‘How govt plans to get $5.2b World Bank loan’
He said the loan will be used to improve electricity generation, distribution and transmission in the country, when finally approved by the World Bank.
Speaking at an interactive forum with the media and members of civil society in Lagos recently, Fashola said the loan will help the economy to recover from its contraction, once it is well utilised.
Under the terms for seeking the loan, Fashola said the private sector arm of World Bank would invest $1.3 billion in power projects and electricity distribution companies, while the bank’s political insurer known as the Multilateral Investment Guarantee Agency would provide equity of $1.4 billion for gas and solar power programmes.
Also, the lender will provide $2.5billion ro improve distribution of power, expand transmission capacity and increase access to electricity in rural areas.
According to him, the home-grown strategy requires that government present a paper on the problems, inhibiting the growth of the sector.
He said the idea has endeared the Federal Goverrnment to the World Bank, which has promised to support the sector financially, when times come.
He said the bank was impressed that the government understands the peculiarities and the magnitutude of the problems facing the industry and the capacity to proffer solution to them, when the matter was tabled before it.
Fashola said: “The home-grown initiative has paid off, as the World Bank was satisfied with the level of understanding of the challenges in the sector by the Nigerian government and has in the process promised to support the Nigerian govenment on the issue. The bank told the government that it knows the problems facing the sector and that it would not be out of place, if the government is left to provide a home-grown soution to the problems. It is on the basis of this that the government hopes to get the needed loans for the sector soon.”
He said the government hopes to continue to leverage on its understanding of the probelms in the industry to get the World Bank loan.
According to the minister, prior to meeting the World Bank on the issue, he, the State Minister of Power and the Permanent Secretary in the ministry met and asked questions on the probelms inhibiting the growth of the sector and how to solve them.
“After seeking the inputs of other stakeholders in the value chain, we arrived at the conclusion that the sector has not delivered on its promise, four years after it was privatised. Everbody knows that the power distribution companies (DisCos) are facing problems such as shortage of meters, huge bills, among others. They know that the DisCos do not have enough money to provide meters, transformers and other equipment needed to supply power to the customers. They know that the sector has not delivered on its promise, since privatisation,” he added.
Fashola said the government, armed with these information presented them to the World Bank.
He said the issue of understanding the structures of World Bank, is another factor that the government is banking on to get the loan.
He said, prior to the evolvement of home-grown method, the sector held a wide consultation with stakeholders, including the government.
He said through the consultation, stakeholders were able to understand the peculiarities and magnititude of the problems in the electricity industry, adding that the development has helped the sector to provide a formidable force to the World Bank on the issue of accessing the loan.
‘’ Our knowledge of the industry is one thing that has endeared us to the World Bank. The bank has promised to assist us financially, after seeing the level of our understanding,’’ Fashola said .
According to him, the government knows that it is only the private arm of World Bank that can easily provide loan to the power sector and, did not waste time in approaching the section for the $5.2billion loan.
The minister assured that the government would get the loans for the power sector, as its able to provide strategies that cannot be easily ignored by the bank.
Fashola said the power generation companies (GenCos) are planning to leverage on solar to improve electricity supply to customers.