The federal government and the World Bank have agreed to cancel about $717.7 million in undisbursed financing under the power sector recovery operation (PSRO) programme.

Worsening tariff shortfalls, implementation delays, and changing realities in Nigeria’s electricity sector have led to an agreement between the Federal Government and the World Bank to cancel about $717.7 million in undisbursed financing under the Power Sector Recovery Operation (PSRO) programme.

According to a World Bank document, the request for cancellation was made by the Federal Government on March 26. This was after a denial by the Office of the Accountant-General regarding a threat to cancel World Bank loans due to more than six months of delayed approval.

“The proposed Level Two restructuring is undertaken in response to a formal request from the Federal Government of Nigeria (FGN), received on March 26, 2026,” the document reads.

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

“The restructuring includes an advancement of the Program closing date from June 30, 2027, to May 31, 2026, to reflect the cancellation and completion of disbursement activities, after which the operation will proceed toward closure in accordance with World Bank procedures.”

According to the World Bank, substantial results were already evident when the programme was approved in 2020, including a 71 per cent reduction in tariff shortfalls between 2019 and 2022.

It said a depreciation of the naira was noticed when gains recorded under the initial phase were reversed after the liberalisation of the foreign exchange (FX) market in June 2023.