The Federal Government of Nigeria has mutually agreed with the World Bank to cancel $717.7 million in undisbursed funding, effectively terminating the remainder of the $1.52 billion Power Sector Recovery Performance-Based Operation (PSRO).
This cancellation of infrastructure funding coincides with worsening nationwide electricity blackouts and critical grid failure.
The cancellation, which follows a formal request by the Nigerian government, was due to mounting tariff shortfalls, worsening financial pressures, and failure to meet key reform milestones.
Documents from the World Bank website show that the programme’s closing date has been brought forward from June 30, 2027, to May 31, 2026. No further disbursements will be made under the facility.
The original programme, approved in 2020 with $752.5 million, recorded notable successes, including a 71% reduction in tariff shortfalls between 2019 and 2022.
However, the additional financing of $763.5 million approved in 2023 struggled significantly due to macroeconomic challenges, particularly the naira depreciation after the 2023 forex liberalisation, which sharply increased gas costs.
Despite these issues, electricity tariffs remained largely frozen for most consumers, causing tariff shortfalls to surge from N140 billion in 2022 to about N1.9 trillion annually in 2024 and 2025.
The World Bank described the implementation of the additional financing as “Moderately Unsatisfactory,” with only about 9% of the funds disbursed.
