World Bank, FG Cancel $717.7m Power Sector Intervention Fund

Our Reporter 

The World Bank and the Federal Government have cancelled $717.7 million in undisbursed intervention financing intended 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 realities in the sector and the inability to meet key reform milestones.

Documents obtained from the World Bank showed that the decision effectively terminates the remaining portion of a $1.52 billion power sector recovery programme, with the cancelled amount representing the entire undisbursed balance under the initiative.

“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 World Bank stated.

The Federal Government had developed the Power Sector Recovery Programme as a framework aimed at restoring financial stability in the electricity sector while reducing the fiscal burden on public finances.

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

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

Following reported progress under the original phase, the World Bank approved additional financing of about $763.5 million on June 9, 2023, to consolidate reforms and support a new phase of implementation.

The additional financing became effective on June 19, 2024, while the project’s closing date was extended to June 30, 2027.

Combined, the original and additional financing totalled about $1.52 billion.

However, while the original programme reportedly recorded substantial progress and largely disbursed its funds, the additional financing struggled to meet critical reform conditions, resulting in limited disbursement and the eventual cancellation of the outstanding balance.

The World Bank noted that Nigeria’s electricity sector continues to face deep-rooted structural challenges, including high technical and commercial losses as well as weak cost recovery, leading to a persistent gap between sector revenues and operating costs.

Despite years of reforms and financial interventions, the sector remains under significant pressure, with concerns persisting over liquidity, infrastructure deficits, and operational inefficiencies.