FG to remove electricity subsidy in 2027 – Minister
The federal government has announced plans to phase out subsidy payments in the power sector with effect from 2027.
The plan may be in line with the recommendations of the International Monetary Fund (IMF) for Nigeria to phase out electricity subsidy.
Joseph Tegbe, the minister of power, announced the plan during a media interactive session on Friday, while speaking on the power sector debt.
He said the subsidy will be gradually removed, but noted that Nigerians will not be deprived of any benefits.
The minister claimed that the withdrawal of the subsidy would not lead to tariff increase tariffs in the immediate term.
“We have the mandate of Mr. president to clear the legacy debt and come up with sustainale 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 improved power services.”
The federal government has put the subsidy burden at N3 trillion as at February 2024, and recently the Association of Power Generation Companies (APGC) said the government is owing GenCos up to N6.5 trillion.
Tegbe’s latest announcement also comes amid steps already taken by the government to clear power sector debt, following a presidential approval for the issuance of a N4 trillion bond.
In January, the federal government issued a N501 billion inaugural bond under the presidential power sector debt reduction programme (PPSDRP).
On July 20, it announced the issuance of the second tranche of a bond valued at about N729 billion for the settlement of verified legacy debts owed to GenCos.
Earlier in February, President Bola Tinubu directed all ministries, departments and agencies (MDAs) to rely on existing electricity sector laws to clearly define how power subsidy costs are shared among the federal, state, and local governments in the 2026 budget.
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