FG to end electricity subsidy from 2027, says Power Minister

The Federal Government has announced plans to phase out electricity subsidy payments from 2027 as part of efforts to tackle mounting debts in Nigeria’s power sector and establish a more sustainable electricity market.

Minister of Power, Joseph Tegbe, disclosed the plan during a media interactive session on Friday, assuring Nigerians that the gradual removal of the subsidy would not deprive consumers of electricity or reduce service delivery.

According to the minister, President Bola Tinubu has directed the government to clear legacy debts in the power sector while implementing reforms that will prevent the accumulation of fresh liabilities.

> “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:

> “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.”

Despite the planned removal of the subsidy, the minister clarified that the government has no immediate plans to increase electricity tariffs.

The announcement is in line with recommendations by the International Monetary Fund (IMF), which has repeatedly urged Nigeria to gradually eliminate electricity subsidies as part of broader fiscal reforms.

The Federal Government previously estimated electricity subsidy obligations at about ₦3 trillion as of February 2024, while the Association of Power Generation Companies (GenCos) says electricity generation companies are owed approximately ₦6.5 trillion.

To address the growing debt burden, President Tinubu recently approved a ₦4 trillion bond programme to settle outstanding obligations in the power sector.

In January, the government issued an inaugural ₦501 billion bond under the Presidential Power Sector Debt Reduction Programme. On July 20, it also announced a second tranche worth about ₦729 billion to offset verified debts owed to power generation companies.

Earlier this year, President Tinubu directed ministries, departments and agencies to implement existing electricity laws to determine how electricity subsidy costs should be shared among the federal, state and local governments in the 2026 budget.