The Federal Government of Nigeria and the World Bank have mutually agreed to scrap roughly $717.7 million in unutilized funding originally earmarked for the Power Sector Recovery Operation (PSRO) initiative.
The decision stems from escalating tariff deficits, persistent project delays, and evolving dynamics within the domestic electricity market.
A World Bank document revealed that the cancellation followed an official appeal submitted by the federal government on March 26, 2026.
This development surfaced shortly after the Office of the Accountant-General of the Federation dismissed concerns over the potential revocation of multilateral loans due to administrative setbacks exceeding six months.
According to the international financial institution, the Level Two restructuring directly addresses the government’s formal request.
The modification nullifies the entire outstanding balance of $717.7 million, ensuring that no additional funds will be released under the scheme.
To accommodate the termination and finalize ongoing disbursement activities, the operational deadline of the program was brought forward from June 30, 2027, to May 31, 2026.
The global lender noted that the initiative had yielded considerable milestones following its launch in 2020, highlighted by a 71 percent contraction in power tariff shortfalls between 2019 and 2022.
However, these initial achievements were largely eroded by the sharp depreciation of the naira that followed the liberalization of the foreign exchange market in June 2023.