The Federal Government has announced plans to gradually end electricity subsidy payments by 2027 as part of efforts to address mounting debts in the power sector.
The Minister of Power, Joseph Tegbe, disclosed this during a media interactive session on Friday while addressing the financial challenges facing the electricity industry.
Tegbe said the subsidy would be phased out in a way that would not deny Nigerians access to electricity or reduce the quality of service.
He also assured consumers that there were no plans to increase electricity tariffs in the immediate future.
“We have the mandate of Mr President to clear the legacy debt and put in place sustainable structures to ensure it does not continue to accumulate,” the minister said.
“By God’s grace, next year we will put an end to this so-called subsidy in the power sector. We will ensure Nigerians continue to enjoy electricity and improved power supply.”
The planned phase-out is in line with recommendations by the International Monetary Fund, which has repeatedly urged Nigeria to eliminate electricity subsidies as part of broader economic reforms.
The Federal Government has previously disclosed that electricity subsidy obligations stood at about ₦3 trillion as of February 2024, while the Association of Power Generation Companies said the government currently owes electricity generation companies about ₦6.5 trillion.
The announcement comes as the government intensifies efforts to reduce the huge debt burden in the power sector. Following presidential approval, authorities have begun settling outstanding obligations through a series of bond issuances.
Earlier this year, the government floated a ₦501 billion inaugural bond under the Presidential Power Sector Debt Reduction Programme. It later issued a second tranche worth about ₦729 billion to pay verified legacy debts owed to electricity generation companies. In addition, President Bola Tinubu recently approved the issuance of a ₦4 trillion bond to further address the sector’s outstanding liabilities.
As part of wider reforms, President Tinubu had in February directed all 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 preparing the 2026 budget. The move is aimed at creating a more transparent and sustainable funding framework for the country’s electricity sector.
