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Electricity Subsidy to Be Phased Out in 2027 as FG Targets Power Sector Debt
Nigeria’s Federal Government will gradually end electricity subsidies from 2027 while tackling legacy debts in the power sector. Officials say electricity supply will continue without immediate tariff hikes.
The Federal Government says it will begin phasing out electricity subsidies from 2027 as part of a broader strategy to eliminate legacy debts and improve the financial sustainability of Nigeria’s power sector.
Speaking during a media interactive session on Friday, Minister of Power Joseph Tegbe said the transition would be gradual and assured Nigerians that electricity supply would not be compromised.
“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 stated.
He further 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.”
Tegbe stressed that there are currently no plans to introduce another electricity tariff increase.
The proposed phase-out follows long-standing recommendations by the International Monetary Fund (IMF), which has encouraged Nigeria to gradually remove electricity subsidies to improve fiscal stability.
Government figures show electricity subsidies were estimated at about ₦3 trillion as of February 2024, while the Association of Power Generation Companies maintains that generation companies are owed nearly ₦6.5 trillion.
To address the debt crisis, President Bola Tinubu approved a ₦4 trillion bond programme for settling obligations in the power sector. The Federal Government had earlier issued a ₦501 billion inaugural bond under the Presidential Power Sector Debt Reduction Programme before announcing a ₦729 billion second tranche on July 20 to pay verified debts owed to generation companies.
In addition, President Tinubu earlier directed ministries, departments and agencies to rely on existing electricity laws when determining how subsidy costs should be shared among the federal, state and local governments in preparing the 2026 budget.
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