The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has disclosed that the Federal Government requested a fresh $3 billion loan from the World Bank to reform the power sector.
Ahmed, who disclosed this in an interview with journalists on the sidelines of the World Bank/International Monetary Fund meetings, Washington DC, United States, explained that her team would be holding further discussions with the management of the Bank to present how the fund would be disbursed for the project.
What it means: FG wants to use the fund for the development of transmission and distribution networks to enhance the delivery of electricity and to address some of the challenges that the country is currently facing in the power sector.
She said, “There is a proposed $2.5 billion to $3 billion facility for the power sector development programme in Nigeria and this will include development of the transmission networks and the distribution networks as well as removing the challenges that we currently have now in the electricity sector.
“We are going to have a full meeting to discuss the power sector recovery programme and back home we have been working a great deal with the World Bank to design how this programme will be implemented.
“So we have an opportunity now to have a direct meeting with the leadership of the bank and to tell them the plan we have and how much we need from one to five years.”
How fund will be disbursed?: FG would be pushing for the disbursement of the $3 billion facility in two tranches of $1.5 billion each.
Contrary to the fear of some critics that the debt status of the nation, which stands at N25.7 trillion, is overwhelming, the minister insisted that Nigeria does not have a debt problem.
According to her, what FG needs to do is to increase its revenue-generating capacity in order to boost the revenue to about 50% of Gross Domestic Product and that Nigeria’s current revenue to GDP ratio stands at just 19%, it’s underperformance is significantly straining the government’s ability to service its debt obligation.
She said, “Nigeria does not have a debt problem. What we have is a revenue problem. Our revenue to GDP is still one of the lowest among countries that are comparable to us. It’s about 19 per cent of GDP and what the World Bank and IMF recommended is about 50 per cent of GDP for countries that are our size. We are not there yet. What we have is a revenue problem.
“The underperformance of our revenue is causing a significant strain in our ability to service debt and to service government day-to-day recurrent expenditure and that is why all the work we are doing at the ministry of finance is concentrating on driving the increase in revenue.”