The Federal Government has cancelled $717.7 million in undisbursed World Bank funding meant for Nigeria’s power sector, effectively cutting short part of a $1.52 billion electricity recovery programme.
According to World Bank documents, the decision was taken jointly with the Nigerian government following implementation challenges and the inability to meet key reform targets attached to the programme.
As part of the adjustment, the project’s completion timeline has also been revised, with the closing date moved forward from June 2027 to May 2026.
The electricity recovery programme, launched in 2020, was designed to improve power supply, reduce tariff shortfalls, and strengthen the financial stability of the sector. While early implementation recorded some gains, including better cost recovery and reduced shortfalls, the additional financing approved in 2023 struggled to deliver expected reforms.
The World Bank noted that Nigeria’s power sector continues to grapple with long-standing issues such as weak distribution networks, transmission constraints, poor revenue collection, and rising financial losses across the value chain.
It also pointed to the impact of naira devaluation following the 2023 foreign exchange reforms, which increased the cost of gas used for electricity generation, while tariffs remained largely unchanged except for Band A customers. This, it said, contributed to a sharp rise in tariff shortfalls from N140 billion in 2022 to about N1.9 trillion in 2024 and 2025.
Elijah Adeyemi
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