The World Bank acknowledged Nigeria’s request for $3billion loan for the expansion of the transmission and distribution networks in the power sector.
Hajiya Zainab Ahmed, The minister of Finance, Budget and National Planning, announced that the country is set to get approval of the first tranche of the $3 billion loan which is being secured from the World Bank for the power sector by April 2020, as it started talks with United Kingdom and Dutshe Bank on Jollof Bond.
Speaking during a press briefing at the end of the 2019 Annual Meetings of the International Monetary Fund (IMF) and World Bank in Washington DC, Ahmed said the federal government had put a request for financing of the sector at the range of $1.5 billion to $4 billion. At the end of the day, it is like we would be looking at the investment size of $3 billion that will be given in four tranches of $750 million each. Our plan is that the team will be able to go to the World Bank for the grant of the first tranche in April 2020.The $3 billion that we are trying to increase from the World Bank is for financing the power sector. This financing will include right now, the gap between what is provided for in the current tariff and the cost of the businesses themselves. So, there is a tariff shortfall but it would also enhance our ability to pay the previous obligations that have crystallised that we have not yet been able to pay. Some portion of it will be for the transmission network and if we are able to expand the facility to $4 billion, the additional $1 billion is for the distribution network. It will help us to exit the subsidy that is now inherent in the power sector. It is supposed to be to reform the sector, to restore the distribution business side of the sector especially on a stronger footing so that they are freed up enough to go out and raise financing to invest in expanding the distribution network.”
The $3 billion power sector loan it is getting from the World Bank, Ahmed said the ministry held meetings on securing a local currency bond to be raised from the international market.
She then said “I am delighted to announce the willingness of the UK authorities to support our infrastructure financing through the possible issuance of Jollof Bonds. Already a working committee is being set up to interface with Nigeria on this possible naira denominated bond. The CBN will be leading in these efforts we will also explore all options in this regard at the next UK investment summit that will be holding in January 2020.
“There have been proposals made to us not just by the UK government but also by Deutsche Bank and today also by the World Bank. We are looking at that as another instrument to raise financing for the national budget. In the past we have issued euro bond which have done well but we are considering this option because it could be cheap and even if it is not, it will be more cost effective because we are protected from exchange rate differential risk.
