Providing updates, the BPE said the loan, under the bank’s
distribution sector recovery program (DISREP), has been secured to mitigate the
challenges faced by DisCos in the country.
“In a strategic move to address the identified gaps in the
electricity distribution companies, the Federal Government of Nigeria has
secured a $500m loan from the World Bank,” BPE said.
“Approved on February 4, 2021, by the World Bank board of
directors, this funding supports the Nigerian Distribution Sector Recovery
Programme aimed at improving the financial and technical performance of the
Discos.
“The DISREP aims to
improve the financial and technical operations of DisCos through capital
investment and financing of approved performance improvement plans, approved by
the Nigerian Electricity Regulatory Commission (NERC).”
The bureau said key areas of improvement include bulk
procurement of customer and retail meters and meter data management systems,
implementation of a data aggregation platform (DAP), as well as strengthening
governance and transparency within the DisCos.
The bureau said the DISREP comprises two main components.
The first part, BPE said, is the programme for results with
an allocation of $345 million and $155 million allocated for investment project
financing (IPF).
“The $345 million has
been allocated to support the implementation of selected PIP components;
implementation by Bureau of Public Enterprises (BPE) and $155 million allocated
for Investment Project Financing (IPF) for the purpose of financing the
procurement of meters, a Data Aggregation Platform, and Technical Assistance,”
the statement further reads.
“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; reducing Aggregate
Technical, Collection, and Commercial (ATC&C) losses; Improving remittances
and liquidity for the DisCos; Enhancing the reliability of power supply, and
increasing transparency and accountability within the DisCos.”
‘CONCESSIONAL
FINANCING’
The BPE said the $500 million DISREP loan from the World
Bank also offers concessional financing with more favourable terms than
commercial bank loans.
“This will enable the DisCos to invest in critical
distribution infrastructure; improve ATC&C losses; increase power supply
reliability; achieve financial sustainability in the power sector, and enhance
transparency and accountability,” the BPE said.
The bureau said it obtained approval from the federal
executive council (FEC) on August 3, 2022.
According to the statement, there has been execution of the
loan’s financing agreement between the ministry of finance, budget and national
planning, and the World Bank; as well as the adoption of the programme
operations manual (POM) by BPE and Transmission Company of Nigeria (TCN).
The BPE said it has also obtained legal opinion from the
attorney-general of the federation, and executed the subsidiary loan agreement.
Effective declaration of the DISREP programme, the agency
said, was carried out on January 31, 2023, adding that the DISREP technical
committee was inaugurated on May 6, 2024,
The BPE added that the inclusion of the loan in the federal
government borrowing plan was “approved by the senate committee on May 16,
2024”.
The bureau said it has also obtained approval from the NERC
and the National Council on Privatisation (NCP) for a structured repayment
hierarchy.
“This structure prioritizes payments as follows: Statutory
Payments (Taxes); Repayment of CBN market loans; Market obligations; Repayment
of DISREP loan; DisCos’ net revenue,” the bureau said.
The structured repayment plan, BPE said, aims to ameliorate
risks associated with repayment uncertainty and defaults, with regulatory
sanctions imposed for any defaults.
