World Bank’s N294bn power sector support

The amount is 25 percent of the $7 billion the Bank earmarked for Nigeria over the period.Details of what the facility is meant for are not clear because BPE provided none, but generally the money would be deployed as part of ongoing efforts to revamp and strengthen Nigeria’s problematic power sector, especially as the new […]

The amount is 25 percent of the $7 billion the Bank earmarked for Nigeria over the period.
Details of what the facility is meant for are not clear because BPE provided none, but generally the money would be deployed as part of ongoing efforts to revamp and strengthen Nigeria’s problematic power sector, especially as the new operators that emerged after it was privatised, have persistently complained of lack of funds to turn around their businesses.
News of the World Bank funding broke just as the Central Bank of Nigeria (CBN) and the Nigeria Electricity Regulatory Commission (NERC) signed terms and conditions, as well as participation agreements with commercial banks to start disbursing a N213 billion intervention fund under the Nigerian Electricity Market Stabilisation Facility (NEMSF).
The signing of the agreements followed the CBN’s earlier agreement with players in the power sector to boost capacity and stimulate economic development that has over the decades been bedevilled by inadequate electricity supply, among other critical factors.
In 2010, the CBN raised N300 billion for the power and aviation sectors at an interest rate of 7 percent under the apex bank’s Industry Revival Fund. It was meant to improve electricity generation, transmission and distribution and related services; but not much has been accomplished since.
Previous interventions have failed mainly because the funds were seen by the then operators of the defunct National Electric Power Authority (NEPA) and the Power Holding Company of Nigeria (PHCN) as government largesse with no commensurate returns in terms of improvement in power supply.
The fact that the latest interventions are private sector driven should provide some comfort that the money this time around would be properly utilised, and hopes that the Nigeria’s decades-long power crisis would soon be a thing of the past. But pessimism about the initiative remains, largely because previous efforts had little or no impact.  
The new power sector operators must realise that these are loans that have to be repaid, even if at a low interest rate and over a long period of time, and therefore should be judiciously applied and used for the purposes they are meant to achieve expected results.
Like the NEMSF, the World Bank facility should ease equipment acquisition and enable refurbishment and upgrade of transmission facilities. It is hoped that the latest intervention will also help the cash-strapped power sector block revenue leakages and defray its nearly N40 billion legacy debt which has greatly hampered the sector’s progress, in a step to make the business more commercially viable for the investors and even attract new investment.
The NERC should ensure that these interventions translate into increase in capacity and reliability of power supply in the country.
The CBN and other relevant agencies need also to closely monitor the disbursement and use of these facilities and insist on regular feedback from the generation, distribution and transmission companies on their performance in order to break the cycle of broken promises of reliable power supply that successive administrations make.
The government should strive to restore the optimism that initially accompanied its power sector privatisation exercise, but which has diminished because of failed promises. Rather than improving, generation and distribution capacities only deteriorated. With the new interventions, the expectation is that the programme should begin to register marked improvements in generation and supply and vastly expanded coverage over the next few months.