Nigeria Sunday has increased the debt profile of the country by borrowing $3 billion-approximately N1 trillion-from World Bank to fund the expansion of the transmission and distribution facilities of the power sector.
The power sector has become the bottomless pit of the Nigerian economy, with the previous administration unbundling and privatizing the sector for efficiency. But the various groups were working at cross purposes, over time turning the economy into a generator economy. Critics have accused generator merchants, who have tentacles in high places, of sabotaging the sector. Power generation has been oscillating between 3-5000 megawatts, with constant collapse of national grids becoming a recurring decimal. According to reports, there has been 206 collapses of the grid since 2010.
Government have muted the idea of borrowing money from the World bank to fund the sector, a move critics see as counter productive since the loan will allegedly end up in the nation’s legendary corruption cesspit.
The Minister of Finance, Zainab Ahmad, has announced this Sunday while addressing journalists, saying the loan will be in four tranches of $750 million. She was at the Annual meeting of the World bank and International Monetary Fund, IMF, in New York.
“This financing will cover the gap between the current tariff and the actual cost of generating electricity,” she said.
“It will also enhance our ability to pay previous obligations in the sector that has crystallized so that investors in the sector can go on with expanding investments in the sector.”
“Some portion of the loan will be for the transmission network and if we are able to expand to $4 billion then the extra $1 billion will be for the distribution network.”
“The distribution sector will be at the backend when the other reforms have been carried out.
“It will be a loan to the distribution companies because they are owned by the private sector.”Recently, the minister had complained that Nigeria is finding it difficult to service its debts.
Over two trillions have been budgeted for debt servicing in the 2020 budget.
