Nigeria has canceled $717.7 million in undisbursed World Bank funding tied to the country’s power sector recovery program, a move that highlights the deepening challenges facing the electricity industry.
The decision followed mounting tariff shortfalls, rising foreign exchange costs, and persistent operational setbacks across the sector.
The News Chronicle reports that the Federal Government and the World Bank agreed to discontinue the remaining funding under the Power Sector Recovery Operation program after reform targets failed to gain momentum.
The program, initially introduced to improve electricity supply and restore financial stability in the sector, will now close earlier than planned after authorities moved to halt further disbursements.
The World Bank apparently related the downturn to growing financial pressures brought on by the naira depreciation and the sharp increase in gas prices applied for power generation.
Though rising operating costs caused electricity rates to be virtually unchanged for most customers, this exacerbated the funding gap in the industry.
Official statistics reveal that yearly tariff shortfalls increased from around N140 billion in 2022 to almost N1.9 trillion in 2024 and 2025, therefore putting more pressure on official resources.
Earlier changes helped to boost income recovery and power distribution, but poor infrastructure, poor cost recovery, and implementation issues slowed progress.
Of the $1.51 billion pledged for the initiative, only about $796 million was ultimately used before the cancellation.
