Nigeria’s Federal Government has cancelled $717.7 million in undisbursed World Bank funding meant for the country’s struggling electricity sector, effectively ending the remaining portion of a $1.52 billion power sector recovery programme.
According to World Bank restructuring documents, the cancellation followed a formal request by the Federal Government and a joint decision by both parties to discontinue financing under the Power Sector Recovery Performance-Based Operation due to mounting implementation challenges and changing realities in the sector.
The World Bank stated that the entire undisbursed balance of $717.7 million would be cancelled and that no further disbursements would be made under the programme. It also moved the project’s closing date forward from June 30, 2027, to May 31, 2026.
The original programme, approved in 2020 with financing of about $752.5 million, was designed to improve electricity supply reliability, strengthen the sector’s financial sustainability, and improve accountability across key power institutions. An additional $763.5 million financing package was later approved in 2023, bringing total support to about $1.52 billion.
However, the World Bank said major macroeconomic developments—including the sharp depreciation of the naira after foreign exchange market liberalisation—significantly increased electricity generation costs, especially because much of Nigeria’s power supply depends on gas priced in US dollars.
The bank noted that electricity tariffs remained largely unchanged for most consumers despite rising generation costs, leading to widening tariff shortfalls and severe financial pressure across the power value chain. Annual tariff deficits reportedly rose from about N140 billion in 2022 to roughly N1.9 trillion in both 2024 and 2025.
Implementation difficulties also affected the programme, with the World Bank citing delays involving performance improvement plans, verification requirements, and broader reform targets. Only about nine per cent of the additional financing package was eventually disbursed.
Despite years of reforms and billions of dollars in international funding, Nigeria’s electricity sector continues to face major challenges, including weak distribution networks, transmission bottlenecks, poor revenue collection, and persistent blackouts affecting homes and businesses nationwide.
The development comes amid growing concerns over Nigeria’s power crisis, with consumers and manufacturers continuing to grapple with unstable electricity supply and rising energy costs.
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