FG confirms electricity subsidy phase-out from 2027, says no tariff hike for now
By Aboki Forex —
The federal government has confirmed it will end electricity subsidies from 2027. Minister of Power Joseph Tegbe announced the phase-out plan at a media interactive session on Friday.
Tegbe said President Bola Tinubu gave the government a direct mandate to clear existing debts in the power sector and build structures that stop new liabilities from piling up. He added that the phase-out will not mean fewer Nigerians getting electricity or a drop in service quality. The minister also made clear there are no plans to raise electricity tariffs in the meantime.
Power sector debts and bond programme
The announcement comes as the financial burden on Nigeria's electricity sector continues to mount. The federal government put the cost of electricity subsidies at roughly N3 trillion as of February 2024, while the Association of Power Generation Companies (APGC) says generation firms are owed close to N6.5 trillion in unpaid obligations.
To begin addressing the shortfall, President Tinubu approved a N4 trillion bond programme earlier this month to settle legacy debts across the sector. In January, the government issued a first bond worth N501 billion under the Presidential Power Sector Debt Reduction Programme. A second tranche of about N729 billion was announced on July 20 to pay down additional amounts owed to generation companies.
What the minister said
Tegbe said: "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."
He added: "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."
Reform direction and subsidy sharing
The subsidy phase-out aligns with longstanding recommendations from the International Monetary Fund (IMF), which has urged Nigeria to wind down electricity subsidies to strengthen the sector's finances and ease pressure on government spending.
The government has also been working out how subsidy costs should be split between the federal, state and local governments. Earlier this year, President Tinubu directed ministries, departments and agencies to use existing electricity laws to determine the right formula for sharing those obligations, as part of planning for the 2026 budget.
Planned outage in Kogi
Separately, the Abuja Electricity Distribution Company (AEDC) notified customers of a planned power interruption expected to last approximately 19 hours across several communities in Kogi State. The outage will affect customers in Lokoja, Konton Karfe, the Naval Base, Banda, Felele, the Army Barracks and nearby areas. AEDC explained that the temporary disruption is necessary to allow the Transmission Company of Nigeria (TCN) to carry out scheduled maintenance work at the Lokoja Transmission Station.
Taken together, the debt repayment programme and the planned subsidy removal signal a broader push by the Tinubu administration to reform Nigeria's electricity market and reduce its dependence on government funding to keep the sector running.