The Federal Government has cancelled $717.7 million in undisbursed World Bank funding meant for Nigeria’s electricity sector, bringing an end to the remaining part of the $1.52 billion Power Sector Recovery Programme earlier than planned.
The decision followed a joint agreement between the Federal Government and the World Bank to discontinue financing under the programme due to ongoing challenges in the power sector and difficulties in meeting major reform targets.
According to details contained in the restructuring arrangement, the cancelled amount represents the entire outstanding balance that had not been disbursed under the programme, meaning no further payments will be made.
The programme, which was originally scheduled to run until June 30, 2027, will now officially end on May 31, 2026, more than a year ahead of schedule.
The Power Sector Recovery Programme was introduced to improve electricity supply across the country, strengthen the financial stability of the sector, and enhance accountability among institutions involved in power generation, transmission, and distribution.
The initial financing package of about $752.5 million was approved in June 2020, while an additional funding package of approximately $763.5 million was later approved in 2023 to support deeper reforms and consolidate earlier progress in the sector.
Although the original phase of the programme recorded notable achievements and largely disbursed its allocated funds, the additional financing component struggled to achieve key reform conditions, leading to low disbursement levels and the eventual cancellation of the remaining balance.
Nigeria’s power sector continues to face several longstanding challenges, including poor distribution performance, transmission constraints, inadequate cost recovery, and weak operational efficiency.
The sector has also been battling high technical and commercial losses, low revenue collection, and persistent tariff shortfalls, all of which have created financial pressures across the electricity value chain.
The recovery programme was designed as part of efforts to restore financial sustainability in the sector and reduce the burden of government subsidies on public finances.
Reports indicated that some progress was made during the implementation of the original programme, with tariff shortfalls reportedly reducing significantly between 2019 and 2022. Regulatory cost recovery also improved, while electricity supplied to the national grid recorded moderate growth within the same period.
Despite these gains, broader reforms expected under the additional financing arrangement failed to progress as planned due to worsening macroeconomic conditions and changes in the operating environment.
The liberalisation of the foreign exchange market in 2023 and the sharp depreciation of the naira reportedly increased the cost of gas used for electricity generation, further deepening the financial challenges facing the power sector.
The cancellation is expected to raise fresh concerns about the future of electricity sector reforms and ongoing efforts to improve power supply and financial stability within the industry.
The Oyo State Police Command has recorded another breakthrough in its ongoing fight against kidnapping and other violent crimes across the state, following a successful security operation in Otu, a community in the Oke-Ogun area of Oyo State. According to the police, the operation led to the neutralisation of three suspected kidnappers and the rescue of an abducted man who had reportedly been held captive by the criminals. The […]
Post comments (0)