The Federal Government has cancelled $717.7 million in undisbursed World Bank funding for Nigeria’s power sector, ending the remaining part of a $1.52 billion recovery programme after reform targets were missed and financial pressures worsened.
Documents on the World Bank website showed the decision followed a government request and a joint agreement to stop financing under the Power Sector Recovery Performance-Based Operation.
According to the bank, “The restructuring will result in the cancellation of the entire undisbursed balance in the amount of $717.7m equivalent, and no further disbursements will be made under the Program following approval of this restructuring.”
The programme’s closing date was also moved from June 30, 2027, to May 31, 2026.
The original project, approved in 2020 with $752.5 million, aimed to improve electricity supply, strengthen sector finances and boost accountability. An extra $763.5 million was approved in 2023 to deepen reforms, bringing total funding to about $1.52 billion.
While the original programme achieved its targets, the additional financing struggled. The World Bank blamed rising tariff shortfalls, a weaker naira, higher gas costs and delays in implementing reforms.
“These constraints have created recurrent financing gaps, most notably in the form of tariff shortfalls, which generate liquidity pressures across the value chain and weaken the operational and financial performance of sector institutions,” the report said.
The bank added that annual tariff shortfalls rose from N140bn in 2022 to N1.9tn in both 2024 and 2025, making key reform goals impossible to achieve and leaving overall progress “Moderately Unsatisfactory.”
