Nigeria Cancels $717M World Bank Loan Amid Power Crisis

The Federal Government of Nigeria has canceled a $717 million loan from the World Bank intended for the power sector recovery program, which was designed to restore financial stability, reduce tariff shortfalls, and improve supply reliability. This decision follows a joint agreement to discontinue the program due to the failure to meet reform conditions within the expected timeframe.

The cancellation affects the entire undisbursed balance of the loan, with no further disbursements to be made. The World Bank's decision raises concerns about worsening blackouts in Nigeria's fragile electricity sector, which continues to struggle with poor distribution performance and transmission bottlenecks.

The program, approved in June 2020, was part of a financial package aimed at enhancing the power sector's sustainability. Despite some achievements, including a 71% reduction in tariff shortfalls from 2019 to 2022, the World Bank noted that Nigeria has failed to establish a credible financial framework to address growing deficits.

Dr. Shamseldeen Ogunjimi warned that this cancellation could hinder future World Bank loans and disrupt project implementations.