- The African Development Bank (AfDB) Group has approved a $500 million loan to Nigeria to boost access to electricity
- The loan will also help bridge the gap in the 2024/2025 budget
- It will support the actualisation of Nigeria’s Energy Transition Plan and the new Electricity Act
The Board of Directors of the African Development Bank (AfDB) Group has approved a $500 million loan to Nigeria to finance the first phase of the Economic Governance and Energy Transition Support Programme (EGET-SP).
According to a statement by the group on Wednesday, July 31, the new programme aims to accelerate the transformation of the country’s electricity infrastructure and improve access to cleaner sources of energy.
The statement added that the loan will help close the financing gap of the budget in the 2024/2025 fiscal year, specifically supporting the implementation of Nigeria’s new Electricity Act and the Nigeria Energy Transition Plan, which envisions the development of 250 GW of installed electricity capacity by 2050, 90 per cent of which will be renewable.
The plan includes the provision of clean cooking access to the bulk of the population by 2030, using liquefied petroleum gas (LPG), biogas, biofuels like ethanol and electric cookstoves.
AfDB added that the Economic Governance and Energy Transition Support Programme will also support the implementation of Nigeria’s Electricity Act and its Energy Transition Plan and help to deliver much-needed upgrades of the nation’s electricity infrastructure and fast-tracking the country’s efforts to transition millions of households and businesses to cleaner and renewable sources of energy.
The bank stated, “The AfDB’s $500 million support to Nigeria is the latest in a series of initiatives aimed at supporting the country’s economic growth, poverty reduction and climate action efforts.
“The Economic Governance and Energy Transition Support Programme (EGET-SP) is in line with the bank group’s new 10-year strategy 2024-2033, its high 5s priorities and the New Deal on Energy for Africa, which seeks to achieve universal access to modern energy by 2030.
“As of July 2024, the African Development Bank Group’s active portfolio in Nigeria is valued at about $4.4 billion.”
AfDB’s loan aims to support the actualisation of energy transition plan and Electricity Act
In August 2022, the Federal Government launched the energy transition plan in line with the global call to achieve universal energy access by 2030 and a carbon-neutral economy by 2060.
Former Vice President Yemi Osinbajo, while launching the plan, said the plan aims to reduce dependence on fossil fuels, tackle energy, poverty, climate change crisis, deliver Sustainable Development Goal (SDG) 7 and achieve net-zero emissions by 2060.
He noted that the plan focuses on reducing greenhouse gas emissions by up to 45 per cent by 2030 and up to 90 per cent by 2050.
In actualising this, the plan, which will gulp $10 billion annually and $410 billion by a full transition in 2060, will create millions of new job opportunities in various sectors like renewable energy, electric vehicles and energy efficiency.
Osinbajo said, “We need to take ownership of our transition pathways and design climate-sensitive strategies that address our growth objectives. This is what Nigeria has sought to do with our energy transition plan. The plan was designed to tackle the dual crises of energy poverty and climate change and deliver SDG seven by 2030 and net zero by 2060.
“While centering the provision of energy for development, industrialisation and economic growth, we anchored the plan on key objectives, including lifting 100 million people out of poverty in a decade, driving economic growth, bringing modern energy services to the full population and managing the expected long term job loss in the oil sector due to global decarbonisation.
“Given these objectives, the plan recognises the role of natural gas in the short term to facilitate the establishment of this low energy capacity and address the nation’s clean cooking deficit in the form of LPG.
“The plan envisions vibrant industries powered by low carbon technologies, streets lined with electric vehicles, and livelihoods enabled by sufficient and clean energy. The plan has the potential to create about 340,000 jobs by 2030 and 840,000 jobs by 2060. And it presents a unique opportunity to deliver a truly low carbon and rapid development model in Africa’s largest economy.”
Also, in June 2023, President Bola Tinubu passed a new Electricity Act that decentralised the electricity supply industry and set the stage for increased investments in electricity generation, transmission and distribution by sub-national governments and the private sector.
$50m for prepaid metres, $800m for palliatives: All the loans that Tinubu administration has taken
Meanwhile, TheRadar reported that the Federal Government was seeking a fresh $50 million loan to support state governments in installing solar plant pilots and infrastructure upgrades, tariff frameworks, market reforms and co-financing the Transmission Company of Nigeria’s Performance Improvement Plan.
Between June and September 2023, the World Bank granted Nigeria a total of $1.95 billion in loans to support various projects, among many other loans the President Bola Tinubu administration has taken.
