To boost the quality of electricity distribution and supply services to consumers, the World Bank on Friday announced the approval of $500 million support the Nigerian government.
The Bank said in a statement that the support would help boost electricity access by improving the performance of the electricity distribution companies (DISCOs) through a large-scale metering programme Nigerians have been looking forward to for a long time.
In addition, financial support would be provided to private distribution companies only on achievement of results in terms of access connections, improved financial management and network expansion.
Due to the absence of a reliable metering system in the country, the DISCOs have always complained against their inability to effectively and efficiently collect revenues from consumers of electricity,
The DISCOs’ resort to estimated billing of consumers for electricity consumed resulted in a push back, amid protests over alleged crazy bills and exploitation.
More than 85 million Nigerians, representing about 43 percent of the country’s population, are estimated not to have access to national electricity grid as a result of poor distribution infrastructure.
The poor situation makes Nigeria the country with the largest energy access deficit in the world.
The lack of reliable power supply, the World Bank said, is a significant constraint for citizens and businesses, resulting on annual economic losses estimated at $26.2 billion (₦10.1 trillion) which is equivalent to about 2 percent of the country’s gross domestic products (GDP).
The 2020 World Bank Doing Business report, which ranks Nigeria 171 out of 190 countries in getting electricity, said electricity access is one of the major constraints for the growth of the private sector.
“Improving access and reliability of power is key to reduce poverty and unlocking economic growth in the aftermath of the global COVID-19 pandemic,” says World Bank Country Director, Shubham Chaudhuri.
“The operation will help improve the financial viability of the DISCOs and increase revenues for the whole Nigerian power sector, which is critical to save scarce fiscal resources and create jobs by increasing the productivity of private and public enterprises.”
The Nigeria Distribution Sector Recovery Programme (DISREP) is expected to help improve service quality in the electricity sector as well as the financial and technical performance of the DISCOs by providing financing based on performance and reduction of losses.
This project complements the support provided under the Power Sector Recovery Operation (PSRO) approved in June 2020.
Specifically, it will ensure that DISCOs made necessary investments to rehabilitate networks, install electric meters for consumers for more accurate customer billing and to improve quality of service for those already connected to the national grid.
It will also help strengthen the financial and technical management of DISCOs to improve the transparency and accountability of the electricity distribution sector.
The World Bank gave conditions for DISCOs to access the fund, saying the programme would only be eligible to those that transparently declare their performance reports to the public with actual flow of funds based on strict verification of achieved performance targets by an independent third party.
Also, the programme would also make electricity meters available at affordable prices to all consumers in Nigeria, a long pending demand of Nigerians,” says World Bank task team leader for the project, Nataliya Kulichenko.
The programme would also facilitate the reduction of the CO2 emissions of the Nigerian power sector by reducing technical losses, increasing energy efficiency, replacing diesel and biomass with grid-electricity, and investing more in on- and off-grid renewable energy.
DISREP supports the development of regulatory guidance on climate-resilient infrastructure and facilitates inclusion of climate risks in decision making.