The Bureau of Public Enterprises (BPE) has announced that the federal government has secured a $500 million loan from the World Bank to improve electricity distribution in the country.
The loan, approved by the World Bank in February 2021, is part of the bank’s Distribution Sector Recovery Program (DISREP) aimed at enhancing the financial and technical performance of electricity distribution companies (DisCos).
The loan will be used to address identified gaps in the operations of DisCos, including bulk procurement of customer and retail meters, implementation of a data aggregation platform, and strengthening governance and transparency within the companies. The DISREP program consists of two main components: a program for results with an allocation of $345 million and investment project financing with an allocation of $155 million.
The BPE has executed the loan’s financing agreement with the Ministry of Finance, budget, and National Planning, and the World Bank. Additionally, the agency has obtained a legal opinion from the attorney-general of the federation and executed the subsidiary loan agreement. The DISREP program was declared effective on January 31, 2023, and the technical committee was inaugurated on May 6, 2024.
The structured repayment plan for the loan has been approved by the Senate Committee on May 16, 2024. The plan prioritizes payments as follows: statutory payments (taxes), repayment of CBN market loans, market obligations, repayment of the DISREP loan, and DisCos’ net revenue. This structure aims to mitigate risks associated with repayment uncertainty and defaults, with regulatory sanctions imposed for any defaults.
The BPE emphasized that the loan will help improve the financial and technical operations of DisCos, ultimately enhancing the overall electricity distribution in the country.