The Federal Government has cancelled the remaining $717.7 million in undisbursed funding under a World Bank-backed power sector intervention programme, ending a major financing arrangement initially designed to support reforms and improve electricity supply across Nigeria.
The cancelled facility formed part of the broader Power Sector Recovery Performance-Based Operation (PSRO), a programme jointly developed by Nigeria and the World Bank to address long-standing structural challenges in the electricity industry. The intervention was aimed at restoring financial stability within the sector, reducing pressure on government finances and improving operational efficiency across the electricity value chain.
According to restructuring documents referenced by the World Bank, the cancellation followed a formal request by the Nigerian government and a mutual agreement by both parties to discontinue financing under the programme due to changing realities in the sector and difficulties in achieving key reform targets. As part of the decision, no further disbursements will be made under the arrangement.
The intervention programme originally consisted of two phases. The initial financing, approved in 2020, was valued at about $752.5 million and reportedly recorded significant implementation outcomes. A second phase worth approximately $763.5 million was approved in 2023 to deepen reforms and sustain progress, bringing the total programme value to about $1.52 billion. However, the additional financing component struggled to meet reform conditions and recorded limited progress before the eventual cancellation.
Despite earlier improvements, the World Bank noted that Nigeria’s electricity sector continues to face major challenges including transmission constraints, weak distribution performance, tariff shortfalls, financial imbalances and rising operational costs. The bank also linked some setbacks to macroeconomic changes, including foreign exchange liberalisation and increased gas costs for electricity generation.
The latest development comes weeks after the Federal Government publicly warned that prolonged approval and disbursement timelines on external financing arrangements could affect Nigeria’s willingness to continue with delayed loan facilities.
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