By Opeyemi Adelakun
The Federal Government has announced plans to end electricity subsidy payments from 2027 as part of measures to address the growing financial burden in Nigeria’s power sector.
Minister of Power, Joseph Tegbe, disclosed this on Friday during a media interactive session, saying the subsidy would be gradually phased out while efforts would be made to maintain and improve electricity services across the country.
Tegbe said the government had received President Bola Tinubu’s mandate to clear the sector’s legacy debts and establish a sustainable financing structure that would prevent the accumulation of fresh liabilities.
“We have the mandate of Mr President to clear the legacy debt and come up with sustainable structures to make sure this doesn’t pile up any more,” the minister said.
He added that the government would discontinue the subsidy from next year while ensuring that electricity consumers continued to receive power.
“I promise you, next year, by God’s grace, we will put a stop to this so-called subsidy in the power sector. Mr President, we will not deprive Nigeria of anything. We’ll make sure Nigerian consumers continue to have power and improve power services,” Tegbe said.
The minister, however, disclosed that there was no immediate plan to increase electricity tariffs.
The planned subsidy withdrawal is consistent with recommendations by the International Monetary Fund, IMF, which has advocated the gradual removal of electricity subsidies as part of reforms to improve the financial sustainability of Nigeria’s power sector.
The government had previously estimated the electricity subsidy burden at about N3 trillion as of February 2024, while the Association of Power Generation Companies said power generation companies, GenCos, were owed approximately N6.5 trillion.
The latest announcement comes amid intensified efforts by the Federal Government to settle outstanding obligations in the electricity sector.
President Tinubu recently approved a N4 trillion bond programme to support the settlement of verified legacy debts in the power sector.
In January, the government issued its inaugural N501 billion bond under the Presidential Power Sector Debt Reduction Programme.
On July 20, the Federal Government announced a second tranche of about N729 billion to settle verified debts owed to power generation companies.
Earlier this year, President Tinubu also directed ministries, departments and agencies, MDAs, to apply existing electricity laws in determining how electricity subsidy costs should be shared among the Federal Government, states and local governments under the 2026 budget.
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