The Federal Government of Nigeria has formally cancelled $717.7 million (about ₦₦) in undisbursed funding from a World Bank intervention aimed at fixing the country’s struggling electricity sector, Zilla Naija can confirm.
The cancelled funds represent the remaining balance of a $1.52 billion Power Sector Recovery Performance‑Based Operation that was designed to improve electricity supply, strengthen sector finances, and boost accountability across Nigeria’s power market.
What Happened?
The move followed a restructuring agreement between the Federal Government and the World Bank, with both sides deciding to discontinue further financing under the programme.
Documents obtained by media show that the entire remaining undisbursed loan of $717.7 million will no longer be paid out, and the project’s closing date was brought forward from June 30, 2027, to May 31, 2026.
Why It Was Cancelled
According to World Bank officials, the cancellation was largely due to Nigeria’s failure to meet key reform targets tied to the loan conditions, including making the power sector fiscally sustainable.
Compounding the problem, the Nigerian naira’s depreciation has driven up the cost of gas — a major fuel for electricity generation — while electricity tariffs have largely remained unchanged for most consumers. This mismatch has caused annual tariff shortfalls to balloon from about ₦140 billion in 2022 to nearly ₦1.9 trillion in both 2024 and 2025.
What This Means for Nigerians
Experts say the cancellation underscores the deep structural weaknesses still plaguing Nigeria’s electricity industry, including:
- Poor cost recovery
- Weak revenue collection
- Transmission bottlenecks
- Under‑utilised generation capacity
Despite decades of reform efforts and previous World Bank support, persistent operational challenges continue to hinder meaningful progress.
Government Response
Prior to the cancellation, the Accountant‑General of the Federation, Dr. Shamseldeen Babatunde Ogunjimi, had warned that Nigeria might decline World Bank loans if approval and disbursement delays continued to threaten project timelines.
He stressed that as a responsible borrower, Nigeria expects timely processing and release of funds meant to support national development priorities.
What’s Next?
The cancellation now raises fresh questions about alternative financing strategies for revamping Nigeria’s power sector, which remains a major obstacle to economic growth and quality of life for millions of Nigerians who still rely on costly generators due to unreliable grid supply.
