FG targets end of electricity subsidy from 2027

The Federal Government has announced plans to gradually phase out electricity subsidies from 2027 as part of ongoing reforms aimed at restoring the financial sustainability of Nigeria’s power sector.

Minister of Power Joseph Tegbe disclosed this on Friday during a media briefing, saying the government was working to eliminate the accumulation of debts in the electricity industry while ensuring consumers continue to enjoy improved power supply.

According to him, President Bola Tinubu has directed the government to clear longstanding liabilities in the sector and establish a sustainable funding model.

“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 will not deprive Nigerians of anything. We’ll make sure Nigerian consumers continue to have power and improve power services.”

The minister, however, clarified that there are no immediate plans to increase electricity tariffs.

The planned subsidy phase-out aligns with recommendations by the International Monetary Fund (IMF), which has repeatedly urged Nigeria to gradually eliminate electricity subsidies to strengthen the sector’s finances.

The government previously estimated electricity subsidy obligations at about N3 trillion as of February 2024, while the Association of Power Generation Companies says electricity generation companies are owed about N6.5 trillion.

To address the sector’s debt burden, President Tinubu recently approved a N4 trillion bond programme under the Presidential Power Sector Debt Reduction Programme.

The Federal Government had earlier issued an inaugural N501 billion bond in January to settle part of the verified debts owed to power generation companies, followed by a second tranche of about N729 billion announced on July 20.

As part of broader reforms, Tinubu also directed ministries, departments and agencies to apply existing electricity laws in determining how subsidy costs should be shared among the federal, state and local governments in the 2026 budget.