THE World Bank Group is to undertake its biggest financing programmein the Nigeria’s power sector, never seen anywhere else in the world.
The Director, Infrastructure Department, International Finance Corporation, IFC, a subsidiary of the World Bank Group, Mr. Bernard Sheahan, who disclosed this at a power summit in Lagos, said the World Bank planned to provide financing for a number of the power projects, such as providing funding for some of the transmission cost and guaranteeing some of the risks in the sector.
He said, “The World Bank will provide funding for some of the transmission costs. The Partial Risk Guarantee programme that the World Bank is planning for Nigeria will be the largest of such programme anywhere in the world.“This integrated business plan for the power sector by the World Bank Group is something we have never tried anywhere else. We are doing this because of the magnitude of the needs here and we think the potential payoff, both for Nigeria and for opening up a really important market for investors.”
He said the IFC is already in discussion with the Federal Government of Nigeria, on how best toset up the next stage of the power reforms programme.
He also said that the IFC has started disbursing some money as co-developers to one of the first Independent Power Projects, IPPs, with the hope of bringing the project to financial closure soonest.
Sheahan noted that in the past, the role of the IFC and other agenciesof the World Bank, was mainly advisory, adding that at the moment, they are moving into the financing phase, through the IPPs and eventually some of the distribution companies, as well.
He expressed support for the tariff system, saying it is a critical part of a system intending to grow that will ensure transparency and will enable the distribution companies to generate enough cash to expand their network and grow capacity.
Continuing, he said, “What this reform has done for the government is the credibility which was not there before. Credibility, which was why many people sat on the side-lines and not much happened, where efforts were made to develop the independent power plants and it did not get very far. Whereas now, we see the payments that had been made for the discos, which are quite remarkable.
“The big difference is the perception and momentum, not because everything has been solved, but enough have been solved that people are willing to put serious money and that is because the government has succeeded in putting together more of these pieces in a whole that become credible that has been the case before.
“Officially, tariffs are quite low, but effectively, the prices that are being paid for power here in Nigeria is higher than the amount paid in any other country in the world, because of self generation. I believe Nigeria is the world leader in self-generation.”
Also speaking, Mr. Solomon Adegbie-Quaynor, Country Manager, Nigeria, African Department, IFC, said, “With the reform we have seen in the last few months, we believe we will see more interest. A couple of weeks ago, I was in Asia, some top companies there say they want a better understanding of Nigeria, to either trade or bring the products in, with time, they might locate some assembling of the products in the market. More importantly is also the maintenance and repair, ensuring that inventory is available, so we have very minimal outages.”