The World Bank has revealed that the Federal Government has borrowed a total of N1.3tn since 2017 as power subsidy to ensure that generation companies and gas suppliers received enough payments to continue generating electricity.
The bank reveals this information in its ‘Resilience through Reforms’ report.
The report stated that the country’s power sector will cost the Federal Government an additional N3.08tn through 2023, if current performance levels and low tariffs persist.
It read, “To ensure that Gencos and gas suppliers receive enough payments to continue generating electricity, since 2017 the FGN has borrowed a total of N1.3tn ($4.2bn).
“In 2019 total FGN support reached N524bn ($1.7bn), 0.4 per cent of GDP – higher than the N428bn budget for health and just 20 per cent less than the N650bn budgeted for education.”
The World Bank report further said, “The FGN has targeted reducing new tariff shortfalls from N502bn in 2020 to less than N300bn in 2021 in its PSRP Financing Plan as it moves the power sector towards full cost recovery and a fair electricity pricing policy – the transition to service-based tariff and the increased payment.
“Nigeria is a critical member of the West Africa Power Pool, the regional market launched in 2018, which can significantly improve the electricity supply not just in Nigeria but throughout all of West Africa.
“By the mid-2020s, it is expected that all 14 countries in the WAPP will be interconnected; efforts are already underway to increase the capacity of the network and to reinforce it in order to increase domestic supply and accrue the benefits of regional trade.”