FG to phase out electricity subsidy from 2027
The Federal Government says it plans to gradually phase out subsidy payments in the power sector from 2027 as part of efforts to tackle the industry’s growing debt burden.
Minister of Power Joseph Tegbe announced the plan during a media interactive session on Friday, while also insisting that there is no immediate plan to increase electricity tariffs.
He said the government had been directed to clear legacy debts and establish a more sustainable financing structure for the sector.
“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.
“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 Nigerians of anything. We’ll make sure Nigerian consumers continue to have power and improve power services.”
The minister said the subsidy would be removed gradually and that consumers would continue to enjoy electricity services.
The move is in line with recommendations by the International Monetary Fund for Nigeria to phase out electricity subsidies.
The Federal Government had earlier put the subsidy burden at about N3 trillion as of February 2024, while the Association of Power Generation Companies says GenCos are owed roughly N6.5 trillion.
Tegbe’s announcement comes as the government continues efforts to settle power sector debts. President Bola Tinubu recently approved a N4 trillion bond programme for debt reduction.
In January, the government issued a N501 billion inaugural bond under the Presidential Power Sector Debt Reduction Programme, while a second tranche worth about N729 billion was announced on July 20 for the settlement of verified legacy debts owed to generation companies.
Earlier in February, Tinubu directed ministries, departments and agencies to rely on existing electricity laws to determine how subsidy costs would be shared among the federal, state and local governments in the 2026 budget.
