The World Bank has approved a $750 million loan for Nigeria’s power sector, the first release of funds after years of stalled talks over long-term reforms, it said.
Nigeria’s decrepit power sector has stunted the growth of Africa’s largest economy for decades.
Problems include decaying infrastructure, mounting debts, low tariffs for electricity and a dilapidated government-owned grid that would collapse if all the country’s power generators operated at full tilt.
The loan will cut tariff shortfalls, protect the poor from price adjustments, and increase power supplied to the grid, the World Bank said in a statement late on Tuesday.
Nigeria’s low tariffs, imposed by the government, have forced the central bank to spend billions of dollars making up the difference owed by power distributors to companies generating electricity.
The World Bank said the aim of the loan was to help Nigeria move away from “from highly regressive tariff shortfall financing”.
The lender often requires reforms to release funds, but it did not say whether any conditions were tied to the money or future tranches.