The Federal Government says it will begin phasing out electricity subsidies from 2027 as part of efforts to address mounting debt in the power sector and establish a more sustainable financing framework.
Minister of Power, Joseph Tegbe, announced the plan during a media briefing on Friday, saying the government had received President Bola Tinubu’s approval to clear legacy debts and prevent the accumulation of new liabilities.
Tegbe, however, assured Nigerians that the planned subsidy removal would not result in an immediate increase in electricity tariffs or reduced access to power.
“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 anymore,” he said.
“Next year, by God’s grace, we will put a stop to this so-called subsidy in the power sector. We will not deprive Nigerians of anything. We’ll make sure consumers continue to have power and improve power services.”
The planned phase-out aligns with recommendations by the International Monetary Fund (IMF), which has repeatedly urged Nigeria to gradually eliminate electricity subsidies.
The government has previously said electricity subsidies had risen to about ₦3 trillion, while the Association of Power Generation Companies (APGC) says the Federal Government currently owes electricity generation companies about ₦6.5 trillion.
To address the debt, the government has already secured presidential approval to issue a ₦4 trillion bond. It also launched a ₦501 billion inaugural bond under the Presidential Power Sector Debt Reduction Programme (PPSDRP) earlier this year and later issued a second ₦729 billion bond to settle verified debts owed to power generation companies.
The latest announcement comes as the government continues efforts to restructure Nigeria’s electricity market and improve the financial sustainability of the power sector while maintaining reliable electricity supply.
