FG confirms plan to end electricity subsidy, introduce cost-reflective tariffs within a year

The Federal Government has confirmed it will gradually phase out electricity subsidies and move to cost-reflective tariffs across Nigeria's power sector. Low-income and vulnerable households will receive targeted support through a proposed Power Consumer Assistance Fund.

The assurance was given by the Special Adviser to the President on Power Infrastructure, Sadiq Wanka, during the Asharami Square 3.0 event organised by Sahara Group in Lagos on Wednesday, July 22, 2026. The event was themed "Energising Africa's Future: Legacy, Impact, and Transformation."

Transition timeline and consumer protection

Wanka acknowledged that the shift to cost-reflective pricing remains one of the most sensitive issues in Nigeria's power sector, especially among investors and industry stakeholders. He said the government had already started the process by introducing cost-reflective tariffs for Band A customers.

He explained that extending the policy to other customer categories would only happen alongside measures to protect vulnerable consumers. “It's official government policy that there would be a transition to cost-reflective tariffs across the board with protections for vulnerable households. So I believe that's something that should happen probably in the next year or so,” Wanka said.

According to him, the transition is now official government policy. The proposed Power Consumer Assistance Fund is expected to provide financial support to poorer households once the reforms are fully implemented. While the exact timeline remains uncertain, the government expects the nationwide rollout of cost-reflective tariffs, backed by consumer protection measures, to take place within the next year.

Massive investment gap in the power sector

Wanka also stressed that Nigeria's electricity industry still trails many comparable emerging economies despite ongoing reforms. He said the country currently attracts roughly $1 billion in annual investment across electricity generation, transmission and distribution. He described that figure as far below what is required to transform the sector.

According to his presentation, Nigeria will need between $9 billion and $12 billion in yearly investments through 2045 to achieve universal electricity access and meet growing industrial demand. The presidential aide estimated that total investment requirements for Nigeria's electricity sector could reach about $121 billion over the next two decades.

He noted that increasing investment and accelerating reforms would be critical to improving power supply, expanding access to electricity and supporting the country's economic growth.

What this means for consumers and the naira

The planned removal of electricity subsidies and rollout of cost-reflective tariffs will likely push up power bills for many households and businesses in the short term. However, if the government delivers on its promise to protect vulnerable Nigerians through the Power Consumer Assistance Fund, the impact on low-income earners could be cushioned. For businesses, more reliable electricity supply driven by higher investment could reduce reliance on expensive generators, potentially lowering operating costs and supporting the naira by cutting demand for imported diesel.