In a statement on Tuesday, the World Bank said the loan is for the power sector recovery operation (PSRO) to achieve financial sustainability and enhance accountability in the sector.
According to the bank, the PSRO will ensure that 4,500 MWh/hour of electricity is supplied to the distribution grid by 2022.
It also estimated that the economic cost of power shortages in Nigeria is $28 billion, equivalent to 2% of the country’s gross domestic product (GDP).
Commenting on the credit facility, Shubham Chaudhuri, World Bank country director for Nigeria, said adequate electricity supply is capable of lifting 100 million Nigerians out of poverty.
“The lack of reliable power has stifled economic activity and private investment and job creation, which is ultimately what is needed to lift 100 million Nigerians out of poverty,” Chaudhuri said.
“The objective of this operation is to help turn around the power sector and set it on a fiscally sustainable path. This is particularly urgent at a time when the government needs all the fiscal resources it can marshal to help protect lives and livelihoods amidst the COVID-19 pandemic.”
The PSRO provides results-based financing to support the implementation of the power sector recovery programme (PSRP).
According to the World Bank, about 47% of Nigerians do not have access to grid electricity and those who do have access, face regular power cuts.