The federal government has announced plans to phase out electricity subsidies from 2027 as part of reforms aimed at restoring financial sustainability to Nigeria’s power sector.
Minister of power, Joseph Tegbe, disclosed the plan during a media interactive session, saying the government was determined to eliminate the subsidy regime while ensuring consumers continue to enjoy reliable electricity supply.
Tegbe said the administration had been mandated by President Bola Tinubu to clear the sector’s legacy debts and establish a sustainable financing framework that would prevent the re-emergence of huge liabilities.
He assured Nigerians that the planned subsidy removal would not result in an immediate increase in electricity tariffs, stressing that the government remains committed to improving power supply without imposing additional hardship on consumers.
“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,” the minister said.
“I promise you, next year, by God’s grace, we will put a stop to this so-called subsidy in the power sector. We will not deprive Nigerians of anything. We’ll make sure Nigerian consumers continue to have power and improve power services.”
The planned withdrawal is in line with recommendations by the International Monetary Fund (IMF), which has repeatedly urged Nigeria to phase out electricity subsidies as part of broader fiscal reforms.
The government had previously estimated the electricity subsidy burden at about N3 trillion as of February 2024, while the Association of Power Generation Companies (APGC) recently disclosed that outstanding debts owed to generation companies had risen to about N6.5 trillion.
As part of efforts to settle the liabilities, the federal government secured presidential approval for a N4 trillion bond programme under the Presidential Power Sector Debt Reduction Programme (PPSDRP). It subsequently issued a N501 billion inaugural bond in January and followed it with a second tranche valued at about N729 billion in July to offset verified debts owed to power generation companies.
Earlier this year, President Tinubu directed all ministries, departments and agencies to implement existing electricity laws in determining how subsidy obligations should be shared among the federal, state and local governments in the 2026 budget.
