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The Nigerian government has announced plans to gradually end subsidy payments in the electricity sector from 2027, as part of efforts to address mounting power sector debts and establish a more sustainable funding structure.
Minister of Power, Joseph Tegbe, disclosed the plan during a media interactive session on Friday, where he discussed the government’s strategy for clearing legacy debts owed within the sector.
Tegbe said the subsidy system would be phased out gradually, assuring Nigerians that the transition would not affect access to electricity or reduce the benefits enjoyed by consumers.
“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.”
The minister also said there were no immediate plans to increase electricity tariffs, adding that the government was focused on improving service delivery while addressing financial challenges affecting the sector.
The planned removal of electricity subsidy aligns with recommendations from the International Monetary Fund (IMF), which has advised Nigeria to gradually phase out subsidies in the power sector.
The government had previously raised concerns over the growing cost of electricity subsidies, which was estimated at about N3 trillion as of February 2024.
The subsidy burden has contributed to liquidity challenges in the sector, with power generation companies also reporting significant unpaid obligations. The Association of Power Generation Companies (APGC) recently stated that the government owes GenCos about N6.5 trillion.
To address the debt crisis, the government has begun implementing measures under the Presidential Power Sector Debt Reduction Programme (PPSDRP), following approval for the issuance of a N4 trillion bond.
In January, the government issued its first bond worth N501 billion to reduce verified power sector debts. On July 20, it announced a second tranche valued at approximately N729 billion to settle outstanding obligations owed to GenCos.
Earlier in February, President Bola Tinubu directed ministries, departments and agencies to apply existing electricity sector laws to determine how subsidy costs should be shared among federal, state and local governments in the 2026 budget.
The government says the reforms are intended to create a financially stable power sector while ensuring consumers continue to receive improved electricity services.
