Subsidy removal may creep in as one of W’Bank terms for new $1bn power loan
Considering the similarities of World Bank and International Monetary Fund (IMF) operating models, there are strong indication that World Bank may in the last minute of approving proposed $1bn loan for the ailing power sector, smuggle in removal of fuel subsidy as condition.
Financial analysts are upbeat that both world bodies usually avoid giving loans to economies that have freebies for its citizens to avoid possible diversion or abuse of the loan on delivery.
Recall that the Federal Government met with the World Bank over a proposed $1bn loan for the power sector but the Bank is yet to give a final nod for the approval.
Minister of Finance, Ms Zainab Ahmed, who led the Nigerian team to the meeting with the World Bank Power Sector team during the discussion for the way forward on the proposed $1bn Nigeria Performance- Based Loan. explaining more at the 2019 International Monetary Fund and World Bank Spring Meetings in Washington DC, the Minister said “We met with the World Bank Power Sector team and discussed the way forward on the proposed $1bn Nigeria Performance -Based Loan. We agreed to bring relevant MDAs together to ensure that we advance this operation in a timely manner.
“We will also discuss the country portfolio performance of Nigeria which currently stands at $9.8bn with the Nigerian Country team at the World Bank and how we could manage the portfolio for optimum results.”
It was not clear if the Nigerian team made up of the Minister of Finance and Minister of Budget & National Planning, Senator Udoma Udo- Udoma plus the outgoing Governor of Central Bank of Nigeria (CBN), Mr Godwin Emefiele, explained to the World Bank that the Discos who were concessionaires during the unbundling of PHCN had failed in their agreement to deepen investment which would have stabilized power supplies before now.
It was not also clear if the Nigerian delegation to the World Bank loan for power sector loan had the courage to inform the Bank that there is nothing to show for over $22bn so far spent on power since 1999 to date.
It was not further made clear if the Ministers and CBN chief told the World Bank that in case the loan is approved, chances of recovering it may be slim as more than half of Nigerian electricity consumers’ are not yet metered and Discos are not very serious in metering consumers but seem to prefer estimated billing which cannot guarantee recovery and repayment of the laon if finally approved and given to Nigeria.
