World Bank And The Nigerian Government Have Agreed To Cancel over $700 Million In Undrawn Power Sector Loans Following Growing Concerns Over Implementation Delays, Rising Tariff Shortfalls And The Worsening Financial State Of the country’s Electricity Industry.
The Cancellation Affects The World Bank’s Power Sector Recovery Performance Operation, A Major Reform Programme Approved In 2020 To Improve Electricity Supply, Boost Financial Sustainability And Strengthen Accountability In Nigeria’s Power Sector.
According to the World Bank restructuring paper sighted by AIT.live, the federal government formally requested the cancellation in March 2026 after both sides reviewed the challenges facing the programme.
The Bank said the operating environment had changed significantly since the additional financing package was approved in 2023.
A major factor was the sharp depreciation of the Naira following foreign exchange market liberalisation, which significantly increased the cost of gas used for power generation.
The World Bank said tariff shortfalls rose from about N140 billion in 2022 to nearly N1.9 trillion in 2024 and 2025, putting heavy pressure on government finances.
The report noted that key conditions required for the release of funds were not met, including the development of a credible financing plan to address the sector’s revenue gaps and reduce subsidy burdens.
The Bank also cited delays in implementing performance improvement plans for major power agencies, including the Transmission Company of Nigeria, TCN, as well as difficulties in verifying reform targets.
As a result, only about 9% of the additional financing approved under the programme had been disbursed, while the remaining balance of about $718 million will now be cancelled.
Despite the cancellation, the World Bank said Nigeria recorded some gains under the earlier phase of the programme, including a reduction in tariff shortfalls between 2019 and 2022 and improvements in electricity supply to the national grid.
Both the World Bank and the Federal Government say future support for the power sector will now shift towards targeted investments that can deliver more direct and measurable improvements in electricity supply, operational efficiency and revenue recovery.
(Editor: Terverr Tyav)
