The world Bank has refused to consider the loan request as the government failed to submit its proposed economic reform plans.
As the country seeks to pull itself out of the first recession in 25 years, the government has sought loans in a bid to revive the economy and finance the budget deficit but, according to sources close to the World Bank, that request has not been considered because the country has not met the requirements.
The government has been in loan talks with the World Bank for over a year. According to Western diplomats and a Nigerian official who chose anonymity, it had agreed to present its proposed reforms to strengthen the economy and attract foreign investment by the end of December.
However, this has not happened and as a result of that delay, the World Bank has not considered a loan.
Meanwhile, the African Development Bank (AfDB) is also holding on to 400 million dollars, the second portion of a one billion dollar loan for the same reason, according to AfDB President, Akinwunmi Adesina.
The first instalment of 600 million dollars was released to the government in November last year.
"We are waiting for the economic policy recovery programme and the policy framework for that", Adesina said on the sidelines of the World Economic Forum in Davos, Switzerland.
The government has said it is looking to borrow a total of four billion dollars from the World Bank and other institutions, and raise one billion dollars from the sale of Eurobonds to fund a massive budget deficit and finance infrastructure projects.
It is unclear why the economic reform plans have not been submitted, especially as the Presidential Economic Team, led by Vice President Yemi Osinbajo, has been working for over a year.
According to a source in the Nigerian financial sector, the government is working with a consultancy to put together a package of proposed reforms. The source, who chose anonymity as the matter is reportedly confidential, did not elaborate.
Finance Minister, Kemi Adeosun and the World Bank refused to comment.