The Federal Government has announced plans to begin phasing out electricity subsidies from 2027 as part of broader reforms aimed at restoring financial sustainability to Nigeria’s power sector.
Minister of Power Joseph Tegbe disclosed the plan during a media briefing in Abuja on Friday, saying the current subsidy regime has become unsustainable due to mounting debts across the electricity value chain. He said the Tinubu administration has been directed to clear legacy obligations while putting in place structures that will prevent new debts from accumulating.
According to Tegbe, the subsidy removal will be implemented gradually and will not immediately translate into higher electricity tariffs. He dismissed reports suggesting that the government intends to raise tariffs or migrate all electricity consumers to Band A in the near term, insisting that the immediate priority is improving power supply, expanding access and ensuring consumers receive better service.
The minister also said the government is developing targeted measures to cushion the impact of the reforms on vulnerable households, stressing that low-income electricity users will continue to receive protection during the transition. He assured Nigerians that the reforms are intended to strengthen, not weaken, the power sector.
The planned phase-out comes against the backdrop of a deep liquidity crisis in the Nigerian Electricity Supply Industry (NESI). The Federal Government previously estimated electricity subsidies at around ₦3 trillion, while power generation companies have said they are owed about ₦6.5 trillion in outstanding payments. Earlier this month, President Bola Tinubu approved a ₦4 trillion bond programme to begin settling legacy debts across the sector.
The policy also aligns with long-standing recommendations from the International Monetary Fund (IMF), which has repeatedly urged Nigeria to move toward cost-reflective electricity pricing while protecting vulnerable consumers. Government officials maintain that the reforms are necessary to attract investment, improve market efficiency and ensure reliable electricity supply in the long term.
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