Government says reforms will clear legacy debts and create a sustainable electricity market without immediate tariff hikes…..
The Federal Government has announced plans to gradually eliminate subsidy payments in the electricity sector from 2027 as part of broader efforts to address rising power sector debts and establish a more sustainable funding structure.
The Minister of Power, Joseph Tegbe, disclosed this during a media engagement on Friday, where he discussed ongoing measures to resolve the financial challenges affecting the sector.
Tegbe said the subsidy system would be phased out gradually, assuring Nigerians that the move would not result in the loss of essential benefits or a decline in electricity services.
He also reiterated that the government has no immediate plans to increase electricity tariffs, stressing that the priority remains improving the sector’s financial stability while protecting 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 any more,” Tegbe said.
He added that the government would work toward ending what he described as power sector subsidy while ensuring consumers continue to receive improved electricity supply.
“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 Nigerians of anything. We’ll make sure Nigerian consumers continue to have power and improve power services,” he said.
The planned reform is in line with recommendations from the International Monetary Fund (IMF), which has advised Nigeria to gradually remove electricity subsidies as part of measures to improve the efficiency of the power market.
The Federal Government had previously raised concerns over the growing cost of electricity subsidies, which stood at about N3 trillion as of February 2024.
The financial pressure in the sector has also been highlighted by power generation companies. The Association of Power Generation Companies (APGC) recently estimated that outstanding government debts to generation companies (GenCos) had risen to about N6.5 trillion.
Tegbe’s announcement comes amid ongoing government efforts to settle accumulated power sector obligations. President Bola Tinubu had approved the issuance of a N4 trillion bond aimed at reducing legacy debts within the electricity sector.
As part of the programme, the government issued an initial N501 billion bond in January under the Presidential Power Sector Debt Reduction Programme (PPSDRP).
In July, it announced another bond issuance worth about N729 billion to settle verified debts owed to GenCos.
Earlier in February, President Tinubu directed ministries, departments and agencies (MDAs) to rely on existing electricity sector laws to determine how power subsidy costs should be allocated among the federal, state and local governments in the 2026 budget.
The government says the planned subsidy phase-out is intended to create a financially stable electricity market while ensuring continued improvements in power supply across the country.
