Strings Attached to African Development Bank's $500 Million Loan for Nigerian Transmission

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Don Priestman, the managing director and chief executive officer of Manitoba Hydro, said that a recent $500 million loan from the African Development Bank (AfDB) to the Nigerian government was insufficient. The loan was to be used as an intervention fund to boost the country's power infrastructure.

For related information, see November 27, 2012, article - Manitoba Hydro Contract Cancellation Reversed a Canada Hangs Tough with Nigerian President, and January 28, 2012, article - Gap Between Installed Power Capacity and Actual Generation Crimps Nigeria's Targets.

"We need all the money we can get, and whatever we can get from that source is extremely welcome," Priestman said. "We need a lot more money than that, but that was an excellent start and we are going to put it to good use immediately.

"We actually need in the order of $1 billion per year on capital investment. The more money we get to spend, the more dependable the facilities will become."

Priestman added that the Transmission Company of Nigeria (TCN) had not been adequately funded for many years, and that Manitoba Hydro was now working with the government to address the situation.

The AfDB loan comes with a precondition attached: There must be a monitoring committee, as the funds are released in tranches of $100 million. The committee consists of representatives from the Ministry of Finance, Ministry of Power, Bureau of Public Enterprise (BPE) and TCN.

Haruna Mohammed, the head of the Finance Ministry's Department for International Relations, said that all projects would be properly tracked and assessed to ensure execution.

"We need to leverage on the execution of these initial projects to be able to access other available funding moving forward," he added.

Power Minister Cinedu Nebo had previously noted that $3.4 billion was needed to upgrade Nigeria's transmission network to standards where it can evacuate the new generating capacity expected to come on stream.

"We have been challenged by the problem of not being able to evacuate power beyond 4,500 megawatts (MW)," Nebo said.

Previous power sector budgets, with no conditions attached, have often disappeared into a black hole.

Manitoba Hydro is now managing and AfDB is watching.

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