The Federal Government has cancelled $717.7 million in undisbursed World Bank funding meant for Nigeria’s power sector, ending part of a $1.52 billion electricity recovery programme earlier than planned.
According to World Bank documents, the programme was discontinued following a joint decision with the Nigerian government over implementation challenges and failure to meet major reform targets.
The project’s closing date was also moved from June 2027 to May 2026.
The power recovery programme, launched in 2020, was designed to improve electricity supply, reduce tariff shortfalls, and strengthen the financial stability of the sector. While the initial phase recorded some progress, including a drop in tariff shortfalls and improved cost recovery, the additional financing approved in 2023 struggled to achieve expected reforms.
The World Bank said the sector still faces major problems including weak distribution networks, transmission bottlenecks, poor revenue collection, and rising financial losses.
It also blamed the naira devaluation after the 2023 forex liberalisation for increasing the cost of gas used in electricity generation, while electricity tariffs remained mostly frozen except for Band A customers.
As a result, annual tariff shortfalls reportedly jumped from N140bn in 2022 to about N1.9tn in 2024 and 2025, worsening pressure on government finances and contributing to the cancellation of the remaining loan.
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