IFC to support Nigerian power generation
IFC, a member of the World Bank Group, has announced a plan to support investments that will add 1,500 megawatts of power generation capacity to the Nigerian national grid and provide electricity for up to 8.0 million households over the next 18 months.
IFC has already signed a mandate to provide financing to mobilise funds for one power generation company, and aims to provide similar support for two more. IFC also plans to support up to three power distributions companies. These projects will add 1,500 MW to Nigeria’s grid and are part of the World Bank Group’s intervention in the sector which is built into the Energy Business Plan. IFC is also considering participation in a gas-to-power project.
Under the Energy Business Plan each World Bank Group institution will leverage its competencies and products to provide solutions to projects that encourage their viability and contribute to the sustainability of the power sector. IFC will provide project structuring and investments along with tailor-made packages of risk mitigation instruments that include World Bank Partial Risk Guarantees and MIGA political risk insurance.
Jean Philippe Prosper, IFC Vice President for Sub-Saharan Africa, Latin America and The Caribbean, said, “The Federal Government of Nigeria has demonstrated strong commitment to successful implementation of the power sector reform so that all the pieces of a sustainable power sector are coming together. The World Bank Group has put together an Energy Business Plan that will allow IFC, the World Bank and MIGA to help address key project structuring issues and boost power supply to Nigerians. IFC and the other institutions of the World Bank Group are committed to supporting Nigeria with targeted interventions in the power sector that facilitate demonstration projects and boost investor confidence and contribute to better living standards”.
The Federal Government of Nigeria estimates that a $10 billion (Naira 1.6 trillion) in annual investment is required for infrastructure development in Nigeria to achieve its target of 40,000 MW generation capacity by 2020. IFC is actively supporting this goal, by structuring projects to attract commercial financing which will assist Nigeria in leveraging its scarce budget resources and mobilize private investment towards improving infrastructure in Nigeria.
Increased power capacity is an important priority for the World Bank Group because it has been identified as a major constraint to economic development. Nigeria has a population of over 160 million, two thirds of which face limited access to electricity, offering enormous potential for growth in its power sector. Strong demand for increased power is already demonstrated by urban consumers who pay the equivalent of more than 35 US cents per kilowatt hour on self generated power, well above the average cost of power generated by commercial power projects.