The Federal Government has announced that it will begin phasing out electricity subsidies from 2027 as part of reforms aimed at addressing mounting debts and restoring financial stability to Nigeria’s power sector.
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Minister of Power Joseph Tegbe disclosed the plan during a media stakeholders’ session held in Lagos on Friday, assuring electricity consumers that the proposed subsidy withdrawal would not result in an immediate increase in tariffs.
“There is no policy by this administration to increase electricity tariffs beyond its current level,” Tegbe said.
The minister explained that the government’s immediate priorities were to improve electricity supply, accelerate the installation of meters nationwide and ensure that consumers pay only for the electricity they actually consume.
According to him, the gradual withdrawal of subsidies is intended to make the Nigerian Electricity Supply Industry commercially viable while preventing the continued accumulation of debts arising from the difference between the actual cost of electricity and the regulated amount paid by consumers.
Tegbe said President Bola Tinubu had given the Ministry of Power a mandate to resolve the legacy debts owed across the electricity value chain and establish a sustainable structure that would prevent fresh liabilities from accumulating.
“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,” he 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 Nigerians of anything. We’ll make sure Nigerian consumers continue to have power and improved power services.”
The announcement comes amid a severe liquidity crisis in the electricity sector, with unpaid subsidy obligations and gas-related debts reportedly running into trillions of naira.
Government sources had earlier placed the verified legacy liability owed to electricity generation companies at about ₦2.8 trillion, although the Association of Power Generation Companies disputed the figure and maintained that the total amount owed to its members was substantially higher.
Tegbe maintained that ending the subsidy system would help create a commercially sustainable electricity market capable of attracting private investment, maintaining infrastructure and improving services to consumers.
He, however, stressed that the planned reform would be implemented gradually and accompanied by measures designed to protect low-income households and other vulnerable electricity users.
The government is expected to use the Power Consumer Assistance Fund to cushion the impact on vulnerable consumers as the subsidy withdrawal progresses.
Under the proposed arrangement, support would be directed specifically to eligible households rather than applied generally to all electricity consumers, irrespective of their ability to pay.
The minister said the implementation timetable and additional consumer-protection measures would be announced as the reform process advances.
President Tinubu had earlier approved a bond programme to settle verified debts owed to electricity generation companies and other operators in the power sector.
The government reportedly issued an initial ₦501 billion bond under the Presidential Power Sector Debt Reduction Programme in January 2026, while another tranche of about ₦729 billion was announced in July to settle additional verified obligations.
The debt repayment programme is expected to improve liquidity among electricity generation companies, enable them to settle obligations to gas suppliers and provide funds for the maintenance and upgrading of power infrastructure.
Tegbe assured Nigerians that the government would not withdraw subsidies without considering the effects on households and businesses, adding that the ultimate objective was to provide more reliable electricity while ensuring that the sector could sustain itself financially.
He reiterated that despite the planned subsidy phase-out from 2027, the Federal Government had no immediate plan to raise electricity tariffs.
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