Documents obtained from the World Bank show the cancellation followed a formal request from the Federal Government.

Both parties agreed to discontinue the remaining financing under the Power Sector Recovery Performance-Based Operation after key reform targets failed to materialise.

The decision also brings the programme to an earlier close. Its end date was moved from June 30, 2027, to May 31, 2026.

According to the restructuring document, “The restructuring will result in the cancellation of the entire undisbursed balance in the amount of $717.7 million equivalent, and no further disbursements will be made under the Program following approval of this restructuring.”

The programme was introduced in 2020 as part of efforts to restore financial stability in Nigeria’s electricity sector, improve power supply and reduce the industry’s dependence on government support.

At the start, the World Bank approved about $752.5 million for the initiative. Three years later, after early reforms showed some progress, the bank approved an additional financing package of roughly $763.5 million to extend the programme and deepen reforms across the sector.

Together, both facilities were worth around $1.52 billion.

Still, the additional financing package struggled almost from the beginning.

The World Bank said the fall of the naira after the foreign exchange market liberalisation in June 2023 significantly raised electricity generation costs because gas prices are tied to the US dollar.

More than 70% of electricity supplied into Nigeria’s national grid comes from gas-fired plants.

At the same time, electricity tariffs were largely unchanged for most consumers. Only Band A customers saw tariff adjustments in April 2024.

That gap between high production costs and revenues collected from consumers widened rapidly.

According to the World Bank, tariff shortfalls climbed from N140 billion in 2022 to about N1.9 trillion annually in both 2024 and 2025.

The bank said the growing deficits placed heavy pressure on government finances and weakened the reform programme.

“Due to the mismatch between the electricity generation costs and the sector tariff revenues, the tariff shortfalls increased sharply in the last 3 years, moving from a low of N140bn in 2022 to a high of N1.9tn per year in 2024 and 2025, putting serious pressure on the limited Federal Government of Nigeria’s fiscal space,” the report stated.

The World Bank also pointed to deeper structural problems in the electricity sector, including weak performance by distribution companies, transmission bottlenecks, underused generation capacity, poor cost recovery, and high technical and commercial losses.

Those problems slowed implementation and made it difficult for Nigeria to meet conditions tied to further disbursements.

The bank said authorities failed to establish a credible financing framework capable of reducing tariff deficits over time.

“Recent financing plans have not fully identified sufficient sources of funding to cover tariff shortfalls, nor established a credible trajectory for their reduction,” the report stated.

Even so, the original phase of the programme achieved some measurable results before conditions worsened.

The World Bank said tariff shortfalls dropped by 71% between 2019 and 2022, falling from N581 billion to N166 billion.

Regulatory cost recovery improved from 56% to 94% during the same period, while electricity supplied to distribution companies increased by 13% between 2018 and 2021.

These encouraged the bank to approve additional financing in 2023.

However, implementation later stalled. The World Bank said none of the global indicators tied to the additional financing arrangement were achieved.

It also downgraded implementation progress under the programme to “Moderately Unsatisfactory.”

Financial records in the restructuring document show that only about 9% of the additional financing package was eventually disbursed.

Out of the programme’s total commitment of roughly $1.52 billion, around $796 million had been released before the cancellation, leaving $717.7 million undrawn.

The World Bank concluded that the programme’s structure no longer matched realities in Nigeria’s power sector.

“Taken together, these developments point to a misalignment between the design of the operation and the evolving implementation context,” the report stated.

The cancellation comes days after the Accountant-General of the Federation, Dr Shamseldeen Ogunjimi, warned that Nigeria could reconsider future World Bank loan arrangements if approval and disbursement delays continue.

Speaking during a meeting with a World Bank delegation in Abuja, Ogunjimi said Nigeria should not face long delays in accessing funds tied to development projects because the facilities are loans, not grants.

He said, “If approvals take more than six months, the Nigerian Government may no longer honour such arrangements.”

Ogunjimi also urged the World Bank to speed up approvals and disbursements to support Nigeria’s development priorities.

In a detailed post shared on his X handle on Tuesday, Obi expressed concern over what he described as recurring financial approvals for the same liabilities without visible progress in electricity supply across the country.

“Let us reflect, sincerely and without sentiment,” he began, urging Nigerians to examine the pattern of policy decisions surrounding the power sector.

He noted that in recent days, the president reportedly approved N3.3 trillion as a “full and final” settlement for debts in the sector, pointing out that similar approvals had been made previously without clear evidence of resolution.

“On May 17, 2024, N3.3 trillion was approved for the same purpose. On July 25, 2024, another N4 trillion bond was approved to settle similar debts. There have also been other approvals in between, all targeted at addressing the same power sector liabilities,” he stated.

Obi questioned whether earlier approvals were effectively implemented, asking, “This raises a fundamental question: were the previous approvals mere announcements without execution?”

Highlighting the continued instability in electricity supply, he referenced campaign-era commitments made by the current administration.

According to him, the worsening state of power generation and distribution contradicts earlier assurances made to Nigerians.

“During the 2023 campaign, President Bola Ahmed Tinubu made a clear promise: that if he failed to deliver stable electricity, Nigerians should not re-elect him,” he said.

Obi added that the situation has deteriorated to the point where discussions have emerged about disconnecting the Presidential Villa from the national grid, describing it as indicative of broader systemic failure.

The Presidential Villa, also known as Aso Rock Presidential Villa, serves as the official residence and workplace of the Nigerian President.

He further argued that recurring policy announcements have not translated into measurable outcomes, stating that “each time legitimate concerns are raised, what we see appears more like policy pronouncements than measurable progress.”

The former Anambra State governor also raised concerns about accountability and transparency in the accumulation of power sector debts, noting that many of the liabilities were built up over successive administrations between 2015 and 2025.

“These debts were largely accumulated under successive administrations of the All Progressives Congress between 2015 and 2025. This raises serious concerns about accountability, transparency, and effectiveness in public financial management,” he said.

Obi questioned the rationale behind the persistent accumulation of obligations, particularly those owed by government institutions, including the Presidential Villa.

“It is important to note that government institutions and agencies, including the Presidential Villa, owe a significant portion of these debts. Year after year, budgets were made and funds appropriated. Why then were these obligations not settled when due?” he asked.

He also sought clarity on the funding structure of the latest approval, raising concerns about whether additional borrowing would be required.

“And from what source will this new payment be made? Are we resorting once more to borrowing to service inefficiencies?” he queried.

Obi further posed several unanswered questions regarding the power sector’s financial structure, including the total size of the debt, the origins of the liabilities, and the extent to which inefficiencies by operators may have contributed.

“Key questions remain unanswered: How did the debt accrue? What is the actual total debt in the power sector? Which components of the debts are due to operators’ inefficiency and should be borne by them? Why have previous approvals not translated into tangible improvements?” he asked.

He also queried whether the newly approved N3.3 trillion is separate from or related to earlier approvals, including the N3.3 trillion sanctioned in 2024 and the N4 trillion bond approved later that year.

“Is the N3.3 trillion approved on April 6, 2026, the same as the N3.3 trillion approved in May 2024, and how does it relate to the N4 trillion bond approved in July 2024?” he wrote.

Concluding his remarks, Obi urged a shift away from what he described as repetitive policy announcements toward meaningful reform of the electricity sector.

“Nigeria must move beyond recycled announcements and confront the power sector crisis with sincerity, transparency, and decisive reforms. Until we do so, we will remain trapped in a cycle of debt and darkness,” he stated.

Wale Edun said this Monday, during a committee investigation into the controversial Make-up Gas (MUG) Reprocessing Deal at the Senate.

This deal involves the Ministry of Finance, Niger Delta Power Holding Company (NDPHC), Calabar Generation Company Limited, and ACUGAS Limited.

According to him, “It is not about restructuring but providing the required liquidity, which the Ministry of Finance is doing through collaboration with the Nigerian Liquefied Natural Gas (NLNG),” Edun stated through his Special Assistant, Dahiru Moyi.

He explained that the gas supply agreements between NPDHC and ACUGAS Limited were inherited by former President Muhammadu Buhari in 2015, having been signed in 2011 during President Goodluck Jonathan’s administration.

“Just as the Ministry of Justice was not aware of the contract agreement, the Ministry of Finance was also not part of it from the beginning. But since government is a continuum, the Ministry of Finance later became involved to facilitate the required liquidity”, he stated

He highlighted that since NLNG pays for gas in dollars, the Ministry is collaborating with the organization to bring liquidity into the longstanding contract agreement through a Deed of Transfer.

“Make-up Gas (MUG) belongs to Calabar, Calabar belongs to NDPHC, and NDPHC belongs to the federal and state governments, with the Federal Government holding 52.68%,” he explained.

Chiedu Ugbo, managing director of NDPHC, also spoke to the committee, stating that due to the gas supply agreement with ACUGAS Limited, the company is utilizing gas from three out of five units to generate power from the Calabar plant for the National Grid. He noted that this plant is the best in the country.

Ugbo detailed that NDPHC had constructed an 80-kilometre gas pipeline for the utilization of MUG in Calabar and Alaoji power plants.

However, he lamented that systemic issues related to transition, frequency, and voltage have prevented the firm from achieving the desired results.

The Federal Government announced this on Thursday, revealing that its financial burden in the industry had been reduced by about N373bn.

It disclosed this through the Nigerian Electricity Regulatory Commission at the Ministerial Retreat on the Integrated National Electricity Policy and Strategic Implementation Policy.

Liquidity refers to the efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price. The most liquid asset of all is cash itself.

In a presentation at the event, Sanusi Garba, the chairman, NERC, said, “Liquidity in the market has moved from N282bn in 2015 to N900bn now. We have also created a mechanism for enforcing payment discipline in the industry. This has seen Disco revenue improve greatly.

“We have reduced the fiscal burden on the government from N528bn to N155bn in 2022. Without our actions, the subsidy would have been in the region of N665bn.”

Speaking on the sidelines of the summit, Adebayo Adelabu, minister of Power, appealed to operators and agencies in the sector to work with the government, stressing that those who fail to deliver would be shown the way out.

“I appealed to the people working with me, the agencies and public servants, that they should support us to ensure that we deliver and not disappoint Mr President. And I say we are using the carrot and stick approach. We are using the carrot now by appealing to ourselves.

“If this does not work, we are going to wield the big stick. Before I’m shown the way out, of course, a lot of people will also leave before me. So this (summit) is just a way of preparing ourselves to achieve the mandate and target of the power ministry,” he stated. (Punch)