THE Federal Government has announced plans to gradually phase out subsidy payments in Nigeria’s power sector beginning in 2027 as part of efforts to establish a more sustainable electricity industry while addressing the sector’s mounting debt burden.
News Point Nigeria reports that the Minister of Power, Joseph Tegbe, disclosed the plan during a media interactive session on Friday while speaking on the challenges surrounding the power sector debt. He explained that although the subsidy would be removed gradually, Nigerians would not be deprived of any of the benefits currently enjoyed under the arrangement.
The minister also reiterated that the Federal Government has no immediate plans to increase electricity tariffs despite the proposed subsidy phase-out.
“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 Nigeria of anything. We’ll make sure Nigerian consumers continue to have power and improve power services,” he added.
If implemented, the plan would align with the recommendation of the International Monetary Fund (IMF), which has consistently advised Nigeria to phase out electricity subsidies as part of broader economic reforms.
The Federal Government had previously lamented the financial burden of electricity subsidies, which stood at about N3 trillion as of February 2024.
The Association of Power Generation Companies (APGC) also recently disclosed that the Federal Government owes electricity generation companies (GenCos) approximately N6.5 trillion in outstanding debts.
Tegbe’s latest announcement comes amid ongoing efforts by the government to settle obligations in the power sector following President Bola Tinubu’s approval for the issuance of a N4 trillion bond aimed at reducing the sector’s debt burden.
As part of the debt reduction programme, the Federal Government in January issued an inaugural bond worth N501 billion under the Presidential Power Sector Debt Reduction Programme (PPSDRP).
On July 20, the government also announced the issuance of the second tranche of the bond valued at about N729 billion for the settlement of verified legacy debts owed to electricity generation companies.
Earlier in February, President Bola Tinubu directed all Ministries, Departments and Agencies (MDAs) to rely on existing electricity sector laws to clearly define how electricity subsidy costs would be shared among the Federal, State and Local Governments in the 2026 budget.
