The Federal Government has announced plans to phase out electricity subsidy payments from 2027 as part of broader reforms aimed at restoring the financial sustainability of Nigeria’s power sector.
Minister of Power, Chief Joseph Tegbe, disclosed this during a media interactive session in Abuja on Friday, saying the administration had received President Bola Tinubu’s approval to clear legacy debts in the sector while putting in place measures to prevent the re-emergence of subsidy liabilities.
Despite the planned withdrawal of subsidy, the minister assured Nigerians that there would be no immediate increase in electricity tariffs, stressing that the government’s priority remains improving power supply, expanding metering and ensuring consumers pay only for the electricity they consume.
“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 anymore,” Tegbe said.
“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 will not deprive Nigerians of anything. We will ensure consumers continue to have electricity while improving power services.”
Tegbe explained that the planned subsidy phase-out would be accompanied by reforms designed to protect electricity consumers, particularly vulnerable households, while creating a financially viable electricity market capable of attracting long-term investment.
The minister’s comments come barely hours after he dismissed reports of an imminent electricity tariff hike, insisting that the Tinubu administration has no policy to increase tariffs in the immediate term. According to him, the government’s immediate priorities remain service improvement, universal metering and eliminating estimated billing.
The proposed subsidy exit aligns with recommendations by the International Monetary Fund (IMF), which has consistently urged Nigeria to gradually remove electricity subsidies and implement cost-reflective pricing to strengthen the power sector.
The Federal Government has repeatedly expressed concern over the growing financial burden of electricity subsidies. Official figures showed the subsidy obligation was estimated at about ₦3 trillion as of February 2024, while the Association of Power Generation Companies (APGC) recently disclosed that outstanding debts owed to electricity generation companies had risen to approximately ₦6.5 trillion.
To address the mounting liabilities, the Federal Government has begun implementing the Presidential Power Sector Debt Reduction Programme (PPSDRP). Earlier this year, it issued an inaugural ₦501 billion bond to offset verified legacy debts, followed by a second tranche valued at about ₦729 billion announced on July 20.
The subsidy reform also follows President Bola Tinubu’s directive that ministries, departments and agencies should implement existing electricity sector laws to clearly define how subsidy costs are shared among the Federal, state and local governments in the 2026 budget.
Industry experts say ending the subsidy regime, alongside debt clearance and ongoing market reforms, is expected to improve liquidity in the electricity value chain, encourage private investment and enhance the reliability of power supply across the country.
