The World Bank has reaffirmed its commitment to Nigeria’s electricity sector despite the cancellation of about $717 million in undisbursed funds tied to a major power sector reform initiative.
The Bank said its partnership with the Federal Government remains active through several ongoing electricity projects focused on improving power supply, strengthening transmission infrastructure and expanding energy access across the country.
Speaking with The Nation on Thursday, the World Bank’s Senior External Affairs Officer, Mansir Nasir, explained that the cancellation followed a joint review with the Nigerian government amid evolving realities in the power sector and implementation challenges affecting parts of the programme.
According to him, the affected funding was linked to the Power Sector Recovery Performance-Based Operation Additional Financing, but the institution continues to support other major interventions within Nigeria’s electricity industry.
Nasir listed ongoing projects to include the Nigeria Electricity Transmission Project, which is aimed at improving the national grid network, the Distribution Sector Recovery Programme focused on metering and billing efficiency, and the Nigeria Distributed Access through Renewable Energy Scale-Up project designed to expand off-grid electricity access.
“The World Bank Group can confirm the cancellation of the undisbursed portion of the Power Sector Recovery Performance-Based Operation Additional Financing, following a joint decision with the Government of Nigeria considering evolving sector conditions and implementation challenges,” he said.
The programme, valued at approximately $752.5 million, had already achieved significant implementation levels before the cancellation. Records showed that between 95 and 97 percent of the approved funding had already been utilised to support reforms across Nigeria’s electricity value chain.
The remaining balance was reportedly earmarked for technical assistance and administrative adjustments under a restructuring process that would have allocated about $23.5 million for project support activities.
Despite the cancellation, the World Bank noted that the programme recorded measurable improvements in the financial performance of Nigeria’s power sector.
One of the major gains was in revenue collection by electricity distribution companies. Remittances by DisCos to the Nigerian Bulk Electricity Trading company reportedly improved from about 28 percent at its lowest point to as high as 80 percent before stabilising around 77 percent.
The Bank said the stronger revenue performance reduced pressure on government finances as cost recovery through tariffs increased from 56 percent to nearly 94 percent. This contributed to a sharp reduction in tariff-related subsidy gaps, with the annual funding deficit dropping by about 71 percent from roughly ₦524 billion to below ₦300 billion.
Electricity supply to the national grid also improved during the implementation period, with power delivered increasing by about 13 percent from 33 terawatt-hours annually to 36 terawatt-hours.
However, the institution explained that broader economic challenges, including the depreciation of the naira and restrictions on tariff adjustments, created additional financial strain across the power value chain.
The Bank noted that because major inputs such as gas are priced in foreign currency, exchange rate volatility widened funding gaps and weakened some of the assumptions behind the financing arrangement.
Nasir added that restructuring and cancellation decisions are part of the World Bank’s standard project review process carried out in collaboration with partner governments.
“Such restructuring decisions are part of the World Bank Group’s standard practice of working closely with governments to assess project performance and ensure support remains aligned with country priorities and realities,” he stated.
The World Bank maintained that the adjustment should not be interpreted as a withdrawal from Nigeria’s power sector, stressing instead that it reflects a strategic recalibration of support toward transmission upgrades, distribution efficiency and renewable energy expansion.
The institution added that future engagement with Nigeria will continue to focus on improving electricity supply while helping the sector manage macroeconomic pressures, particularly foreign exchange volatility affecting long-term sustainability and cost recovery.