Nigeria cancels World Bank power loan
Analysis based on 9 articles · First reported May 26, 2026 · Last updated May 27, 2026
The cancellation of the $717.7 million World Bank Group loan signals a significant setback for Nigeria's power sector reforms, potentially increasing fiscal pressure on the Nigerian government and raising concerns among investors about the country's economic stability and ability to implement critical infrastructure projects. The depreciation of the Nigeria — Nigerian naira, a key factor in the program's failure, could further deter foreign investment and impact companies operating in Nigeria reliant on stable exchange rates.
Nigeria has cancelled $717.7 million in undisbursed funding from the World Bank Group's Power Sector Recovery Performance-Based Operation, following a formal request by the Federal Government on March 26, 2026. This decision, jointly made by Nigeria and the World Bank Group, marks a major setback for efforts to restore financial sustainability in Nigeria's electricity sector. The program's collapse is largely attributed to the sharp deterioration in the sector's financial position, exacerbated by the Nigeria — Nigerian naira devaluation in June 2023, which significantly increased the cost of natural gas for electricity generation. Despite surging costs, electricity tariffs remained frozen for most consumers, leading to an unprecedented rise in annual tariff deficits from N140 billion in 2022 to N1.9 trillion in 2024 and 2025. The World Bank Group noted that Nigeria failed to meet critical performance indicators and establish a credible financing framework, leading to the cancellation of the remaining funds and an early closing date for the program.
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