The Federal Government has announced plans to begin phasing out subsidy payments in Nigeria’s power sector from 2027 as part of broader efforts to tackle the mounting debt burden and restore financial sustainability to the electricity industry.
The Minister of Power, Chief Joseph Olasunkanmi Tegbe, disclosed the plan during a media interactive session in Abuja on Friday while addressing the growing liabilities in the Nigerian Electricity Supply Industry (NESI).
According to the minister, the government’s continued subsidy payments have become unsustainable, making it imperative to implement reforms that will gradually reduce the fiscal burden while ensuring the long-term viability of the power sector.
“We are working towards a gradual phase-out of power sector subsidies beginning in 2027 as part of efforts to address the liquidity crisis and put the electricity industry on a sustainable footing,” Tegbe said.
He explained that the transition would be carefully managed to minimise the impact on electricity consumers while improving market efficiency and encouraging greater private sector investment.
The minister noted that the Federal Government remains committed to resolving the sector’s longstanding debt challenge, which has affected electricity generation companies (GenCos), distribution companies (DisCos) and other operators across the value chain.
“The objective is to create a commercially viable electricity market where operators are paid for the services they render, investments are protected and consumers enjoy improved power supply,” he added.
The planned subsidy phase-out comes amid growing concerns over the liquidity crisis in the power sector. Electricity generation companies have repeatedly warned that rising unpaid obligations threaten the stability of electricity generation and could undermine efforts to improve supply across the country.
Industry stakeholders have argued that while subsidy removal could improve the sector’s financial health, it should be accompanied by stronger consumer protection measures, expanded electricity access, improved metering, reduced technical and commercial losses, and enhanced service delivery to cushion the impact on Nigerians.
The Federal Government has in recent months reiterated its commitment to comprehensive reforms in the electricity sector, including attracting new investments, expanding renewable energy projects and strengthening transmission infrastructure to improve power supply nationwide.
