The Federal Government has announced plans to phase out electricity subsidies from 2027 as part of a broader strategy to eliminate mounting debts in Nigeria’s power sector and establish a more sustainable electricity market.
Minister of Power, Joseph Tegbe, disclosed the plan on Friday during a media interactive session, assuring Nigerians that while the subsidy would be gradually withdrawn, electricity supply and consumer access would not be compromised.
According to the minister, President Bola Tinubu has directed the government to clear the power sector’s legacy debts and put measures in place to prevent a recurrence.
“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.
“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.”
Despite the planned subsidy removal, Tegbe said the Federal Government has no immediate plans to increase electricity tariffs, a move likely aimed at easing concerns among consumers.
The minister’s announcement comes amid ongoing reforms in the power sector and aligns with repeated recommendations by the International Monetary Fund (IMF) for Nigeria to gradually phase out electricity subsidies.
The Federal Government previously estimated the electricity subsidy bill at about ₦3 trillion as of February 2024, while the Association of Power Generation Companies (APGC) has put outstanding debts owed to electricity generation companies at approximately ₦6.5 trillion.
To address the growing liabilities, President Tinubu recently approved a ₦4 trillion bond programme to settle verified debts across the power sector.
As part of the initiative, the government floated a ₦501 billion inaugural bond in January under the Presidential Power Sector Debt Reduction Programme. On July 20, it announced a second tranche worth about ₦729 billion to offset additional verified debts owed to power generation companies.
The administration has also moved to redefine how electricity subsidies are financed. Earlier this year, President Tinubu directed ministries, departments and agencies to apply existing electricity laws in determining how subsidy obligations should be shared among the federal, state and local governments in the 2026 budget.
The latest announcement signals the government’s determination to overhaul the country’s electricity financing framework while tackling longstanding debts that have continued to weigh heavily on the power sector.
