In a strategic move to address the identified hitches in the electricity distribution value chain in the country, the Federal Government confirmed on Thursday that it had secured a $500 million loan from the World Bank to support the Nigerian Distribution Sector Recovery Programme (DISREP) aimed at improving the financial and technical performance of the DisCos.
The Bureau of Public Enterprises (BPE) in a statement issued by its Head, Public Communication, Amina Tukur Othman, the DISREP is designed to enhance the financial and technical operations of the DisCos through capital investment and the financing of key components of their Performance Improvement Plans (PIPs), which had been approved by the Nigerian Electricity Regulatory Commission (NERC).
She listed the key areas of improvement as including the Bulk procurement of customer/retail meters and meter data management systems; Implementation of a Data Aggregation Platform (DAP); Strengthening governance and transparency within the DisCos; and Programme Components/
According to her, the DISREP comprises two main components, namely Programme for Results (PforR) and Allocation of $345 million to support the implementation of selected PIP components.
Othman stated that the Implementation would be carried out by the Bureau of Public Enterprises (BPE) with Investment Project Financing (IPF) Allocation of $155 million to finance the procurement of meters, a Data Aggregation Platform, and Technical Assistance.
She further clarified that the DISREP loan, particularly the Investment Project Financing (IPF) component, was 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.
The $500 million DISREP loan from the World Bank offers concessional financing with more favorable terms than commercial bank loans and 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 Bureau’s spokesperson confirmed that significant progress had been made in the preparation of the DISREP Programme, with several key milestones achieved, and approval by the Federal Executive Council (FEC) on August 3, 2022; execution of the Financing Agreement by the Federal Ministry of Finance, Budget and National Planning, and the World Bank, adoption of the Programme Operations Manual (POM) by BPE and TCN.
In addition, she stated that the DISREP had obtained Legal Opinion from the Attorney-General of the Federation, Execution of the Subsidiary Loan Agreement, effective declaration of the DISREP Programme on January 31, 2023, inauguration of the DISREP Technical Committee on May 6, 2024, and inclusion in the Federal Government Borrowing Plan, approved by the Senate Committee on May 16, 2024.
Othman added that to ensure repayment assurance, the BPE sought and obtained approval from the Nigerian Electricity Regulatory Commission (NERC) and the National Council on Privatisation (NCP) for a structured repayment hierarchy.
She further clarified that this structure prioritized payments as follows: Statutory Payments (Taxes); Repayment of CBN market loans; Market obligations; Repayment of DISREP loan; DisCos’ net revenue, adding that this structured repayment plan aims to mitigate risks associated with repayment uncertainty and defaults, with regulatory sanctions imposed for any defaults.
