The African Development Bank Group (AfDB) has approved a $500 million loan to support the nation’s transition to cleaner energy sources and improve its electricity infrastructure.
The loan, announced on Thursday, will fund the first phase of the Economic Governance and Energy Transition Support Program (EGET-SP).
“The Board of Directors of the African Development Bank Group has approved a loan of $500 million to the Federal Republic of Nigeria, to finance the first phase of the Economic Governance and Energy Transition Support Program (EGET-SP), a new program aimed at accelerating transformation of the country’s electricity infrastructure and improving access to cleaner sources of energy”, AfDB stated.
This financial support will help address the federal budget’s financing gap for the 2024/25 fiscal year and underpin the implementation of Nigeria’s new Electricity Act and Energy Transition Plan.
The initiatives are designed to decentralize the electricity supply industry, encouraging investments from regional governments and the private sector.
Nigeria’s Energy Transition Plan, introduced in August 2022, aims to develop 250 gigawatts (GW) of installed electricity capacity by 2050, with 90% of this capacity coming from renewable sources.
By 2030, the plan seeks to provide clean cooking solutions to the majority of the population using liquefied petroleum gas (LPG), biogas, biofuels like ethanol, and electric cookstoves.
The EGET-SP will play a critical role in upgrading Nigeria’s electricity infrastructure, thus accelerating the transition of millions of households and businesses to cleaner, renewable energy sources.
The AfDB emphasized that the program aligns with its new 10-Year Strategy (2024-2033), its High 5s priorities, and the New Deal on Energy for Africa, which aims for universal access to modern energy by 2030.
Babatunde Irukera, former chairman of the FCCPC, commented on the approval, stating, “This loan is a crucial step forward in our journey towards sustainable energy and economic growth. It not only addresses immediate budgetary needs but also lays the groundwork for a cleaner, more efficient energy future for Nigeria.”
The loan comes at a pivotal time as the country faces persistent challenges in its electricity sector. A recent report by the National Bureau of Statistics (NBS) revealed a significant increase in the number of customers on estimated billing, rising from 5.83 million in Q4 2023 to 6.43 million in Q1 2024.
This highlights the ongoing struggle to adequately meter all customers and bridge the metering gap.
In addition to the AfDB’s support, the World Bank has announced a supervision mission to Nigeria in response to the underperformance of a previous $500 million loan aimed at improving the country’s electricity distribution sector.
The World Bank also restructured a $350 million loan to ensure the completion of seven critical power plants in educational institutions, further strengthening Nigeria’s energy infrastructure.
The AfDB’s $500 million loan underscores a broader series of initiatives aimed at aiding Nigeria’s economic growth, poverty reduction, and climate action efforts. As the nation works towards its ambitious energy goals, this financial backing is set to play a key role in transforming Nigeria’s power sector and driving sustainable development.
