LAGOS, Nigeria – The Federal Government has announced plans to begin a gradual phase-out of electricity subsidies from 2027 as part of a broad reform programme aimed at restoring the financial health and long-term sustainability of Nigeria’s power sector.
The Minister of Power, Joseph Tegbe, disclosed the plan during a Media Stakeholders Session held in Lagos on Friday. He explained that the phased withdrawal of subsidies is intended to revive the commercial viability of the Nigerian Electricity Supply Industry (NESI) while ensuring that consumers continue to benefit from improved electricity supply.
Despite the planned subsidy reforms, the minister assured Nigerians that the current administration has no immediate plans to increase electricity tariffs.
“There is no policy by this administration to increase electricity tariffs beyond its current level,” Tegbe said.
According to him, the government’s immediate priorities are to improve electricity generation and distribution, accelerate universal metering, and ensure that consumers pay only for the electricity they actually consume.
The planned reforms come at a time when Nigeria’s power sector is battling one of its worst liquidity crises in recent years. Official figures from the Nigerian Bulk Electricity Trading Plc (NBET) indicate that the Federal Government’s outstanding electricity tariff shortfall has risen to N1.78 trillion, while debts owed to gas suppliers under the Gas Stabilisation Fund have reached N986.45 billion. Combined, the sector’s financial obligations now exceed N2.7 trillion.
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The mounting debt has placed significant pressure on electricity generation companies and gas suppliers, limiting their ability to finance maintenance, invest in new infrastructure, and sustain power generation across the country.
Data further revealed that between April 2025 and April 2026, electricity distribution companies issued invoices totaling N3.16 trillion. Of this amount, the Federal Government was expected to cover N1.86 trillion, representing approximately 58.8 per cent, as subsidies for customers in Bands B to E whose tariffs remain below cost-reflective levels.
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To address these longstanding financial challenges, Tegbe announced that the government is advancing a Power Sector Bond initiative designed to clear outstanding debts owed to electricity generation companies, gas suppliers, and other stakeholders within the electricity market.
He noted that settling the legacy obligations is essential to restoring investor confidence, attracting fresh investments, and re-establishing commercial discipline across the power sector.
The minister also unveiled a comprehensive “Resetting the Sector” agenda aimed at addressing structural deficiencies across electricity generation, transmission, distribution, and market governance.
As part of the reforms, the Federal Ministry of Power will conduct a comprehensive technical audit of the national transmission network, harmonise electricity regulations between the federal and state governments, strengthen three major transmission corridors covering Lagos, Enugu–Port Harcourt, and Abuja–Kaduna–Kano, modernise transmission infrastructure, optimise underutilised electricity assets, and implement a Super Grid Programme to expand the country’s transmission backbone.
On metering, Tegbe said the Presidential Metering Initiative has been placed at the centre of the government’s reform agenda. He announced the inauguration of a Power Force comprising 5,000 Nigerian youths who will be trained and deployed nationwide to install electricity meters, helping to bridge Nigeria’s metering gap while creating employment opportunities.
The minister further revealed that Nigeria has consistently generated approximately 5,000 megawatts of electricity over the past two weeks, attributing the improvement to better coordination across the electricity value chain. However, he stressed that increased generation alone would not solve the country’s electricity challenges.
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“Electricity must be generated, transmitted, distributed and paid for. All these components must function simultaneously,” he said.
Expressing optimism about the sector’s outlook, Tegbe said Nigerians should begin to experience noticeable improvements in electricity availability within the next few months. He added that a stronger, more reliable, and financially sustainable electricity market is expected to emerge over the next two to three years.
“Resetting the sector is not about buzz words. It is about execution, discipline, coordination and measurable outcomes. We will measure our success by improvements experienced in the daily lives of Nigerians,” the minister stated.
The planned subsidy phase-out marks one of the most significant reforms proposed for Nigeria’s electricity sector in recent years, as the government seeks to balance affordability for consumers with the financial sustainability required to attract investment and improve power supply nationwide.
