FG to Phase Out Electricity Subsidy by 2027, Says No Immediate Tariff Hike

The Federal Government has announced plans to phase out electricity subsidy payments from 2027 as part of efforts to address mounting debts in the power sector.

The Minister of Power, Joseph Tegbe, disclosed this on Friday during a media interactive session in Abuja. He said the subsidy would be removed gradually and that consumers would not lose access to electricity services.

“We have the mandate of Mr. President to clear the legacy debt and come up with sustainable structures to ensure this does not pile up anymore,” Tegbe said.

“I promise you, by God’s grace, next year we will put a stop to this so-called subsidy in the power sector. Mr. President will not deprive Nigerians of anything. We will ensure that Nigerian consumers continue to have power and that services improve.”

The minister added that there is no immediate plan to increase electricity tariffs.

The announcement aligns with recommendations by the International Monetary Fund, IMF, for Nigeria to gradually remove electricity subsidies.

The government has previously put the subsidy burden at about N3 trillion as of February 2024. The Association of Power Generation Companies, APGC, says Generation Companies, GenCos, are owed roughly N6.5 trillion.

Tegbe’s comments come amid ongoing efforts to clear legacy debts in the sector. President Bola Tinubu recently approved a N4 trillion bond programme for debt settlement.

In January, the government issued a N501 billion inaugural bond under the Presidential Power Sector Debt Reduction Programme. On July 20, it announced a second tranche worth about N729 billion to settle verified debts owed to power generation companies.

Earlier this year, Tinubu also directed ministries, departments and agencies to use existing electricity laws to determine how subsidy costs should be shared among the federal, state and local governments in the 2026 budget.