The Federal Government has announced plans to gradually phase out electricity subsidy payments from 2027 as part of efforts to address rising debts in the country’s power sector.
Minister of Power, Joseph Tegbe, disclosed this during a media interactive session, saying the government is putting in place measures to make the electricity market more sustainable without disrupting power supply to consumers.
He said the President had directed the government to resolve the long-standing debts in the sector and prevent a recurrence.
“We have the mandate of Mr President to clear the legacy debt and put in place sustainable structures that will stop the debt from piling up again,” Tegbe said.
The minister expressed confidence that the subsidy regime would end next year.
“By God’s grace, we will put a stop to this so-called subsidy in the power sector,” he said.
Tegbe, however, assured Nigerians that the move would not affect electricity supply or the quality of service.
“Mr President will not deprive Nigerians of anything. We will ensure that consumers continue to have electricity while we improve power services,” he added.
He also clarified that the government has no immediate plan to increase electricity tariffs.
The planned subsidy removal is in line with recommendations by the International Monetary Fund (IMF), which has repeatedly urged Nigeria to gradually phase out electricity subsidies.
The Federal Government had earlier estimated the electricity subsidy bill at about ₦3 trillion as of February 2024, while the Association of Power Generation Companies said electricity generation companies are currently owed about ₦6.5 trillion.
To reduce the debt burden, President Bola Tinubu recently approved a ₦4 trillion bond programme to settle outstanding obligations in the power sector.
In January, the government issued an inaugural bond of ₦501 billion under the Presidential Power Sector Debt Reduction Programme.
On July 20, it also announced a second bond worth about ₦729 billion to pay verified debts owed to electricity generation companies.
Earlier this year, President Tinubu directed ministries, departments and agencies to apply existing electricity laws in determining how electricity subsidy costs should be shared among the federal, state and local governments in preparing the 2026 budget.