The Federal Government has re-channelled a $730 million World Bank loan to support recovery efforts in Nigeria’s power distribution sector.
The fund was originally part of the Power Sector Recovery Programme, PSRP. But with the original targets no longer feasible, it will now focus on expanding metering and strengthening distribution infrastructure, sources told Premium News
Nigeria could not meet the conditions to access an additional $750 million tranche under the PSRP. This led to the cancellation of the programme’s original objectives.
Sources told Premium News that the $730 million has not been withdrawn, but it has been moved to a new area within the power sector.
“Nigeria is still the beneficiary of that loan, but it is now re-focused to another area of the power sector,” a source said.
The fresh focus will prioritise closing the metering gap and reinforcing weak distribution networks across the country.
Besides, Nigeria and the World Bank
have agreed on a revised programme which targets an expansion of the revenue base of distribution companies by metering more customers and bringing them into the billing net.
The programme also covers the reinforcement of distribution infrastructure — including substations and distribution transformers — with the ultimate aim of improving electricity supply to consumers across the country.
The Presidency said the strategy will drive recovery in the distribution sub-sector on the strength the players are predominantly private sector operators.
” They will be required to comply fully with the conditions attached to the loan.The loan has not been taken away from us. Nigeria still has access to it for the power sector, but this time to finance recovery in the distribution segment of the industry,” sources said.
Premium News gathered that two factors killed the original PSRP goals. First, the administration failed to fully remove the power sector’s tariff shortfall.
In 2019, that shortfall stood at approximately ₦580 billion. By 2022 it had been reduced to ₦143 billion, and the target was to bring it down further to around ₦100 billion by 2023, with full elimination projected by 2024.
The trend reversed in June 2023 after the incoming government unified the exchange rate. With gas contracts and major sector costs tied to the dollar, the naira’s steep fall from ₦350 to over ₦1,500 per dollar pushed generation costs up significantly.*
The tariff shortfall, previously declining, then spiked to about ₦2 trillion in 2025, rendering the PSRP conditions unachievable
The second factor was political. The government was unable to remove the tariff subsidy in its entirety as required by the World Bank, creating a persistent liquidity gap that could not be bridged under the existing programme framework.
“These two developments together — the FX shock and the incomplete subsidy removal — led to the agreement between both parties to cancel the original programme objectives and redirect the loan toward distribution recovery,” sources added.
Sources also told Premium News that approximately $20 million allocated for technical assistance to NERC, NBET and the Federal Ministry of Power had not been drawn down before the PSRP objectives were cancelled. The funds remain accessible under the revised programme.