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Nigeria is to receive a $500 million loan from the African Development Bank (AfDB) to help increase access to electricity and support the country's energy transition plan.

More than 85 million Nigerians lack access to grid power, while many others face an unreliable energy supply.

The Bank's Board of Directors approved the loan to finance the first phase of the country's Economic Governance and Energy Transition Support Programme (EGET-SP).

It is a new programme aimed at accelerating transformation of Nigeria's electricity infrastructure and improving access to cleaner sources of energy.

The loan will help close the financing gap of the Federal Budget in the 2024/25 fiscal year, specifically supporting the implementation of the country's new Electricity Act and the Nigeria Energy Transition Plan.

Programme to support energy transition plan's policies

The Nigerian government launched the energy transition plan in August 2022.

In June 2023, it passed a new Electricity Act decentralising the electricity supply industry (ESI) and setting the stage for increased investments by sub-national governments (States) and the private sector.

The energy transition plan envisions the development, by 2050, of 250GW of installed electricity capacity, 90% of which will be renewable.

It will provide clean cooking access to the bulk of the population by 2030, using liquefied petroleum gas (LPG), biogas, biofuels like ethanol, and electric cookstoves.

The EGET-SP will also support the implementation of these policies. This should help deliver much-needed upgrades of Nigeria's electricity infrastructure, and fast-track the country's efforts to transition millions of households and businesses to cleaner and renewable sources of energy.

The Bank Group's $500m 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 EGET-SP is in line with the AfDB'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 AfDB's active portfolio in Nigeria is valued at about $4.4 billion.