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World Bank says Nigeria’s electricity sector faces a $2.45 billion tariff shortfall, threatening its financial sustainability.
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New FY26–FY32 framework will support tariff and subsidy reforms while mobilising private capital for power generation, transmission and distribution.
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Bank targets electricity access for more than 32 million Nigerians through on-grid and renewable energy investments.
September 03, (THEWILL) — The World Bank Group has backed reforms to Nigeria’s electricity tariff and subsidy frameworks as part of efforts to restore financial sustainability and attract private investment into the power sector.
The commitment is contained in the World Bank Group’s Country Partnership Framework for Nigeria for fiscal years 2026 to 2032.
The framework comes as Nigeria continues to face a major electricity access deficit, unreliable supply and a liquidity crisis that has constrained investment across the sector.
Tariff shortfall hits $2.45bn
The World Bank said Nigeria has the world’s largest electricity access deficit, with more than 86 million people without access to electricity.
It noted that frequent power outages have forced households and businesses to depend on expensive generators, negatively affecting the productivity of firms.
The bank said the financial position of the electricity sector remained unsustainable, with tariff shortfalls estimated at $2.45 billion by the end of 2025.
It said its support would focus on tariff and subsidy reforms, competitive investment planning and sound regulation.
“The WBG will also support reforms to restore financial sustainability, focusing on tariff and subsidy frameworks, competitive investment planning, and sound sector regulation,” it stated.
Private capital targeted
The World Bank said it would support electricity access and reliability through both on-grid and off-grid solutions, in line with Nigeria’s Mission 300 Compact targets.
It will also support renewable energy expansion and grid densification while helping Nigeria mobilise private capital for the sector.
The bank said it would continue supporting the Nigeria Distributed Access through Renewable Energy Scale-up platform, which is designed to catalyse private investment in mini-grids and standalone solar systems.
It will also assist the Federal Government in developing public-private partnerships and private investment frameworks across generation, transmission and distribution.
The support will include project preparation, transaction structuring and transparent competitive processes to attract investors.
The bank said the combined off-grid and on-grid interventions under the framework would provide electricity access to more than 32 million Nigerians.
Government tackles sector liquidity
The planned reforms come after years of government intervention to keep electricity tariffs below the cost of supply.
The resulting tariff gap has contributed to the financial pressures confronting electricity market participants, particularly generation and distribution companies.
The Federal Government has continued to provide financial interventions to support the sector, while Power Minister Joseph Tegbe has identified liquidity as one of the major challenges facing the industry.
The World Bank’s six-year framework therefore places financial sustainability and private capital mobilisation at the centre of efforts to improve electricity supply.
The reforms are expected to complement government measures aimed at creating a more financially sustainable electricity market while expanding access and improving reliability for households and businesses.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
