The Federal Government of Nigeria has secured a $500 million loan from the World Bank to bolster the country’s electricity distribution sector. The loan is part of the Nigerian Distribution Sector Recovery Programme aimed at improving the financial and technical performance of the Distribution Companies (Discos) in Nigeria. The funding will support key initiatives such as bulk procurement of customer meters, implementation of a Data Aggregation Platform, and efforts to enhance governance and transparency within the Discos. The loan comprises two main components: a program for results with an allocation of $345 million and an Investment Project Financing component with an allocation of $155 million. The goal is to address issues such as metering gaps, reduce losses, improve remittances, enhance power supply reliability, achieve financial sustainability, and increase transparency within the Discos.
Significant progress has been made in preparing for the DISREP program, with key milestones achieved and approved by the Federal Executive Council. The financing agreement has been executed by relevant government bodies, including the Ministry of Finance and the World Bank. A structured repayment hierarchy has been established to ensure repayment assurance, prioritizing statutory payments, loan repayments, market obligations, DISREP loan repayment, and Discos’ net revenue. This structured plan aims to mitigate risks associated with repayment uncertainty and defaults.
The $500 million DISREP loan from the World Bank offers concessional financing with more favorable terms than commercial bank loans. It is expected to enable Discos to invest in critical distribution infrastructure, reduce losses, improve power supply reliability, achieve financial sustainability in the power sector, and enhance transparency and accountability within the industry.
