The federal government has secured a $500 million loan from the World Bank to fund electricity Distribution Companies (DisCos).
According to the Bureau of Public Enterprises, in a statement in Abuja, yesterday, the loan would fill financing gaps in the distribution segment, considered as the most problematic in the industry.
“This funding supports the Nigerian Distribution Sector Recovery Program (DISREP) aimed at improving the financial and technical performance of the DisCos.
“The DISREP is designed to enhance the financial and technical operations of the DisCos through capital investment and the financing of key components of their Performance Improvement Plans (PIPs), which have been approved by the Nigerian Electricity Regulatory Commission (NERC),” the Bureau said in the statement signed by Amina Othman, Head, Public Communications.
It added that the $500 million DISREP loan offered concessional financing with more favorable terms than commercial bank loans.
It is expected that DisCos would invest the funds “in critical distribution infrastructure; Improve ATC&C losses; increase power supply reliability; achieve financial sustainability in the power sector; and enhance transparency and accountability. Significant progress has been made in the preparation of the DISREP Programme”, BPE explained.
According to the privatisation agency, key areas of improvement include: bulk procurement of customer/retail meters and meter data management systems; implementation of a Data Aggregation Platform (DAP); strengthening governance and transparency within the DisCos; and programme components.
The DISREP loan, particularly the Investment Project Financing (IPF) component is expected to significantly benefit the Nigerian Electricity Supply Industry (NESI) by closing the metering gap, reduce Aggregate Technical, Collection, and Commercial (ATC&C) losses; improve remittances and liquidity for the DisCos; enhance the reliability of power supply; as well as increase transparency and accountability within the DisCos.