BPE) Amina Tukur Othman, the loan will provide funding support for the Nigerian Distribution Sector Recovery Program (DISREP) which seeks to improve the financial and technical performance of the DisCos.

The Distribution Sector Recovery Program (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).

Key areas of improvement include: Bulk procurement of customer/retail meters and meter data management systems; implementation of a Data Aggregation Platform (DAP); and strengthening of governance and transparency within the DisCos.

According to the terms of the loan agreement, the Program for Results (PforR) has an allocation of $345 million, with the purpose of supporting the implementation of selected PIP components. While the Investment Project Financing (IPF), which would be implemented by the Bureau of Public Enterprises (BPE) has an allocation of $155 million.

The BPE further explained that the loan IPF help bridge Nigeria’s metering gap; reduce Aggregate Technical, Collection, and Commercial (ATC&C) losses, improve remittances and liquidity for the DisCos, enhance the reliability of power supply, and increase transparency and accountability within the DisCos.

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.

“Significant progress has been made in the preparation of the DISREP Program, 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 Program 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 Program 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.