The Federal Government and the World Bank have jointly terminated the remaining $717.7m undisbursed portion of a $1.52bn electricity sector recovery programme, bringing an early end to a major intervention aimed at reviving Nigeria’s troubled power industry.
Documents obtained from the World Bank on Monday revealed that the decision followed a request by the Federal Government after both parties agreed to discontinue the Power Sector Recovery Performance-Based Operation due to persistent sector challenges and difficulties in meeting critical reform targets.
According to the World Bank’s restructuring document, the cancelled amount represents the full balance yet to be disbursed under the programme. The bank stated that no additional payments would be made once the restructuring receives approval.
The development also led to the project’s closing date being moved forward from June 30, 2027, to May 31, 2026, effectively ending the initiative over a year earlier than planned.
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The power recovery programme was initially approved in June 2020 with funding of about $752.5m to improve electricity supply, strengthen financial sustainability in the sector, and enhance accountability among key institutions.
In 2023, the World Bank approved an additional $763.5m financing package to deepen reforms and build on earlier achievements, bringing the total support to about $1.52bn.
While the original programme recorded significant progress and fully utilised its funds, the additional financing struggled due to worsening macroeconomic conditions and delayed reforms.
The World Bank noted that Nigeria’s electricity sector continues to battle weak distribution networks, transmission constraints, huge revenue losses, and persistent tariff shortfalls.
The report added that reforms were further complicated after the liberalisation of the foreign exchange market in 2023 triggered a sharp depreciation of the naira, increasing the cost of gas used for power generation and worsening financial pressures across the sector.
