Kunle Aderinokun
18 June 2009
Abuja — The Board of the World Bank yesterday approved N173.4 billion (about $1.02 billion) International Development Association (IDA) credit for four major projects in Nigeria including power and gas projects, HIV/AIDS reduction, malaria booster project and secondary school education project in Lagos State.
An IDA credit is a highly concessionary loan, which is interest-free but attracts commitment and service charges of 0.50 per cent and 0.75 per cent respectively and it's repayable over 35 to 40 years with 10-year grace period.
Out of the $1.02 billion credit, the Bretton Woods institution approved $600 million for the Power and Gas sectors, comprising $200 million, which was given to assist in network investments and technical assistance to improve electricity supply and a further $400 million in Partial Risk Guarantees (PRGs) in support of domestic gas market development.
World Bank's PRGs ensure payment in the case of debt service default resulting from the non-performance of contractual obligations undertaken by the government or their agencies in private sector projects.
The bank, which acknowledged that poor infrastructure in the power sector was a key constraint to growth in Nigeria, expressed the hope that "the project will help the Federal Government's current programme to improve electrical power to Nigerians, a priority in the government's seven-point agenda for economic development."
The Nigeria Electricity and Gas Improvement Project (NEGIP), which is one of the beneficiaries of the credit, is expected to provide PRGs in support of Gas Supply Agreements that will assure and increase gas supply to boost power generation which is critical for economic growth of the country.
In this way, the project will address one of the critical bottlenecks in the supply chain for power generation and underpin the government's reform efforts in the gas and power sectors.
The project has been designed to rehabilitate existing transmission and distribution infrastructure to supply the increased power generated from the improved gas supply to consumers.
Benefits to be derived from the project, according to the World Bank, include reliable and improved quality of gas supply by instilling commercial discipline in the gas sector through commercial contracts; reduction of power losses from the electrical grid and improved power quality and reliability.
The project involved extensive consultations with government and Civil Society Organizations (CSO) in Nigeria.
The remaining three projects, which amount to a total of $420 million (N71.4 billion) are Second HIV/AIDS Programme Development Project ($225 million) to reduce the risk of infections by scaling up prevention interventions as well as increase access to and utilisation of counselling, testing, care and support services; the Malaria Booster project ($100 million); and the Lagos Eko Secondary Education project ($95 million).
The World Bank explained that additional funding for malaria would help close remaining gaps for net distribution, malaria treatment, diagnostics, awareness-raising, behaviour change communication, and engagement of grassroots organisations in the fight against malaria in Nigeria.
The Lagos Eko Secondary Education project, the Bretton Wood institution added, would support public secondary education in Lagos State, transforming it into a centre of excellence in Africa, by enhancing the skills of its population through quality secondary education.
Lagos, which "accounts for 80 per cent of the country's manufacturing value added", needs skilled labour force to support its 2,000 industries and 250 financial and allied institutions, the bank said.
Specifically, the bank disclosed that the project would be implemented using grants, performance-based incentives, teacher training and standardized testing of students, stating that "schools which improved the most in standardised English, Math and Science tests will receive performance cash grants."
"Over 500,000 students in 637 public secondary schools will benefit from the project, and more than 5,300 teachers and 1,700 school administrators are expected to be trained under the project," the bank noted.
Commenting, Country Director, World Bank, Nigeria, Mr. Onno Ruhl, said: "The approval of these four projects is a major milestone in our partnership with Nigeria. We are especially excited about the prospect that our support to the power sector might help solve the perennial problem of generation capacity lying idle whilst Nigerians stay without light."
"I also would want to highlight the malaria project, which will build on the very encouraging results of the Kano bednet campaign last month. We will work hard with our partners in government as well as civil society to ensure that the money will be well used and delivers real results for Nigerians," added Ruhl.
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