Nigeria’s electricity sector has received at least $3.653 billion in World Bank-backed funding over the past 24 years, yet millions of households and businesses across the country continue to grapple with unstable power supply, frequent national grid collapses and an overwhelming reliance on generators.

An analysis of World Bank-supported electricity projects between 2001 and 2024 shows that successive interventions targeted transmission upgrades, sector reforms, rural electrification, renewable energy expansion and recovery programmes designed to stabilise Nigeria’s struggling power industry.

According to data from the World Bank, as highlighted by Statisense, major interventions include the $100 million Transmission Development Project launched in 2001, the $172 million National Energy Development Project in 2005 and the $400 million Nigeria Electricity and Gas Improvement Project introduced in 2009.

Other projects include the $145 million Nigeria Power Sector Guarantees Project in 2014, the $486 million Nigeria Electricity Transmission Project in 2018, the $350 million Nigeria Electrification Project also launched in 2018, the $750 million Power Sector Recovery Programme approved in 2020, the $750 million Distributed Access through Renewable Energy Scale-up Programme introduced in 2023 and the $500 million Sustainable Power and Irrigation for Nigeria Project launched in 2024.

Collectively, the projects account for approximately $3.653 billion in funding, excluding regional interconnector and hydro rehabilitation initiatives whose financial details were not disclosed.

Electricity Challenges Persist Despite Billions in Funding

Despite the substantial investments, Nigeria’s electricity supply remains inadequate for its growing population and expanding industrial sector.

The national grid continues to experience repeated collapses, while power generation has remained below the level required to meet national demand. As a result, households and businesses still depend heavily on petrol and diesel generators due to unreliable electricity supply from distribution companies.

Industry experts have attributed the persistent crisis to weak transmission infrastructure, liquidity challenges within the power market, gas supply constraints, vandalism, inadequate investment and policy inconsistencies.

Shift Towards Renewable Energy Solutions

The pattern of interventions reflects a gradual shift in the World Bank’s strategy from conventional transmission and gas-focused projects toward renewable energy and decentralised electricity access.

Recent programmes such as the Distributed Access through Renewable Energy Scale-up initiative and the Sustainable Power and Irrigation for Nigeria Project are designed to expand solar-powered electricity access, particularly in rural and underserved communities.

The World Bank has maintained that these initiatives are intended to improve electricity access, strengthen transmission infrastructure and support reforms capable of attracting private sector investment into Nigeria’s power sector.

However, concerns remain regarding the pace of implementation and the actual impact of these interventions on electricity consumers nationwide.

Businesses Continue to Face High Energy Costs

Businesses across Nigeria continue to cite rising energy costs as one of their biggest operational challenges, with manufacturers spending significant amounts on self-generation due to unreliable grid power.

The persistent electricity crisis has also negatively affected productivity, healthcare delivery, small businesses and overall living conditions across the country.

Stakeholders argue that Nigeria’s continued dependence on donor-backed interventions highlights the depth of structural challenges facing the power sector, more than a decade after the privatisation of electricity generation and distribution companies.

While the interventions have contributed to infrastructure development and improved electricity access in some communities, a stable and reliable nationwide electricity supply remains largely elusive.

Federal Government Cancels $717.7m World Bank Facility

The development comes after the Federal Government cancelled $717.7 million in undisbursed World Bank financing earmarked for Nigeria’s electricity sector.

Documents obtained from the World Bank revealed that the cancellation affected the remaining balance of a $1.52 billion Power Sector Recovery Programme following a joint decision by both parties to discontinue financing due to evolving sector realities and challenges in meeting key reform milestones.

According to the World Bank restructuring paper, the entire undisbursed balance was cancelled, while the programme’s closing date was moved forward from June 30, 2027, to May 31, 2026.

Expert Blames Corruption, Governance Failures

Reacting to the situation, Professor of Energy at the University of Lagos, Dayo Ayoade, blamed corruption and poor governance for Nigeria’s persistent electricity challenges.

According to him, the country’s economy will continue to suffer unless decisive reforms are implemented within the power sector.

“Until the power sector is fixed, Nigerians and the economy will continue to suffer. Self-generation is inefficient and expensive for households and businesses,” he said.

Ayoade called for comprehensive reforms, improved governance, stronger accountability mechanisms and the gradual removal of electricity subsidies to ensure tariffs reflect the true cost of power generation and distribution.

He also warned against the proliferation of institutions within the sector, stressing the need for streamlined operations and stronger anti-corruption measures.

“Billions of dollars have been spent on power projects over the years with little improvement in electricity supply. We must address governance failures, leakages and corruption if we are serious about solving Nigeria’s electricity crisis,” he added.

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The Federal Government has cancelled $717.7 million in undisbursed World Bank funding for Nigeria’s power sector, ending the remaining portion of a $1.52 billion electricity recovery programme amid worsening tariff shortfalls and persistent sector challenges.

Documents obtained from the World Bank revealed that the cancellation followed a request by the Federal Government and a joint decision by both parties to discontinue financing under the Power Sector Recovery Performance-Based Operation after key reform targets failed to materialise.

According to the World Bank, the cancelled amount represented the entire undisbursed balance under the programme.

“The restructuring will result in the cancellation of the entire undisbursed balance in the amount of $717.7m equivalent, and no further disbursements will be made under the programme,” the institution stated.

The programme’s closing date was also moved from June 30, 2027, to May 31, 2026, effectively ending it more than one year earlier than originally planned.

Power Sector Recovery Programme Hits Major Setback

The Power Sector Recovery Performance-Based Operation was approved in June 2020 with financing of about $752.5 million aimed at improving electricity supply reliability, strengthening financial sustainability and enhancing accountability across Nigeria’s electricity value chain.

In June 2023, the World Bank approved an additional financing package worth approximately $763.5 million to deepen reforms and support further recovery efforts.

Combined, both facilities amounted to approximately $1.52 billion.

However, despite progress recorded under the original programme, the additional financing struggled to achieve critical reform benchmarks.

Tariff Shortfalls Rise to N1.9tn

The World Bank report identified deep-rooted structural problems within Nigeria’s electricity sector, including:

• Weak distribution performance
• Transmission bottlenecks
• Underutilised generation capacity
• Poor cost recovery
• Persistent financial deficits

According to the report, tariff shortfalls increased significantly from N140 billion in 2022 to approximately N1.9 trillion annually in both 2024 and 2025.

The institution explained that rising generation costs and frozen electricity tariffs widened the gap between actual sector expenses and revenue collection.

Naira Depreciation Worsened Sector Pressure

The World Bank noted that foreign exchange reforms introduced in 2023 contributed significantly to the challenges.

The liberalisation of the forex market led to a sharp depreciation of the naira, increasing the cost of natural gas used in electricity generation.

Since more than 70 per cent of electricity supplied to Nigeria’s national grid depends on gas-powered plants, rising gas costs placed further strain on the sector.

Low Disbursement Rate Triggered Cancellation

Financial records showed weak implementation under the additional financing package.

Out of the $763.5 million approved:

• Only about 9 per cent was disbursed
• Large portions remained undrawn
• Several reform conditions were not achieved

The World Bank described overall implementation progress as “Moderately Unsatisfactory.”

It also cited delays involving the Transmission Company of Nigeria and broader implementation constraints.

FG Warns Over Delayed Loan Approvals

Meanwhile, Accountant-General of the Federation, Dr Shamseldeen Ogunjimi, recently warned that Nigeria could reconsider future World Bank loans if lengthy approval and disbursement processes continue.

He stressed that development financing should align with project timelines, especially as such facilities are loans rather than grants.

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