The Federal Government has said it has plans to scale-up the impending World Bank for power sector intervention from $3billion to $4billion.
The minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed, disclosed this in Washington DC at a press briefing on the sidelines of the 2019 World Bank/IMF meetings in Washington DC.
She told journalists that the loan will be used to finance transmission, distribution and offset its pending obligations to the sector adding that it will also help the government end the subsidy regime in the power sector.
“The $3bn that we are trying to raise from World Bank is for financing the power sector. This financing will include, covering right now the cost of the gap between what is provided for in the current tariff, and the cost of the businesses themselves. So, there is a tariff cost differential. But it would also enhance our ability to pay the previous obligations that have crystallized and which we have not yet paid,” she explained.
The loan, she said, will be in three tranches adding that “there is some portion of it that will be for the transmission network.”
“And if we are able to expand the amount to $4bn, the additional $1bn is for the distribution network. So, it will help us to exit the subsidy that is now inherent in the power sector,” she said.
She explained further that the loan is supposed to be used “to reform the sector, to restore the distribution business side of the sector especially, on a stronger footing so they are freed up enough to be able to go out and raise financing to invest in expanding the distribution network.”
She however noted that the distribution aspects will come at the back end when the government is done with the much needed reforms.