Nigeria is looking towards a $3billion World Bank loan to tackle mounting debt in the power sector that risks the collapse of companies running the national grid.
The country, with over 200 million people is battling to meet its electricity needs even after state-owned power assets were sold to private investors in 2013 in a bid to boost supply.
According to the International Monetary Fund [IMF], Nigeria’s current electricity production per capita is less than 15% of the average of emerging-market economies and less than 25% of the sub-Saharan Africa average.
“Distribution companies are not collecting enough revenue to pay their bills to the power-generation companies, who then can’t pay their bills to the gas companies supplying them,” the World Bank country director, Shubham Chaudhuri, said in an interview in Abuja.
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“The federal government has been stepping in to cover the bills for now, because otherwise the power will shut off.”
More Nigerians, more of the time, use power from other sources other than electricity from the national grid. The experience has sent many manufacturing firms, especially international companies to close shop and leave Nigeria.
President Muhammadu Buhari’s government has asked for World Bank assistance to turn around its power industry. Mr Chaudhuri said some of the solutions may be new policies and regulations, along with additional financing.
“What we’re trying to do is to help the government figure out what combination of reforms and financing will be needed to get the power sector on track,” he said.
The World Bank is also encouraging the West African country to improve its business environment to create the space for businesses to thrive, create jobs, and address the country’s poverty.
Nigeria has climbed 15 places to 131 in the latest ease-of-doing-business rankings.
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According to The National, using Lagos and Kano, two of the country’s biggest cities, substantial improvements were found in the speed of registration of companies, streamlining of payments, quick issuance of construction and electricity-connection permits for new businesses.
“It’s a combination of action at the federal level and the state levels,” said Mr Chaudhuri. “It’s a conversation between the federal, state governments, the private sector and international partners.”