World Bank approves $1.2bn financing package for Nigeria’s power output

The World Bank Group announced on Wednesday that the executive directors of three of its arms, the World Bank, International Finance Cooperation (IFC) and Multilateral Investment Guarantee Agency (MIGA), have approved a package of loans and guarantees totaling almost $1.2 billion to support a series of energy projects that will help boost independent power generation and ease crippling energy shortages in the Nigeria, Africa’s largest economy.

The approval includes partial risk guarantees of up to US$245 million for the 459 megawatts (MW) Azura Edo power plant near Benin City, Edo State and up to US$150 million for the 533 megawatts Qua Iboe plant in Ibeno, Akwa Ibom State, both plants which are gas-fired.

Another part of the approval is that by the boards of IFC and MIGA approved loans and hedging instruments of up to US$135 million and guarantees of up to US$659 million for the Azura Edo project.

The World Bank Group said these projects are a critical element of its energy business plan for Nigeria.

The approved project is also fully aligned with the World Bank Group Country Partnership Strategy that prioritises improving Nigeria’s power supply, which is critical to expanding inclusive economic growth.

In a statement announcing the series of approvals, the bank said the IBRD guarantees include forward-looking mitigation and risk-sharing arrangements, designed to augment the country’s power sector reforms while building market confidence and setting industry benchmarks.

IFC’s investment and MIGA’s guarantee for the Azura Edo power plant will support a trail blazing project at the center of Nigeria’s ambitious power sector programme, while setting a replicable model for future power projects.

Commenting, Makhtar Diop, vice president, Africa region, World Bank, said the Brentwoods institutions are glad that we were able to support Nigeria’s extensive energy reform programme and provide direct assistance to increase generation capacity by mobilising nearly US$ 1.7 billion of private sector financing through a range of instruments.

“Efficient, affordable and reliable access to electricity is essential for small and medium-sized enterprises in Nigeria to accelerate job creation,” said Makhtar Diop, vice president, Africa region, World Bank.

Nigeria is endowed with abundant energy resources, including the world’s eighth largest reserves of natural gas. Yet 65 percent of its population – some 100 million people – has no access to electricity.

The bank, therefore, believes that unlocking the flow of Nigeria’s extensive natural gas reserves will expand power supply and energy exports to neighbouring countries in the West Africa power pool.