In a significant development on May 26, 2026, the Federal Government of Nigeria has formally cancelled $717.7 million in undisbursed financing from the World Bank. This move effectively ends the remaining portion of a $1.52 billion Power Sector Recovery Performance-Based Operation, a program originally designed to revive the country's struggling electricity sector.
Background of the Programme
The initiative started in 2020 with about $752.5 million to improve electricity supply reliability, reduce tariff shortfalls, and strengthen financial sustainability in the power value chain. An additional $763.5 million was approved in 2023 to build on early gains, extending the closing date to June 2027.
The parent program saw notable successes: tariff shortfalls dropped 71% between 2019 and 2022 (from N581 billion to N166 billion), regulatory cost recovery improved from 56% to 94%, and electricity supplied to the grid rose 13% from 2018 to 2021. All key indicators were achieved, and most funds disbursed.
However, the additional financing struggled. Only about 9% was disbursed due to macroeconomic shocks, particularly the 2023 foreign exchange liberalization that caused sharp naira depreciation. This inflated natural gas costs (used for over 70% of grid power), while tariffs remained largely frozen, ballooning annual shortfalls to around N1.9 trillion in 2024 and 2025.
The parent program saw notable successes: tariff shortfalls dropped 71% between 2019 and 2022 (from N581 billion to N166 billion), regulatory cost recovery improved from 56% to 94%, and electricity supplied to the grid rose 13% from 2018 to 2021. All key indicators were achieved, and most funds disbursed.
However, the additional financing struggled. Only about 9% was disbursed due to macroeconomic shocks, particularly the 2023 foreign exchange liberalization that caused sharp naira depreciation. This inflated natural gas costs (used for over 70% of grid power), while tariffs remained largely frozen, ballooning annual shortfalls to around N1.9 trillion in 2024 and 2025.
