Nigeria Cancels $717M World Bank Power Loan Amid Crisis

The Federal Government of Nigeria has officially canceled a $717 million loan from the World Bank that was designated for the country's power sector. This decision comes amid ongoing challenges in electricity supply, with the sector facing deep structural problems despite years of reform efforts.

The cancellation is linked to the failure to meet key reform targets and financial conditions necessary for the disbursement of funds. The World Bank's documentation indicates that no further payments will be made, and the project is set to close ahead of schedule, with an original end date of June 2027 now moved to May 2026.

The Nigerian electricity sector is grappling with issues such as a weak distribution network, transmission bottlenecks, poor revenue collection, and significant tariff shortfalls, which have worsened due to the liberalization of the foreign exchange market in 2023. The report highlights that the tariff shortfall is projected to rise from ₦140 billion in 2022 to ₦1.9 trillion by 2024-2025, placing additional financial pressure on the government.