BY MARTINS EZE
The Federal Government has cancelled $717.7 million in undisbursed financing from the World Bank meant for Nigeria’s struggling electricity sector, effectively ending the outstanding balance of a $1.52 billion Power Sector Recovery Programme (PSRP) amid growing tariff gaps, financial strain and persistent structural challenges across the industry.
The development marks a significant setback for ongoing efforts to reform and stabilize Nigeria’s power sector, which has for years battled inadequate funding, mounting debt obligations, weak infrastructure and operational inefficiencies despite repeated interventions.
Reports indicate that the cancelled amount represented the remaining undisbursed portion of the World Bank-backed programme designed to support critical reforms in the electricity value chain. The PSRP was introduced to improve power generation, transmission and distribution while strengthening the financial sustainability of the sector.
The decision comes at a time when Nigeria’s electricity industry faces increasing pressure over widening tariff shortfalls and liquidity problems affecting operators. Distribution companies, generation firms and other market participants have repeatedly raised concerns over insufficient revenue recovery and accumulating debts, which continue to threaten the stability of the sector.
Sources familiar with the development said the cancellation was linked to persistent implementation obstacles and the inability to fully execute reform conditions attached to the programme.
The latest move raises fresh concerns about the future of power sector financing and ongoing reform efforts. Analysts warn that losing access to the remaining funds could slow infrastructure improvements and delay initiatives intended to improve electricity supply across the country.
Nigeria’s power sector has remained a major challenge for successive administrations despite multiple policy interventions and funding arrangements. Citizens and businesses continue to grapple with unreliable electricity, frequent grid collapses and high energy costs, leading many households and industries to rely heavily on alternative power sources.
The cancellation may also intensify debate over electricity tariffs, government subsidies and the broader sustainability of reforms within the sector. Experts argue that without significant structural changes and stronger implementation frameworks, financial pressures within the industry could worsen.
The development is expected to trigger fresh scrutiny over Nigeria’s power sector strategy and may reignite calls for broader reforms aimed at addressing long-standing inefficiencies affecting electricity generation and distribution nationwide.
