The World Bank has released up to $200 million in previously locked funding for Nigeria’s largest off-grid electricity programme after the Nigerian Electricity Regulatory Commission (NERC) raised capacity ceilings for mini-grids and reformed its licensing framework — but the programme still has roughly 11 million connections to deliver before its December 2028 deadline.
The funding forms part of the Distributed Access through Renewable Energy Scale-up (DARES) project, a $750 million facility structured across three tranches of International Development Association (IDA) credit — the World Bank’s concessional lending arm — approved in December 2023. A further $243 million has been pledged, bringing total committed funds to more than $430 million.
The disbursement was triggered after Nigeria met four performance-based conditions embedded in the project’s design. Chief among them: NERC issued a new mini-grid regulatory framework in April and granted a derogation raising the capacity ceiling for DARES-eligible projects to 10 megawatts, up from the previous limit.
Despite the funding milestone, the programme’s delivery gap remains wide. Renewable capacity enabled by DARES stood at 41.25 megawatts as of June, against a target of 465 megawatts. Some 5.3 million Nigerians have received new or improved electricity access under the project, against a target of 16.2 million. Solar home unit deployments — the component moving fastest — have reached 1.046 million, up from roughly 709,500 in March, against a target of 2.75 million.
The World Bank’s own risk register tempers the progress. Political and governance risk remains rated high, unchanged since the project’s approval, as does macroeconomic risk — reflecting currency volatility and the continuing effects of Nigeria’s fuel subsidy removal.
That caution carries recent precedent. In May 2024, Nigeria and the World Bank agreed to cancel $717.7 million in undisbursed financing under the Power Sector Recovery Programme after reform milestones went unmet, bringing the operation’s closing date forward by more than a year.
The parent programme had delivered measurable gains — tariff shortfalls fell 71% between 2019 and 2022, and regulatory cost recovery rose from 56% to 94% — but its additional financing could not meet the required indicators. DARES and the Power Sector Recovery Programme represent the same lender moving in opposite directions: one releasing money against conditions met, the other closed early against conditions missed.
Where DARES goes next depends significantly on Nigeria’s states.
Over the past two years, Nigeria transferred electricity regulation to 16 subnational commissions, and the World Bank’s engagement with the Nigeria Governors’ Forum has identified the need for technical assistance to build state-level power sector institutions.
DARES creates a platform for states to access that support, with the Rural Electrification Agency (REA) serving as nodal agency to bring states on board as they express interest.
The institutions that have inherited subnational regulatory powers will largely determine whether the remaining 11 million connections are reachable before the programme closes.
