The Federal Government has ruled out any immediate increase in electricity tariffs despite the rising cost of subsidising power and concerns over mounting debts across the electricity value chain.
The Minister of Power, Joseph Tegbe, stated this on Monday in Abuja during a media parley marking his first 100 days in office, saying the government’s priority was to stabilise the sector and improve electricity supply rather than impose additional costs on consumers.
“There are no immediate plans to increase electricity tariffs. Our goal is to build a commercially viable power sector while protecting vulnerable consumers,” Tegbe said.
The position comes as the Federal Government’s electricity subsidy obligation reached N1.93tn in 2025, according to the Nigerian Electricity Regulatory Commission’s 2025 Annual Report.
NERC said the subsidy represented 57.44 per cent of the total Nigerian Bulk Electricity Trading invoice for the year, with an average monthly obligation of N160.69bn.
The regulator explained that the subsidy arises from the gap between the cost-reflective tariff and the tariff approved for consumers, with the government covering the difference.
“In the absence of cost-reflective tariffs, the government undertakes to cover the resultant gap between the cost-reflective and allowed tariff in the form of tariff subsidies,” NERC said.
With the Federal Government maintaining its position against an immediate tariff increase, the subsidy burden could remain around N2tn in 2026, further adding to the financial pressures confronting the electricity market.
The development is coming alongside efforts to address the sector’s longstanding debt crisis, with the government implementing its N4tn Presidential Power Sector Debt Reduction Programme to settle verified legacy obligations owed to electricity generation companies.
The Federal Government has so far raised about N1.23tn through two bond issuances under the programme. The latest N728.98bn Series 2 issuance brought the total amount raised in the first phase to approximately N1.23tn.
However, electricity generation companies have questioned whether the debt programme can provide a lasting solution, warning that new liabilities are continuing to accumulate across the power value chain.
The Association of Power Generation Companies said fresh debts estimated at more than N7tn could accumulate before the existing debt-reduction programme is fully implemented.
The APGC Chief Executive, Joy Ogaji, said settling the legacy debt without addressing the continuous accumulation of new obligations could leave the sector in another debt cycle.
“Every month, the DisCos are not paying 100 per cent. NBET is not paying 100 per cent. The N4tn legacy debt is until December 2024. So, how about the accumulation for 2025? And what is already accumulated for 2026?” Ogaji asked.
She added that by the time the government completes its proposed seven-year bond repayment programme, additional liabilities could have accumulated.
“So by the time you finish issuing this N4tn bond over seven years, by 2033, two times what you’re going to pay would have accumulated. So what is your plan?” she said.
Ogaji also questioned the sustainability of the current electricity subsidy arrangement, arguing that the government had not made adequate budgetary provision to meet its subsidy obligations.
“One of the sustainable ways is for the Federal Government to acknowledge the fact that they cannot subsidise the power market. Because you can see it’s only on paper that the government is subsidising power. It’s not in the budget,” she said.
She urged the government to determine the level of subsidy it could realistically afford and make clear budgetary provisions for it rather than allowing obligations to accumulate across the electricity value chain.
Meanwhile, Tegbe said the government was working to tackle the structural problems responsible for the sector’s financial and operational difficulties, including gas supply constraints, ageing power plants, transmission bottlenecks, revenue leakages and poor payment discipline.
He disclosed that generation companies were receiving only 27 per cent of their bills, a situation he said was undermining their ability to maintain generating plants and pay gas suppliers.
“Our generation fleet was heavily dependent on thermal plants, with ageing equipment, deferred maintenance, stalled projects, and capacity unable to reach consumers. The sector diagnosis revealed payment of only 27 per cent of generation companies’ bills, undermining their ability to maintain plants and pay gas suppliers,” Tegbe stated.
The minister also said damaged gas pipelines and commercial conditions had constrained gas supply to power stations, while vandalism and overstretched equipment continued to affect the transmission network.
He said the administration’s focus over the coming months would be to improve collections, strengthen infrastructure, increase gas availability, expand metering and restore market discipline.
The developments leave the Federal Government balancing two competing pressures: keeping electricity tariffs from rising for consumers while meeting the growing financial obligations required to sustain power generation and prevent further deterioration of the electricity market.
