The World Bank and the Federal Government have cancelled $717.7 million in undisbursed intervention financing designed to support the revival of Nigeria’s struggling electricity sector.

The cancellation followed a formal request by the Federal Government and a joint decision by both parties to discontinue funding under the Power Sector Recovery Performance-Based Operation, citing evolving sector realities and the inability to meet key reform milestones.

According to documents obtained from the World Bank, the decision effectively terminates the remaining portion of a $1.52 billion power sector recovery programme.

The cancelled amount represents the entire undisbursed balance under the programme.

“The restructuring will result in the cancellation of the entire undisbursed balance in the amount of $717.7 million equivalent, and no further disbursements will be made under the programme following approval of this restructuring,” the bank stated.

The Federal Government developed the Power Sector Recovery Programme as a framework to restore financial stability in the electricity sector and reduce its fiscal burden on public finances.

The programme included plans to gradually eliminate tariff shortfalls, improve operational performance across power sector institutions, and strengthen regulatory oversight and accountability mechanisms.

The loan was approved on June 23, 2020, with initial financing of about $752.5 million. It was designed to improve electricity supply reliability, strengthen financial and fiscal sustainability in the sector, and enhance accountability across the electricity value chain.

Following early progress, the World Bank approved additional financing of approximately $763.5 million on June 9, 2023, to consolidate reforms and support a new phase of implementation. The financing became effective on June 19, 2024, extending the project’s closing date to June 30, 2027.

Together, the original and additional financing amounted to about $1.52 billion.

However, while the original programme reportedly achieved substantial results and largely disbursed its funds, the additional financing struggled to meet critical reform conditions, leading to limited disbursement and eventual cancellation.

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The World Bank noted that Nigeria’s electricity sector continues to face deep structural challenges, including high technical and commercial losses and weak cost recovery, resulting in a persistent mismatch between revenue and operating costs.

Despite years of reforms and financial support, the sector remains under significant pressure.