he World Bank has approved of $750 million for the Power Sector Recovery Programme (PSRP) through the International Development Association (IDA).1 The disbursement plan to commence in 2021 is as follows: $426 million in 2021 and $162 million in 2022 and 2023, respectively, summing up to $750 million. The recovery plan being set up is to enable Nigeria achieve a more reliable electricity supply and improve the accountability of the power sector. Presently, approximately 47 percent of the population do not have access to national grid electricity. The population that has access are subjected to frequent power outages, a major constraint that costs the Nigerian economy around $28 billion, annually – equivalent to 2 percent of the GDP. Furthermore, the aim of the PSRP is to make Nigeria a more financially sustainable nation and it will achieve this by increasing the annual electricity supplied to the national grid by 4,500 MWh/hour by 2022. Aside improving service delivery, the additional liquidity will strengthen the balance sheet of distribution companies and enhance their ability to attract private finance. Furthermore, the government will be better positioned to utilize the resources previously used to bail out the power sector for other development spending.
October 27, 2020
Nigeria Economic Update (Issue 38)
Recent NBS data shows a significant decline in power generated in 2016Q2. Precisely, power generated declined by 31 percent (quarter on quarter) from a total quarterly average of 92,352 MWH in 2016Q1 to 63,692.39 MWH in 2016Q2. Remarkably, the reoccurrences of pipeline vandalism in 2016Q2 prompted the shortage of gas for power generation. Thus, there were about eight recorded system collapses in the quarter which led to several days of power outages. However, subsequent quarterly declines in power generation could be averted if efforts to repair vandalized pipelines and adopt hydro sources are intensified.
OPEC weekly basket price reduced from $61.14 to $60.73 per barrel (December 1 8, 2017). Similarly, Global oil benchmark crude sold for as low as $61.22 per barrel during the week, down week-on-week by 1.8 percent. Nigerias Bonny light declined slightly by approximately 1 percent to $63.534. The fall in crude prices came after a sharp rise in U.S. inventories of refined fuel, which suggested that actual demand may be weakening5 (the EIA data shows an increase of 8.5 million barrels of stored fuel). Given that crude oil revenue remains critical to Nigerias budget performance, investments aimed at improving growth and competitiveness of other key sectors is essential to minimize distortions on budgetary expenditure.