The Federal Government has terminated $717.7 million in undisbursed funding from the World Bank meant to support reforms in Nigeria’s troubled power sector, amid persistent blackouts and mounting financial strain within the electricity industry.
The cancelled funds formed part of a broader $1.52 billion electricity recovery programme introduced in 2020 to improve power supply, reduce tariff deficits, and restore the sector’s financial viability.
According to documents from the World Bank, the decision to discontinue part of the programme followed mutual agreement between the bank and the Nigerian government after key reform targets failed to materialise due to implementation setbacks.
The international lender also adjusted the project’s completion timeline, bringing forward the closing date from June 2027 to May 2026.
Although the initial phase of the programme reportedly recorded gains in cost recovery and reduction of tariff gaps, the additional financing approved in 2023 struggled to deliver the expected reforms across the electricity value chain.
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The World Bank noted that Nigeria’s power sector continues to grapple with weak electricity distribution infrastructure, transmission constraints, poor revenue collection, and increasing financial losses.
It further stated that the depreciation of the naira following the Federal Government’s 2023 foreign exchange reforms significantly increased the cost of gas used for electricity generation, while tariffs for most consumers remained largely unchanged except for Band A customers.
The development, according to the bank, pushed annual tariff shortfalls from about N140 billion in 2022 to nearly N1.9 trillion in both 2024 and 2025, placing additional pressure on public finances and contributing to the cancellation of the remaining loan facility.
The latest development comes as millions of Nigerians continue to face unstable electricity supply and frequent nationwide grid collapses despite repeated promises of reforms in the power sector.