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Federal Government announces plans to begin a phased withdrawal of electricity subsidies from 2027 as part of sweeping power sector reforms.
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Power Minister Joseph Tegbe says the subsidy exit will be gradual, assuring Nigerians they will continue to enjoy improved electricity services.
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Government dismisses fears of an imminent electricity tariff increase, insisting no immediate upward review is being considered
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Fresh reforms are aimed at clearing legacy debts, strengthening the financial viability of the power sector, and attracting new investments.
July 31, (THEWILL) — The Federal Government has announced plans to begin a gradual phase-out of electricity subsidy payments from 2027, signalling a major shift in Nigeria’s power sector reform agenda as authorities seek to end decades of mounting liabilities without imposing immediate tariff increases on consumers.
Minister of Power, Joseph Tegbe, disclosed the policy on Friday during a media interactive session while addressing concerns over the electricity sector’s growing debt profile and the Federal Government’s strategy for restoring financial stability to the industry.
According to the minister, the subsidy removal will be implemented in phases rather than through an abrupt termination, stressing that the objective is to build a sustainable electricity market while ensuring Nigerians continue to enjoy a reliable power supply.
“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.
“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 will not deprive Nigerians of anything. We’ll make sure Nigerian consumers continue to have power and improve power services,” Tegbe said.
He further assured consumers that the gradual withdrawal would not erode the benefits they currently enjoy under the subsidy regime.
“The subsidy will be gradually removed, but Nigerians will not be deprived of any benefits,” the minister stated.
Gradual Exit Planned to Rescue Power Sector
Tegbe explained that the planned subsidy withdrawal forms part of broader reforms aimed at addressing the structural financial challenges that have continued to undermine the electricity industry.
He noted that successive subsidy payments have created enormous fiscal pressure on government finances while limiting investments required to improve electricity generation, transmission, and distribution.
Although he did not provide a detailed implementation timetable, the minister confirmed that 2027 remains the target year for the commencement of the phased withdrawal.
The policy is also in line with repeated recommendations by the International Monetary Fund (IMF), which has urged Nigeria to gradually eliminate electricity subsidies and adopt cost-reflective reforms capable of improving the sector’s financial health.
No Immediate Tariff Increase
Responding to concerns that subsidy removal could lead to higher electricity bills, Tegbe clarified that the Federal Government has no immediate plans to increase electricity tariffs.
His reassurance comes amid widespread public anxiety over inflation and the rising cost of living, with many households already grappling with increased economic pressures.
The minister maintained that the government’s immediate focus is on restructuring the sector and resolving its debt burden rather than placing additional financial obligations on consumers.
The Federal Government had previously estimated electricity subsidy obligations at about N3 trillion as of February 2024, while the Association of Power Generation Companies (APGC) says power generation companies are currently owed about N6.5 trillion.
To address the liquidity crisis, President Bola Tinubu recently approved a N4 trillion bond programme for settling verified debts across the power sector.
Earlier this year, the government issued an inaugural N501 billion bond under the Presidential Power Sector Debt Reduction Programme and later announced a second tranche of about N729 billion to offset verified debts owed to electricity generation companies.
The President had also directed Ministries, Departments, and Agencies (MDAs) to rely on existing electricity laws in determining how subsidy obligations should be shared among the Federal, State, and Local Governments in preparing the 2026 budget.
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