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World Bank cancels $1.5 billion loan facility to Nigeria's power sector after milestones were not met
The World Bank has cancelled a $1.5 billion loan facility to Nigeria's power sector after the country failed to meet required milestones. Only about $700 million was disbursed before the cancellation. Nigeria currently generates only 5,000-6,000 megawatts out of 12,000-13,000 installed capacity.
The World Bank has cancelled a $1.5 billion loan facility to Nigeria's power sector after the country failed to meet the required milestones for continued disbursement. As reported by Channels Television, only approximately $700 million of the total facility was released before the cancellation, leaving a significant funding gap in the country's efforts to improve electricity supply.
Nigeria currently generates only 5,000 to 6,000 megawatts of electricity out of an installed capacity of 12,000 to 13,000 megawatts, leaving millions of citizens without reliable power. Energy expert Mr Al-Abidi told Channels Television that the fundamental problem is financial dysfunction in the sector, where the cost of selling electricity does not cover the cost of generation, transmission and distribution.
The cancellation raises questions about whether it was initiated by the World Bank due to unmet conditions or by the Nigerian federal government itself recognising that milestones could not be achieved. The World Bank typically releases funds in tranches as progress is recorded, and the inability to demonstrate sufficient improvement triggered the facility's termination.
According to Al-Abidi, the power sector has been operating at a loss since privatisation, with previous governments essentially providing hidden subsidies by securing international loans to bridge the gap. He described this approach as treating malaria with paracetamol, noting that the underlying financial dysfunction was never addressed.
The loss of the World Bank facility compounds Nigeria's existing challenges in the power sector, including deteriorating transmission infrastructure, insufficient investment and chronic liquidity problems. Power remains one of the most pressing issues facing the country, with experts identifying it alongside human capital development and technology as the three pillars necessary for national development. The federal government has yet to announce alternative plans for funding the sector's rehabilitation.