The Federal Government has cancelled $717.7 million in undisbursed World Bank funding meant for Nigeria’s electricity sector, ending part of a $1.52 billion power recovery programme due to poor implementation and growing financial challenges.
According to World Bank documents, the cancelled amount was the remaining balance under the Power Sector Recovery Performance-Based Operation, after both parties agreed to discontinue the programme following delays in reforms and worsening sector conditions.
The programme, launched in 2020, aimed to improve electricity supply, reduce tariff shortfalls, and strengthen the financial sustainability of Nigeria’s power sector.
Although the initial phase recorded progress, the additional financing approved in 2023 struggled to meet key reform targets, leading to limited disbursement and eventual cancellation.
The World Bank said Nigeria’s electricity sector continues to suffer from weak distribution performance, transmission challenges, poor revenue collection, and rising tariff shortfalls.
According to the report, annual tariff deficits rose sharply from ₦140 billion in 2022 to about ₦1.9 trillion in 2024 and 2025, putting pressure on government finances.
The bank linked part of the crisis to the naira depreciation following forex reforms in 2023, which increased the cost of gas used for electricity generation, while tariffs for most consumers remained largely unchanged.
Despite the challenges, the World Bank noted that the original programme achieved some success, including a 71% reduction in tariff shortfalls between 2019 and 2022.
However, only about 9% of the additional $763.5 million financing was eventually disbursed before the programme was terminated.
The World Bank said the project no longer aligned with the realities of Nigeria’s power sector, adding that reform implementation had become increasingly difficult.
