The Federal Government is planning to end electricity subsidy payments from 2027. The move is part of efforts to tackle the growing debt burden in Nigeria’s power sector.
The Minister of Power, Joseph Tegbe, disclosed this on Friday during a media interactive session. He said the government would phase out the subsidy while developing a more sustainable funding structure. Tegbe explained that the decision was driven by the need to clear existing debts. It would also prevent fresh obligations from building up across the power sector.
“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,” the minister said.
He assured electricity consumers that the policy change would not lead to a withdrawal of power services.
“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,” he added.
FG plans to end electricity subsidy
Despite the planned subsidy withdrawal, Tegbe said the government had no immediate plan to increase electricity tariffs. The decision comes as financial pressure continues to affect the electricity value chain. The government previously estimated the subsidy burden at about N3 trillion as of February 2024.
Meanwhile, the Association of Power Generation Companies has estimated outstanding debts owed to generation companies at about N6.5 trillion. The Federal Government has already started addressing the accumulated liabilities. The measures are aimed at reducing financial pressure across the sector.
Tinubu approves N4tn power sector debt programme
President Bola Tinubu recently approved a N4 trillion bond programme. The programme will support the settlement of verified power sector debts. Under the Presidential Power Sector Debt Reduction Programme, the government issued its first N501 billion bond in January.
In July, it announced a second tranche worth about N729 billion. The funds are expected to settle verified obligations owed to power generation companies. The administration has also taken steps to clarify responsibility for electricity subsidy payments.
Earlier this year, Tinubu directed ministries, departments and agencies to apply existing electricity laws. The directive covers how subsidy obligations should be shared among the federal, state and local governments in the 2026 budget. The planned subsidy exit is part of the government’s wider effort to reduce the power sector’s debt burden. It also seeks to create a more sustainable funding system.
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