The Federal Government has confirmed that electricity subsidy payments will begin to end in 2027 as part of efforts to put Nigeria’s power sector on a more sustainable financial footing.
The Minister of Power, Joseph Tegbe, disclosed this on Friday, July 31, during a media briefing where he addressed the country’s mounting power sector debt and the government’s plans to resolve it.
According to the minister, the transition away from subsidies will be gradual, with measures in place to ensure consumers are not left worse off. He also assured Nigerians that there are no immediate plans to increase electricity tariffs.
”We have the mandate of Mr. president to clear the legacy debt and come up with sustainale 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. We will not deprive Nigeria of anything. We’ll make sure Nigerian consumers continue to have power and improve power services.”
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The proposed phase-out is in line with repeated recommendations by the International Monetary Fund (IMF), which has urged Nigeria to eliminate electricity subsidies as part of broader economic reforms.
Successive government reports have highlighted the growing financial burden of the subsidy programme. As of February 2024, the Federal Government estimated the electricity subsidy bill at about ₦3 trillion.
The power generation companies have also continued to raise concerns over unpaid obligations. The Association of Power Generation Companies (APGC) recently said the government owes electricity producers approximately ₦6.5 trillion.
The latest announcement comes as the Tinubu administration intensifies efforts to reduce the sector’s debt burden.
Following presidential approval for a ₦4 trillion bond programme, the government issued an inaugural ₦501 billion bond in January under the Presidential Power Sector Debt Reduction Programme (PPSDRP).
On July 20, authorities announced a second bond worth about ₦729 billion to settle verified legacy debts owed to power generation companies.
Earlier this year, President Bola Tinubu directed all Ministries, Departments and Agencies (MDAs) to apply existing electricity sector laws in determining how subsidy costs should be shared among the federal, state and local governments in the 2026 budget.