FG cancels $717.7m World Bank electricity financing

FG cancels $717.7m in undisbursed World Bank financing for Nigeria's electricity sector, ending the program more than a year early on May 31, 2026. The joint decision follows failed reforms under additional $763.5m financing package due to naira depreciation after forex liberalization in June 2023.

The original $1.52bn power sector recovery programme had achieved substantial results with 95% disbursement, including a 71% reduction in tariff shortfalls between 2019-2022. However, gas generation costs increased while electricity tariffs remained largely frozen since early 2023, causing tariff shortfalls to surge from N140bn in 2022 to N1.9tn in 2024-2025.

This creates significant pressure on Nigeria's fiscal space as the government struggles to bridge the gap between rising electricity production costs and consumer tariffs. The Accountant-General warns Nigeria may reject future World Bank loans if disbursement timelines exceed six months, emphasizing these are loans with repayment obligations, not grants.

SOURCE: https://www.channelstv.com/2026/05/26/fg-cancels-717-7m-world-bank-power-intervention-loan/