The African Development Bank Group (AfDB) has granted Nigeria a $500 million loan to enhance its electricity infrastructure and promote cleaner energy. This funding supports the first phase of the Economic Governance and Energy Transition Support Program (EGET-SP).

The AfDB's statement emphasized that this loan aims to bridge the financing gap in Nigeria’s 2024/25 federal budget. It will aid the implementation of the new Electricity Act and the Nigeria Energy Transition Plan, focusing on decentralizing the electricity supply industry and attracting investment from regional governments and the private sector.

Nigeria’s energy transition plan, introduced in August 2022, and the new Electricity Act, enacted in June 2023, aim to develop 250 gigawatts (GW) of installed electricity capacity by 2050, with 90% from renewable sources. By 2030, the goal is to provide clean cooking solutions using liquefied petroleum gas (LPG), biogas, biofuels, and electric cookstoves to most of the population.

The EGET-SP will upgrade Nigeria’s electricity infrastructure and expedite the shift to renewable energy for millions of households and businesses. This $500 million support is part of the AfDB’s broader initiatives to promote economic growth, reduce poverty, and address climate change in Nigeria.

Additionally, the AfDB’s loan aligns with its new 10-Year Strategy (2024-2033), High 5s priorities, and the New Deal on Energy for Africa, which aims to achieve universal access to modern energy by 2030.

The Federal Government’s plan to eliminate estimated billing by the end of 2024 faces significant hurdles, as recent data from the National Bureau of Statistics (NBS) shows a 10% increase in customers on estimated billing in the first quarter of 2024. This rise highlights ongoing challenges in adequately metering all customers, leading to a reliance on estimated billing.

This new loan from the AfDB coincides with the World Bank's supervision mission to Nigeria to address the underperformance of a previous $500 million loan for the electricity distribution sector. The World Bank also restructured a $350 million loan to ensure the completion of seven critical power plants in educational institutions, extending the project’s deadline to December 31, 2024.

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