World Bank approves Nigeria’s $3bn power sector loan – TheNigerialawyer

* FG okays $1.61bn for power supply

The Federal Government on Sunday said it had opened discussions
with the United Kingdom on the possibility of raising “Jollof Bond’
to finance the national budget.

The Minister of Finance, Budget and National Planning, Mrs
Zainab Ahmed, also said the $3bn loan request for the expansion of
the power transmission and distribution networks in the industry
had finally approved by the World Bank.

The minister said this while addressing journalists on the
outcome of Nigeria’s participation at the annual meetings of the
World Bank/International Monetary Fund in Washington DC.

The Jollof Bonds are bonds issued offshore, but denominated in
local currency. The importance of such a transaction to a country
is that it protects the issuing country from exchange rate
exposure.

Ahmed said apart from the UK government, the Federal Government
had also received proposals from Deutsche Bank of Netherlands as
well as the World Bank on the need for naira denominated bond.

She said a working group was being set up to work on the naira
denominated bond, adding that the Central Bank of Nigeria would
lead further discussions on the issuance.

The funds to be raised from the bond issuance, according to the
minister, will be used to support infrastructure financing as
captured in the annual budget.

She said the $3bn World Bank loan for the power sector would be
disbursed in four tranches of $750m each, beginning from next
year.

The loan, according to her, will cover the funding gap as well
as the current tariff that investors in the sector described as
very low compared to what was obtainable in other countries.

The minister said, “We had very productive meetings with the
World Bank Group Country Power Sector Team on Nigeria for the power
sector recovery programme, wherein we received an update on the
outstanding issues covering sustainable fiscal support, policy and
regulatory environment, operational efficiency and infrastructure
investment possibly under a programmatic approach.

“We identified the imperative of solving two critical problems,
which are operational efficiency and revamping the associated
infrastructure in the power sector to ensure the overall success of
the interventions in the power sector.

“The World Bank indicated its readiness to provide the technical
assistance in the near-term and the funding in a programmatic
manner. This financing will cover the gap between the current
tariff and the actual cost of generating electricity.”

She said some portion of the loan would be for the transmission
network, adding that if the government could expand the facility to
$4bn, then the additional $1bn would be used for the distribution
network.

On the issue of climate change in the Lake Chad region, Ahmed
also said she held a discussion with the World Bank to find ways of
reducing the fragility through the bank’s regional
intervention.

At the end of the meeting, she said the bank agreed to include
Nigeria in the first phase of an integrated project that would
address some of the drivers of fragility.

Meanwhile, the Federal Government, in collaboration with
international donor agencies has earmarked over $1.61bn for steady
power supply across the country.

Briefing newsmen at the Kumbotso power substation, the
Managing-Director/Chief Executive Officer of the Transmission
Company of Nigeria, Alhaji Usman Gur, disclosed that the project
would be executed under the Transmission Rehabilitation Expansion
Programme, adding, “We are rehabilitating and expanding to degree
20,000 megawatts by 2022 across the country.”

Already, he noted the Federal Government had set aside about
N32bn to compensate Nigerians, whose lands houses and farmlands
would be affected by the right of way to establish power lines for
the execution of the projects.

“The total amount that we are going to pay for compensation
across the country is about N32bn, while the total project cost is
$1.61bn.”

Gur, who is also the Chairman of the West African Power Pool
Committee, stated that he led the TCN team to Kano, “to validate
and look at the route that will ran from Kumbotso Transmission
Substation to Rimi Zakara.

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