The Federal Government has cancelled $717.7m in undisbursed World Bank intervention financing designed to revive Nigeria’s struggling electricity sector.
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 evolving sector realities and the inability to achieve key reform milestones.
According to documents obtained from the World Bank, the development effectively terminates the remaining portion of a $1.52bn power sector recovery programme.
The cancelled amount represents the entire undisbursed balance remaining under the programme.
“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 bank stated
The Federal Government developed the Power Sector Recovery Programme as a framework to restore the sector’s financial viability and reduce its fiscal burden on public finances.
The programme included plans to progressively eliminate tariff shortfalls, improve operational performance among power sector institutions, and strengthen regulatory oversight and accountability mechanisms.
The loan was approved on June 23, 2020, with financing of about $752.5m equivalent. The programme was structured to improve electricity supply reliability, strengthen the sector’s financial and fiscal sustainability, and enhance accountability among key institutions in the electricity value chain.
Following initial progress recorded under the programme, the World Bank approved an Additional Financing package of approximately $763.5m equivalent on June 9, 2023, to consolidate earlier gains and support a new phase of reforms. The financing became effective on June 19, 2024, and extended the project’s closing date to June 30, 2027.
Together, the original financing and the additional facility amounted to about $1.52bn.
The World Bank noted that Nigeria’s electricity sector continues to face deep-rooted structural challenges despite years of reforms and significant financial support.
The report stated that the sector still suffers from weak distribution performance, transmission bottlenecks, underutilisation of available generation capacity, and persistent financial imbalances.