By Our Correspondent

National News – The Federal Government has cancelled a $717.7 million World Bank power sector loan meant to support electricity reforms in Nigeria, despite ongoing blackouts and worsening challenges in the energy sector.

The cancellation followed a joint agreement between Nigeria and the World Bank after key reform targets failed to materialise within the expected period.

The affected loan was part of a larger $1.52 billion Power Sector Recovery Programme introduced to improve electricity supply, reduce tariff shortfalls, and strengthen financial stability across the industry.

According to the World Bank, the remaining undisbursed balance was officially withdrawn, while the project’s closing date was moved from June 2027 to May 2026.

The World Bank explained that Nigeria’s power sector continues to face serious operational and financial problems.

Weak electricity distribution, poor revenue collection, transmission bottlenecks, and rising generation costs have worsened the crisis.

The bank noted that tariff shortfalls jumped from N140 billion in 2022 to about N1.9 trillion in both 2024 and 2025.

Officials stated that the naira depreciation triggered by the foreign exchange market liberalisation in 2023 increased the cost of natural gas used for power generation.

Since over 70 per cent of Nigeria’s electricity depends on gas-powered plants, the rising costs placed additional pressure on the sector.

Although the original phase of the programme reportedly achieved major milestones, the additional financing package struggled due to delays, policy setbacks, and failure to establish a sustainable financing framework.

Only about nine per cent of the additional funds were eventually disbursed before the cancellation.

The Accountant-General of the Federation, Dr Shamseldeen Ogunjimi, also criticised delays in the approval and release of World Bank loans, warning that prolonged processes could discourage Nigeria from accepting future facilities.