Federal Government to End Electricity Subsidy from 2027, Says no immediate plans to increase power tariffs
The Federal Government has announced plans to phase out electricity subsidies from 2027 as part of efforts to tackle the mounting debt burden in Nigeria’s power sector and establish a more sustainable electricity market.
Minister of Power, Joseph Tegbe, disclosed this on Friday during a media interactive session, saying the subsidy would be removed gradually without disrupting electricity supply to consumers.
According to the minister, President Bola Tinubu has directed the government to clear the legacy debts in the power sector and put in place structures 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,” Tegbe said.
He added: “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’ll make sure Nigerian consumers continue to have power and that power services improve.”
Tegbe, however, clarified that the government has no immediate plans to increase electricity tariffs despite the planned removal of subsidies.
The minister’s announcement aligns with recommendations by the International Monetary Fund (IMF), which has consistently urged Nigeria to gradually eliminate electricity subsidies as part of broader fiscal reforms.
The Federal Government had previously estimated electricity subsidy obligations at about ₦3 trillion as of February 2024, while the Association of Power Generation Companies (GenCos) says electricity generation companies are currently owed approximately ₦6.5 trillion.
To address the growing debt, President Tinubu recently approved a ₦4 trillion bond programme aimed at settling legacy liabilities in the power sector.
Earlier this year, the government issued an inaugural ₦501 billion bond under the Presidential Power Sector Debt Reduction Programme. On July 20, it also announced a second tranche worth about ₦729 billion to settle verified debts owed to power generation companies.
In addition, President Tinubu had directed ministries, departments and agencies to utilise existing electricity laws in determining how electricity subsidy costs would be shared among the federal, state and local governments in the 2026 budget, as part of ongoing reforms in the sector.
Source: Vanguard