World Bank has approved a $750 million International Development Association (IDA) credit for Nigeria's Power Sector Recovery Operation (PSRO) to improve electricity supply.
The bank, in statement in Abuja on Wednesday, said that the target was to also achieve financial and fiscal sustainability and enhance accountability in Nigeria's power sector.
It explained that about 47 per cent of Nigerians did not have access to grid electricity and those who had access, faced regular power cuts.
According to the bank, the economic cost of power shortages in Nigeria is estimated at around $28 billion, which is equivalent to two per cent of its Gross Domestic Product (GDP).
It stated that getting access to electricity was one of the major constraints for the private sector according to the Ease of Doing Business report.
It added that improving power sector performance, particularly in the non-oil sectors of manufacturing and services, would be central to unlocking economic growth post COVID-19.
The statement quoted Shubham Chaudhuri, World Bank Country Director for Nigeria, as saying "lack of reliable power has stifled economic activity and private investment and job creation.
"This is ultimately what is needed to lift 100 million Nigerians out of poverty.
"The objective of this operation is to help turn around the power sector and set it on a fiscally sustainable path. This is particularly urgent at a time when the government needs all the fiscal resources it can marshal to help protect lives and livelihoods amid the COVID-19 pandemic."
The bank said that PSRO would provide results-based financing to support the implementation of the Government's Power Sector Recovery Programme (PSRP).
It further explained that the PSRP was a comprehensive programme to restore the power sector's financial viability, improve service delivery and reduce its fiscal burden.
"The PSRO is expected to increase annual electricity supplied to the distribution grid, enhance power sector financial viability while reducing annual tariff shortfalls and protecting the poor from the impact of tariff adjustments.
"This will enable the turnaround of power sector while helping the Federal Government to redirect large fiscal resources from highly regressive tariff shortfall financing towards critical crisis-responsive and pro-poor expenditures. It will also increase public awareness about ongoing power sector reforms and performance.
"Specifically, the PSRO will ensure that 4,500 mwh/hour of electricity is supplied to the distribution grid by 2022 by strengthening the regulatory, policy and financing framework.
"It will also enhance the accountability and financial viability of the sector, helping the sector create a track record of sustainable operation necessary for unlocking much needed private investments in the future," the Bank explained.